Calvin is a slow-reading body at the grain facility I own outside Decatur, Illinois, and I keep his wages high precisely because I keep his choices narrow. Rich Lowry is right in National Review that American workers with very low literacy can earn nearly $30 an hour, far more than their British counterparts; he presents the comparison as proof of the greatest economy in human history. I present it as an invoice. You buy Calvin’s grain, his cereal, the oil in your kitchen, and the public programs that keep him standing after my line has finished with him. God, who fixed a gulf between the quick and the slow, has never once asked me to close it.
Calvin works the loading bay from 5 a.m. to 1:30, 5 days a week. He opens the gate, checks the grade, and directs the conveyor. He reads at a level the OECD would flag. He earns $24.74 an hour, roughly 76% more than a British man doing comparable work. His wrists went first. The gates are cast iron, rusted, and manual. He pushes and locks, pushes and locks, 260 days a year. Bilateral carpal tunnel. Work-related.
You’re thinking the $24.74 proves opportunity. It proves something better: I can pay a man well enough to make his injury look like a private failure while I keep the product of his hands. The cereal you ate Tuesday morning came through Calvin. So did the cooking oil. The wage buys the hour. It doesn’t buy the $9.85 glove, and it certainly doesn’t buy the wrist.
Let me put the numbers where you can see them. The glove lasts 12 shifts. That’s $0.82 per shift, or $213.20 a year. Calvin’s evaluation at the county hospital cost $14,200. I declined the first number and you absorbed the second. You’d spend the $213 and call it decent. I kept it. Someone else ate the $14,200. The two figures never meet on my books.
That’s not cruelty. Cruelty would suggest I’d taken an interest in Calvin. This is cleaner. The balance sheet is what’s real.
I don’t buy the glove.
I kept the $213.
There. That’s the lesson.
You buy the grain. You pay for the cereal. You fund the hospital that records what I decline to cover. Your taxes feed the body between shifts while I keep the yield from the shift itself. Thank you for your business. You’ve been a remarkably reliable maintenance department.
Glen is the same arithmetic in a different furnace. He’s a slow-reading hand at the mouth of the glass plant I keep firing outside Evansville, and the insulation behind your drywall came off his line. His nearly $30 an hour is the figure Lowry celebrates. I keep the difference between what Glen can earn and what he can read.
The evening literacy course costs $832 a year. Across 2,080 hours, that’s $0.40 an hour.
$0.40.
I don’t buy it. The course would teach Glen the label on the respirator he isn’t given. It would teach him the placard describing what sits in the air at the furnace mouth. Two semesters might teach him to read the want ad across the river, the one paying $17.50. Then he’d be $17.50, and my line would be down a hand. So the $30 stays. That’s the whole machine: the economy doesn’t reward the illiterate because it is kind. It rewards the man who can’t read the comparison, because a man who can’t read the comparison can’t make it.
The glass dust opens his chest later. You’ll pay for that through the public program that carries him when the line wants a regulator instead of a hand. I keep the margin. The $0.40 is mine.
Calvin’s wrists and Glen’s lungs look different on the floor. The arithmetic underneath is identical. One body pays in movement; the other pays in breath. I call both outcomes maintenance variance. The honest phrase would make the partners uncomfortable, and I’d rather not spoil an annual meeting with the human anatomy.
Now lift your eyes off the loading bay. The system doesn’t run a labor market. It runs a cost-allocation architecture. The employer takes the output. The public keeps the worker alive. A hospital absorbs the injury, a federal credit supplements the wage, a school district feeds the child, and a household pays for all of it without ever seeing the whole column.
Here is what my books carry:
| Line Item | My Books | The Full Cost |
|---|---|---|
| Hourly wage | $24.74 | $24.74 |
| Employer-side FICA | $1.89 | $1.89 |
| Workers’ compensation premium | $0.47 | $0.47 |
| Company physical, amortized | $0.15 | $0.15 |
| County hospital write-downs | — | $4.10 |
| Medication subsidies | — | $1.85 |
| Federal EITC supplement | — | $2.44 |
| School lunch program | — | $0.38 |
| Housing and utility assistance | — | $1.48 |
| Hourly total | $27.25 | $37.50 |
$10.25 an hour.
That is the gap between what I pay and what it costs to keep Calvin standing. You pay it. I’ve never written a check for it.
$10.25 × 2,080 hours = $21,320 a year.
One body. One grain facility. One margin that exists because you and I are never asked to look at the same number.
The labor share of income has fallen from 65% in 1970 to 54.1%, the lowest the Federal Reserve Bank of New York has measured since it began keeping score. I own one of the portfolios receiving the difference. Calvin owns one of the hands surrendering it. The arrangement is stable because no single person pays the whole cost. His maintenance is distributed across a hospital, a federal credit, a school district, and you.
John C. Calhoun described the arrangement in 1837 as the basis of wealthy and civilized society: one portion lives, in fact, on the labor of another. He was discussing slavery. I’ve only rerouted the invoice.
“And ye shall take them as an inheritance for your children after you, to inherit them for a possession; they shall be your bondmen for ever: but over your brethren the children of Israel, ye shall not rule one over another with rigour.”
— Leviticus 25:46
That is the older text under the newer payroll. It prices the body. It says nothing about teaching it to read.
Frederick Douglass’s master understood the same point. When Douglass was being taught to read, the lesson was stopped because literacy would make him unfit to remain obedient and useful. The master had identified the cost of comparison. I’ve merely removed the whip and retained the information asymmetry.
Hammond called the laboring class the mudsill of society and gave its requisites as “vigor, docility, fidelity.” I don’t need to say the whole phrase aloud. Calvin supplies the vigor. Glen supplies the fidelity. The docility is what remains after the public has mistaken a wage premium for freedom.
Widen the frame once more. Lowry’s comparison is relative. It measures the child against the neighbor and the neighbor against my furnace. I don’t need the worker absolutely poorer. I need him fed enough to reach the loading door and unlettered enough to stay there. The county’s reading average at the loading bay is falling. The line is full. I have not asked to see the number, and no dividend has suffered for it.
I employ 340 hands at Decatur. 91 qualify for at least one form of public assistance: 26.8% of payroll. The number is low because I schedule most of them at 33 hours, beneath the full-time benefit threshold. The facility processes 40,000 bushels a day. The labor share fell. The conveyor did not. The silo fill rate reached 98.4% this month, the highest since the facility opened.
You see the law now. It isn’t generosity. It’s allocation. Private capital owns the output; public money maintains the input. The old planter carried the body through sickness and age because he owned it. I’m more advanced. I rent the hour, externalize the maintenance, and replace the body when the hour stops yielding.
The vendor’s proposal for the automated loader is on my desk. It’s 47 pages. I’ve read the cover letter. The headcount line is on page 3.
I haven’t opened it.
The current load is clear. The quarterly number is unchanged. Calvin’s wrists, Glen’s lungs, and the wages that would have bought the cereal are all outside the page I’m reading. The goose is warm, and it has never been required to read the invoice.
That is why it keeps laying.
Sterling A. Varice holds the Hayek-Friedman Chair and serves as Dean of Instruction at Warden University’s College of Business and Economics in Richmond, Virginia. He is the author of three textbooks: Divine Mandates for Labor Utilization, Social Obligations for Profit Maximization, and Calibrated Deprivation: A Manager’s Guide to Employee Motivation.