Five Factors That Affect Wages and Profits

Are you looking for a career that gives a high salary or deciding what kind of business to establish? Adam Smith enumerated five factors that affect wages and profits:

  1. The agreeableness or disagreeableness of the employments

    • A job’s difficulty, cleanliness, and/or honorableness can lead to different wage and profit levels

Defense contractors get paid a lot

  1. The difficulty and cost of learning them

    • A job that requires a high degree of techincal skill will lead to higher wages than one that is simple. This explains the high wages given to specialized IT professions, surgeons, and expert lawyers.

A solutions architect is a high paying job in IT

  1. The constancy or inconstancy of employment in them

    • Seasonal jobs get paid differently than non-seasonal ones
    • Here, Smith gives the general rule that “The lowest common earnings may always be considered as the earnings of the majority.”

Seasonal labor in farming


  1. The small or great trust which must be reposed in those who exercise them

    • Smith gives the example of doctors whom we should trust to cure us



  1. The probability or improbability of success in them.

    • Lotteries (chance of winning) and insurance (chance of loss) are examples. Venture capitalism and adventurous jobs are also given



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