The objective of this investigation is to establish the reasons why Premier league footballers earn substantially more than nurses in the National Health Service. For example, the average wage of a premier league footballer is approximately more than £300,000. per annum, with the likes of Steven Gerard of Liverpool Football Club and Frank Lampard of Chelsea Football Club supposedly earning over £100,000. per week, whereas a newly qualified nurse earns £17,610 – £19,437. per annum (1).
During this investigation I will try to establish the reasons why there is such an inequality in wages between a premier league footballer and an NHS nurse.
The labour market
The function of a labour market is to establish the price of labour. That
price should reflect the value labour has added to the production process and the ability and willingness of workers to provide the labour. This is most likely to occur in a competitive labour market. In such a market there are many employers seeking workers and many workers seeking employment. The employers’ demand for labour and the willingness of individuals to supply labour determines the level of wage or salary for a job. If demand is high or supply is low, wages and salaries will be high. Where the demand for workers is low or a great many are available to do the job, wages will be low.
Derived Demand is a demand that is produced as a by-product of demand for another item or service. For example in the case of footballers there is derived demand for clubs memorabilia, thus increasing the income of the employer and also derived demand in personal endorsements thus increasing a players income. In contrast there is very little derived demand if any at all from the services of a nurse.
Equilibrium is where Producers and Consumers agree. In the context of supply and demand for labour, the suppliers of labour will want to maximise their earning (price) and the consumer will want to minimise their cost. Equilibrium is where the two parties agree on a price/cost.
Nurses
The market for nurses is affected by the following:
1) The public sector
2) Less than 10% of nurses are men
3) That it takes about 3 year to train as a nurse
4) The main motivational factor
1) The public sector
The public sector includes everything owned by the government including hospitals, which employ nurses. Public sector hospitals are there to provide a service to all and not to make a profit.
The public sector is allocated funds from the government on an annual basis. These funds are the redistribution of taxes, paid for by the working public and companies. As such there is only a limited amount of money available at any one time to pay nurses wages. Due to the limited funds demand and supply of labour will only work to a limited extent. This contrasts with the private sector where market forces play a more active role in the determination of wages.
2) Less than 10% of nurses are men
The gender gap still exists and is widening as far as pay is concerned. Female workers in the U.K. earn 27 per cent less on an average compared with male workers, says a new study. The gap exists at its widest in London, with male workers earning an average of 39,022 pounds against the average for females computed at 28,833 pounds, almost 35 per cent more. (2)
Nurses are one of the few jobs that is still thought of as a “woman’s job,” which is helped along by the fact that less than 10% of nurses are men. It is believed that the gender gap maybe one of the reasons for the nurse’s low wages.
3) It takes about three years to train as a nurse
Three years is comparatively a relatively average amount of time to train to become a nurse. If the supply becomes low it will not take too long to train new nurses.
4) The main motivational factor
People become nurses for a number of reasons; sometimes they just want to give something back to society, other times their parents were nurses so they want to become a nurse. Other times they just want to help people. When you become a nurse, job satisfaction is huge part in job motivation, because if you are not satisfied in a job you aren’t going to be motivated and therefore will not be happy.
Footballers
The following factors affect the market for footballers:
1) There can only be a limited amount of top players because there are only 20 premiership clubs.
2) Top players need to have natural talent, which is in short supply
3) A good player can increase clubs revenue.
1) There are only 20 premiership clubs
There are only 20 premiership clubs, which means there is a small amount of people to pay. This means the less people to pay the more you can pay them.
2) Top players need to have natural talent, which is in short supply
If something is in short supply or rare, it tends to become more valuable. That is something I believe to be the natural talent of a footballer. However it is not just natural talent that is needed by a footballer; they need to have been practicing since they were very young to develop the skill needed to play at such a top level. This shows that it is not just a short-term course; it is years of training and dedication to make it in the premiership, which makes the market for new footballers, very small.
3) A good player can increase revenues for a club
A good player can increase the revenue of a club in more than one way. They can make the club merchandise sell well, they can get them through to higher places in competitions which bring in more profit and they can also bring in more publicity to a club. A club using the right marketing strategies can make a huge profit off of club’s merchandise. This means each member of a team can be valuable to team in more than just their football skills, known as derived demand. This shows the market for footballers is a very commercial and active market.
How does the labour market explain the differences in footballers and nurse pay?
Footballers
In a demand and supply graph for a footballer there is a high demand for a top premiership player, but there is also a low supply, which makes them very valuable and expensive in the labour market. Another reason top footballers are in low supply is because it takes years of hard work and dedication to become a top footballer.
Supply and demand graph of premiership footballers
As you can see on the graph the price of premiership footballers rise a lot when the quantity decreases a little bit.
Nurses
Nurses are in an even supply and demand, and if ever there is a sudden drop it will not take very long to get new nurses trained because it is only a three-year course.
The main reason that nurses don’t often get a pay rise is because their wages are paid though taxes and to give them a pay rise the government would have to raise taxes, which would make them a very unpopular. This poses the threat of getting voted out of power, which I think is a risk, whatever government is in power, would not be willing to take.
Supply and demand for nurse
The graph shows, the demand and supply of nurses is quite even.
Comparing the wage of footballers and nurses to those in similar professions
The average rugby player earns less than one-tenth of the average English Premiership football player (3). I think the main reasons for that is because football is a bigger commercial and sporting market. More people watch football, go to football, and buy football merchandise than any other sport in the United Kingdom.
Doctors can earn anything from £20,000 a year at the start of their career, but will earn much more as they become experienced and more qualified (i.e. specialised). Their earning will also increase if they work in a private hospital (4). Nurses on the other hand earn around £16,000, but can earn more if they train longer and if they work in the private sector. But, they will never earn as much as a doctor, due to the fact that doctors have to train much longer.
Conclusion
This investigation was to find the reasons why footballers earn more than nurses. In conclusion, the main reasons for the difference or inequality in wages are:
* The skill factors highlighted by the years of training necessary to become a top footballer versus the time taken to become a nurse.
* The demand for a scarce resource, that is, a top footballer will always obtain a high price.
* The derived demand for merchandise made possible by a footballer, and as such increase income and profit.
* The ability of the government to raise additional taxes to pay nurses.
The determination of the wage level of a footballer and the wage level of a nurse have been subject to the labour market and equilibrium points have been found that equates to the wage levels.