[HN Gopher] Minimum wage would be $26 an hour if it had grown in...
___________________________________________________________________
Minimum wage would be $26 an hour if it had grown in line with
productivity
Author : apress
Score : 152 points
Date : 2021-09-14 19:33 UTC (3 hours ago)
(HTM) web link (www.cbsnews.com)
(TXT) w3m dump (www.cbsnews.com)
| Rebelgecko wrote:
| 1. I don't think there's a good argument for tying minimum wage
| to median productivity gains across the entire economy. Is an
| accountant today 5x more productive than an accountant in the
| 1960s? Perhaps. But is a dishwasher or a frycook 5x more
| productive? Probably not. I also think the biggest problem
| impacting lower income folks is housing costs and IMO minimum
| wage is not the best tool for fixing that issue.
|
| 2. 1968 as a start year is super mega cherrypicked. A lot of
| people say "if minimum wage had kept with with CPI inflation
| since 1968, it'd be $12/hour now!" They usually neglect to
| mention that if minimum wage had kept up with CPI inflation since
| 19 _4_ 8, it'd only be $4/hour. The only reason to use 1948 vs
| 1968 is to massage the data to match your preexisting hypothesis.
| commandlinefan wrote:
| Hm - that's about 3.5x what it is now. Does that mean everybody
| else should be making 3.5x what they're making now, or does this
| just apply to the lowest earners?
| R0b0t1 wrote:
| This $25/$26 figure was what was being quoted >5 years ago.
| It's more now.
|
| The comparison comes from (iirc) purchasing power parity based
| on the minimum wage when it was first established.
| unclebucknasty wrote:
| > _Does that mean everybody else should be making 3.5x_
|
| No, it doesn't necessarily mean that. Productivity gains have
| not been distributed proportionally; which is what this metric
| is underscoring for our lowest wage workers.
|
| EDIT: If I'm misreading this, I welcome the enlightenment.
| pessimizer wrote:
| It very obviously applies to the workers that saw the least
| share of productivity gains. What case would you make for
| raising the salaries of those paid _more_ than their equivalent
| jobs were paid (adjusted for productivity growth) when the
| minimum wage began?
| eloff wrote:
| The productivity of minimum wage labor did not increase by that
| amount. It's largely unchanged. Computers did not do much to
| revolutionize productivity on your average minimum wage job.
|
| This is a major reason why wage growth is unequal across job
| types.
| pessimizer wrote:
| > The productivity of minimum wage labor did not increase by
| that amount.
|
| Maybe include a link?
| eloff wrote:
| I don't have one. Google it if you care enough.
|
| It should be pretty intuitively true if you think about which
| jobs benefited the most from technology and which benefited
| the least.
| lmilcin wrote:
| I agree that minimum wages are too low but the argument that
| wages should track productivity is false from economical point of
| view, in my opinion.
|
| The argument would be true if how people contribute to economy
| did not change.
|
| But over time disparity in contribution to economy changed.
| Hundred years ago people had very similar jobs, mostly physical,
| manual, where each would contribute rather similarly.
|
| Nowadays companies can produce virtual goods, sell "IP", and many
| other mechanisms to produce a lot with relatively little that
| just are not possible with traditional production lines.
|
| Now, I think the correct reason to justify better minimum wage is
| basic human decency and also the role of the state as servants to
| _entire_ population.
|
| I think a person doing honest, important work for 8 hours a day 5
| days a week should enjoy a compensation that should be enough for
| a basic living plus some little extra. Basic living means a
| decent place to live, medical care, ability to buy healthy, non-
| extravagant food, etc.
|
| It doesn't matter if that job is cleaning streets or being
| cashier at Walmart. We need streets to be cleaned and we need to
| buy stuff.
|
| These people doing basic jobs are unable to defend themselves and
| that's where the state should come in and make sure that people
| who do basic jobs are able to afford basic living.
| mytailorisrich wrote:
| The level of a minimum wage should certainly take productivity
| into account.
|
| Economically, all jobs that have a productivity lower than the
| minimum wage's total cost to employers disappear.
|
| So there is a balance to achieve and that's why low
| productivity is always seen as problematic (and why food
| delivery guys are never going to be paid a lot).
| gruez wrote:
| > The level of a minimum wage should certainly take
| productivity into account.
|
| calculating the productivity of a job is non-trivial. A
| factory can't operate without assembly line. Does that mean
| the workers are responsible for all of the productivity? What
| about the engineers that designed the product? How much
| productivity goes to them?
| lmilcin wrote:
| So you say keeping streets clean is unimportant?
