Baseball’s Biggest Problem

The biggest problem facing Major League Baseball, bar none, is its regressive, exploitative wage structure.

For the first six full years of a player’s major league service time, he makes below market value for his services. For three or four years, depending on when he’s called up, a player makes the league minimum. It goes without saying that this is detrimental to labor, as regardless of a man’s output, he’s paid less than a tenth of what a win above replacement is worth on the open market. This creates obscene excess value, even outside of extremes like Mike Trout, Bryce Harper, and Clayton Kershaw.

In the 2017 season, the Boston Red Sox got 2.6 wins above replacement out of outfielder Andrew Benintendi. With a conservative estimate of a win above replacement being worth about $6.5 million, his 2017 season was worth $16.9 million dollars on the open market, and he only earned the league minimum, which was $535,000.

The arbitration system, which kicks in after the years at league minimum, is not much better for labor. Again, the system of players and teams bargaining over salary to an arbitrator suppresses wages and breeds resentment between teams and labor. It’s in the team’s best interest to downplay the abilities of their players, and the outdated nature of the data that is allowed to be used in arbitration creates a gulf between value and earnings, on top of the depression that arbitration intends to create.

This offseason, with the luxury tax’s harsh penalties making it into something of a hard salary cap, many of the league’s best free agents are still without teams because teams are unwilling to meet their demand in years and/or salary. In the past, players have been able to make up for lost earnings in their min/arbitration years with big paydays in free agency. But if at no point a player can earn true market value for his abilities, the system must be changed.

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