Baseball Salaries and Inequality

Are professional athletes paid too much? It’s pretty common to claim that’s the case, and here is a fairly standard example of the claim from Edward McClelland in today’s Slate. However, maybe the athletes aren’t overpaid, but are rather paid fairly relative to the wealth their labor helps produce for others. Here’s a good example of this argument from baseball writer Craig Calcaterra, which was a direct response to the ‘overpaid’ Slate essay. This is a fun debate to explore in discussions of social inequality. When I teach social inequality, I use this debate to focus in on how we, as a society, determine the value of work. Do we let the free market sort it out and trust that those getting paid the most are most deserving according to its logic? The classic functionalist explanation of economic inequality is that those who get paid the most must be doing the most important things. So, high pay indicates high social value. This explanation has been rightly debunked because it’s easy to point out many inefficiencies and counter examples that demonstrate that our meritocracy doesn’t really work very well. Calcaterra rightly points out these critiques when he writes:

[Inequality is] concerning because it creates separate classes of people who are increasingly stuck in their lot with no chance to move up. It’s not entirely clear how that all works on a micro-level, but the upshot is that the very promise of the American Dream — that a poor kid can make good one day — is much, much harder today than it was yesterday because the gulf he or she has to leap is much, much larger.

Calcaterra’s claim that focusing on ball players’ salaries isn’t enough is absolutely right. For example, see this Bill Moyers piece.

Calcaterra makes another claim that many of my students bring to the conversation – that the athletes are worth what they get paid because the market will bear it. In fact, their high salaries in this case might be seen as a victory for workers who are creating immense value and getting a pretty good portion of the spoils. He writes:

Growing income inequality in society is not concerning due to some people having a lot and some not having a lot in and of themselves. It’s concerning because a lot of these people are making money that is in no way connected to the value or income they generate….What it is certainly not about is some ballplayer or entertainer or musician — who, as McClelland freely admits has extremely specialized and valuable skills — making millions. Indeed, a poor kid flinging a baseball and turning that into $80 million or whatever is the ultimate inequality hack. It takes that poor kid out of the dilemma he’s so concerned about in the first place. And unlike that CEO or executive class about which we should be somewhat concerned, at least baseball players’ salaries correlate pretty nicely with the value they’re creating for the business. Baseball’s receipts have exploded at just as high if not a higher rate than salaries have, and ballplayers are the reason for it. They’re creating value in terms of butts in seats, so why shouldn’t they be paid for it?

Here is where I get a little uncomfortable. I really struggle with the notion that the 1 in a million poor kid who gets the big MLB contract is the “ultimate inequality hack.” Calcaterra points out how small a number of players make those huge contracts later in his essay to say, essentially, ‘it’s so few, you shouldn’t worry yourself over it.’ Here I thought of Michael Sokolove’s book The Ticket Out, which chronicles the lives of those whose inequality hack doesn’t work out so well. Suggesting that baseball salaries might be an anecdote to inequality is clearly shortsighted because if baseball is a poor kid’s best path to a secure future, then we are going to need quite a bit of league expansion. This might have been one of Calcaterra’s trademarked trolls, which is part of the reason I like to read him so much.

But, I also struggle with the model of player salaries in his essay. Is it “butts in the seats” that generates MLB revenue and salaries, or is it corporate luxury boxes and TV contracts? Yes, I know somewhere in the process is consumer demand for baseball, I love the game myself, but if it was just ticket sales and viewership driving the salaries, explain the Marlins and their new stadium for me. MLB team revenues and player salaries are not purely a function of a free market, really, it’s a monopoly. A trust. The big money in baseball is to some degree a function of CEO’s lobbying lawmakers for anti-trust exemptions and getting municipalities to build stadiums.

Further, is the absolute amount of money professional baseball players make relative to other sorts of workers not to be criticized just because the ball players work in fields that produce a lot of wealth? Is that the only metric we should use to decide what’s ok? Market value? Is it ok that the average MLB salary in 2012 ($3,440,000) is about 69 times U.S. median household income? The minimum salary in MLB ($490,000) is about 10 times the median household income. I don’t have an answer for this that isn’t just a value claim, but I can’t see how anybody needs to make that much money, and I can absolutely understand class based resentment of those who do. That median household income has been stagnant or decreasing the last few years, but MLB ticket prices keep going up seems important too. I could understand a member of the working/middle class making 50k a year or less starting to resent those salaries, to stop going to games, and to feel alienated from ‘the game’ and its players. Isn’t this exactly what McClelland is writing about (even if I doubt McClelland’s all that poor himself). This sense of alienation, which I do think is a reasonable response, isn’t good for society. See this great Atlantic piece from just a few days ago that explains how income inequality can lead to dangerous mistrust.

Baseball salaries clearly aren’t everything that’s wrong with the American financial system, but I do think it’s shortsighted to simply dismiss arguments like McClelland’s. Alienation is a real thing, and it has real consequences for society. If nothing else, this is a great bunch of material for my social inequality class next fall.

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