|
| I think you are blind to basic human values.
|
| If we left it to companies to determine who gets paid and who
| does not we would have half of population starve to death.
| drran wrote:
| What stopping you from paying much more to these poor workers?
| tyree731 wrote:
| There are people who do pay more to these sorts of workers,
| but that doesn't fix the broader, societal problem.
| lmilcin wrote:
| What is stopping companies is competition.
|
| If you own a supermarket and want to pay a decent wage, bad
| news for you. Over long time you are likely to loose against
| your competitor who doesn't share your sentiment.
|
| You may start with 100 companies of which 2 don't have any
| scruples and over time you will find out that these companies
| will take over the market along with other ones that will use
| this experience as learning on how to make successful
| business.
|
| In the end the companies that are more aggressive win because
| that is just the nature of competition.
|
| Governments are there exactly to protect individual people
| from aggressive predation.
| megaman821 wrote:
| Half the comments are suggesting that the investor class is
| just pocketing the extra wealth. How is that going to
| result in all their competitors going out of business? So I
| am guessing by no scruples you mean lowering the cost of
| goods to consumers. I am not sure how that qualifies as
| evil.
| orwin wrote:
| > Half the comments are suggesting that the investor
| class is just pocketing the extra wealth.
|
| That's were most economists, orthodox or heterodox (Neo-
| keynesian, MMT) agree, the capitalist class captured all
| productivity gains since the 70s. They disagree on the
| "how". And imho, you are right, they are not stealing
| wages, they are capturing wealth creation, it's not the
| same thing, and its pernicious because most of them don't
| understand how it works (and those who are able to try
| hard to not understand).
|
| I used to think people were idiot to go after the banks
| ten years ago, but in fact, they were intuitively way
| more intelligent than a "rational" me. I just did not
| understood "how money works".
| tbihl wrote:
| >If you own a supermarket and want to pay a decent wage,
| bad news for you. Over long time you are likely to loose
| against your competitor who doesn't share your sentiment.
|
| If you can market this "decent wage" to your customers
| successfully enough that they buy in, then you can continue
| along this trajectory. (As a side note, most people here
| probably wouldn't take you up on that "decent wage" retail
| job, in part because they don't consider the wages very
| impressive. On the other hand, people who work at the
| "unscrupulous" grocery stores have agreed to those wages.
| So "decent" might have a sliding scale.)
| [deleted]
| lmilcin wrote:
| That only works if your customers are willing to pay for
| employees to be paid better.
|
| As it is, it seems most people do not give a fuck about
| it and will still choose a store that is cheaper.
|
| Actually, everybody knows Walmart or Amazon employees are
| paid shit and they still choose cheap.
| midasuni wrote:
| From what I've seen in the U.K., Amazon shelf stackers
| get paid more than salaries at local inefficient
| independent shops
| q1w2 wrote:
| If a worker wants to partake in the profits of the company,
| they should work for a public company and buy shares, or be
| part of a company that offers profit sharing/private
| shares/options/bonus compensation.
|
| Their salary is a cost, like any other expense, and should be
| kept to a minimum, and only high enough to retain talented
| employees according to the market rates for those positions.
|
| That's a fundamental principle of corporate accounting.
| uoaei wrote:
| This is a stringently normative claim that perpetuates the
| is-ought fallacy.
| tick_tock_tick wrote:
| I honestly think a minimum wage is one of the worst way's to
| guarantee a minimum quality of life. It keeps all the downside
| of an employer focused system and keeps adding more and more of
| the governments job onto corporations. Huge parts of this mess
| are from government intervention in the employee/employer
| relationship (healthcare being taken care of by your employer
| was to circumvent wage freezes by Congress during WW2).
|
| We are already seeing good results from the expanded child tax
| credit distributed over time instead of lump summed. I'd like
| to see that expanded as a negative income tax credit over the
| full 12 months of the year. It doesn't have to be a ton of
| money either if the guaranteed floor is half of what's need to
| live it would force a lot of employers to clean up their act.
|
| One other idea I'd like to pitch is a say every 5 year moving
| tax credit. Something like if you move >100 miles you can claim
| a $5k tax credit. The main goal would be to get people out of
| the rut where they are too poor to move but the area they live
| in is too expensive to stay.
| jhoechtl wrote:
| Keeping that in line would mean to socialize wins - it wont
| happen and doesn't make sense either. Sorry.
| credit_guy wrote:
| No it would not. The average productivity of a US worker might
| have increased by a certain amount, but not the productivity of
| the minimum wage earners. If their productivity had gone up that
| much, there would be no need for a minimum wage law, the
| employers would simply be glad to pay them based on their
| productivity.
