Today's substantially lower pay is not evidence of wages being set by skill level, but suggests an employer taking advantage of labor conditions. Indeed, unless Harvard professors are willing to clean their own offices and students cook their own food, the Ad Hoc Committee's approach virtually guarantees that some members of the community will remain in poverty. Because even if the current labor force ''betters'' itself, and moves up the ladder, a new crop of underpaid employees will be hired to do this work. Furthermore, the ''skills and education'' approach ignores one of the most interesting currents of research within economics in the last two decades, the so-called ''efficiency wage theory,'' or the idea that it is efficient to pay workers more than the going rate. Effort, morale, and productivity improve as wages rise, particularly in relation to the market-clearing level.
Higher wages lead workers to value their jobs more, which has benefits for the employer.
The debate over the living wage is frequently couched in terms of morality versus the market, and this has been a common theme in Harvard Yard in recent weeks. This perspective is rhetorically powerful, and analytically useful in some respects. But it can be misleading and even disempowering for those who seek fundamental social change. While compassion may win the day for extreme cases of inequity, such as the Harvard workers, market logic has proved difficult to counter. The dichotomy between markets and morality is not inevitable.