| JumpCrisscross wrote:
| > _If their productivity had gone up that much, there would be
| no need for a minimum wage law, the employers would simply be
| glad to pay them based on their productivity_
|
| Agree with your first objection. Believe this requires more
| data to be sustained. Minimum-wage workers have a poor
| bargaining position.
| all2well wrote:
| This is just begging the question. How do you know wage changes
| equal changes in productivity?
| standardUser wrote:
| "employers would simply be glad to pay them based on their
| productivity."
|
| I honestly mean no offense, but that sentiment indicates a
| spectacular misunderstanding of capitalism.
| vrotaru wrote:
| Why do you think the capitalist pay programmers so much?
| omgwtfbyobbq wrote:
| Because they don't have an alternative. If the supply of
| programmers was as large as the supply of minimum wage
| workers pay would drop significantly.
| credit_guy wrote:
| That is _exactly_ what capitalism is about. Prices being
| driven by supply and demand. Companies certainly try to
| pay the minimum they can get away with, just like workers
| look for jobs that pay them the maximum they can find.
| Companies are not generous (although some claim they
| are), and workers aren 't either. But the competition
| drives the prices and, in the case of jobs, the salaries.
| If you are productive, you'll be in demand, and you'll be
| paid handsomely. If you are productive but live in
| communist Soviet Union, you'll get very close to whatever
| else gets in a similar job.
| omgwtfbyobbq wrote:
| I think you're thinking of a Market Economy.
|
| https://en.wikipedia.org/wiki/Market_economy
|
| Capitalism is about the private ownership of the means of
| production and profits.
|
| But yeah, competition for labor (and other things) via
| differences in wages are attributes of a market economy.
|
| Capitalism can be a healthy part of this, but sometimes
| it isn't.
|
| Crony capitalism for instance can provide companies the
| opportunity to collude so they can artificially suppress
| wages, which distorts the market economy for labor.
|
| https://en.wikipedia.org/wiki/High-
| Tech_Employee_Antitrust_L...
| ido wrote:
| Nobody is "glad" to pay programmers that much - they pay as
| little as they can get away with, which for programmers
| happens to be a higher floor.
| decebalus1 wrote:
| Because they 'currently' have no choice. Give it a few more
| decades..
| credit_guy wrote:
| Not when we are talking about $15 vs $26 per hour. If you
| think there are workers out there whose productivity is
| $26/hour, but who can't find work at more than $15/hour, then
| you can truly disrupt the market and hire all these workers
| for $20/hour and become rich.
|
| PS: it looks like the federal minimum wage is still $7.25
| [1], not $15. You can become richer.
|
| [1] https://www.dol.gov/general/topic/wages/minimumwage
| pydry wrote:
| >If you think there are workers out there whose
| productivity is $26/hour, but who can't find work at more
| than $15/hour, then you can truly disrupt the market and
| hire all these workers for $20/hour and become rich.
|
| How? If their productivity is $26 / hour but their market
| rate is $15 / hour, by paying them $20 / hour you'll just
| post lower profits than companies that pay them market
| rate.
| VRay wrote:
| The workers will leave all the other companies and work
| for you, so those other companies will be dead in the
| water and/or stuck raising their own workers' pay to
| compete
|
| At least, that's how it was supposed to work in theory..
| Now that we see people out there going for improved
| wages/jobs in line with good capitalist doctrine, the
| business owners are all screaming in rage about a "labor
| shortage"
| bena wrote:
| Yeah, but there's a soft form of collusion going on. If
| we live on an inescapable island of 1000 people, and I
| have 200 jobs, and you have 200 jobs, and Bob has 200
| jobs, then the fact that you and Bob pay twice as much
| doesn't matter. You guys only need 400 workers, total.
| Those 600 other workers will be left to compete for the
| 200 jobs I have.
|
| I still get to name my price. And once you see that I can
| undercut labor costs due to this, it makes no sense for
| either you or Bob to continue paying twice as much as I
| do.
|
| And let's not pretend that if you don't have the very
| best workers, you can't compete. First of all, you can't
| identify the best. You hope to get lucky, but in reality,
| you're going to be paying not the best, but those
| adequate enough to perform the job reasonably well.
|
| COVID assistance has changed the game. Because before,
| the choice was to have a job or starve homeless. You'd
| take almost anything in desperation. Remove desperation
| and people stop acting desperate.
| VRay wrote:
| Yeah, I'm really optimistic about the labor market now
|
| This is the first time I've ever seen restaurant workers,
| delivery drivers, etc taking charge of their own careers
| the same way Silicon Valley tech workers do.
|
| All of our laws and safety nets are designed around the
| idea that people will act in their own rational self-
| interest and hop jobs when it suits them, but I never saw
| that actually happening until this last year.
| pydry wrote:
| I'm pretty sure Walmart would prefer to post higher
| profits than to drive the local hairdressers out of
| business and have more job applicants than they know what
| to do with.
| omgwtfbyobbq wrote:
| You could, if you also had access to the same assets that
| the employers paying $15/hour do.
|
| Practically speaking, it's relatively hard to enter into a
| market and outcompete existing firms for labor without a
| significant amount of capital to offset the existing assets
| of the employers you're competing with.
|
| The other downside is that it can initially leave a
| business more vulnerable to a bad economy in the same way
| corporations buying back shares can make them more
| vulnerable. With that said, the solution is to slowly
| increase wages while also building a sufficient amount of
| capital to weather an economic downturn.
|
| And at the end of the day, anything that went into business
| expansion and/or profits could have gone at least partially
| to higher wages instead.
| JoeAltmaier wrote:
| It indicates the major flaw of capitalism: It has no moral
| compass whatsoever. Its a vicious meat grinder. I think the
| comment is quite insightful, in the employers might think one
| thing while the realities of capitalism dictate another.
| dnautics wrote:
| s/capitalism/the universe/g
|
| Anyways, your statement is not true. Capitalism absolutely
| has a moral compass, it had the moral compass of the
| consumptive patterns of society; if that compass points the
| wrong way then either we must take a hard look at
| ourselves, or, think about what policies are twisting
| consumptive patterns to go the wrong way.... Probably a bit
| of both.
| BuckRogers wrote:
| The consumers don't drive much. They just exist in the
| environment they were born into. The idea we vote with
| our money doesn't hold much water when the system is
| rigged with regulations set by the largest corporations
| to their own benefit. Keeping out competition. And that's
| just never going to stop either, so the economic system
| needs examined, not hoping for some sort of libertarian
| awakening.
|
| To make this worthwhile to continue at all, this
| conversation first needs to clearly define capitalism.
| Capitalism is not the free market. Markets existed long
| before capitalism. Capitalism is exclusively paying
| people less than the value they produce, to create a
| profit for the employer.
|
| To rectify that economic system's moral compass, you
| create incentives to moving towards worker-owned
| enterprise. Instead of the employer/owner running your
| gas station, the employees that actually work it have 1
| share each. To own a share you have to actively work
| there. That model resolves most issues with capitalism.
| Worker's unions also resolve it, but in a less ideal way
| as the tension between employer-employee still exists.
| Which is just a slightly kinder model as master-slave, or
| lord-serf.
|
| Not sure about the universe comparison. The universe is
| chaotic entropy as far as we know, but assigning human
| misery- that we actively create, to the universe is a bit
| much.
| dnautics wrote:
| "Instead of the employer/owner running your gas station,
| the employees that actually work it have 1 share each."
|
| This is laughably naive. The power, then, devolves to
| whosoever authority gets to conjure the legal definition
| of "actual work". How can I be that person, and how can
| then use my power to enrich my friends and cronies and
| screw BuckRogers over? After all, all employees are
| equal, but some employees are equaller, and some are not
| even employees.
| BuckRogers wrote:
| Calling the idea "laughably naive" doesn't seem
| appropriate when many businesses today are ran this way,
| some of them producing billions of dollars a year. That
| makes me question your age, as anyone with some life
| experience knows about worker co-ops. They're all over
| the western world. GE and Microsoft are fully aware of
| them, they've researched this extensively, sending
| representatives around the globe to figure out why these
| businesses maintain such high quality. It's the removal
| of worker alienation.
|
| The authority to define what working there is decided
| upon by the shareholders, it's a democratic workplace. So
| you couldn't be that person on matter how hard you tried.
| That's kind of the point. To finally remove the master-
| slave class tension from the our places of work and
| replace it with democracy.
| yupper32 wrote:
| Capitalism is the only system that seems to work at all
| under the realization that society itself will never have a
| moral compass.
|
| Outside of small communes, any society that heavily relies
| on trust doesn't work.
|
| That's not to say that capitalism works _well_ , or that we
| can't reign in some stuff (public works, monopoly
| regulation, etc). But a capitalistic base is the only
| system we've figured out that works at all.
| tw04 wrote:
| >the employers would simply be glad to pay them based on their
| productivity
|
| Based on...? What employer do you know of that just willingly
| offers employees raises for no reason other than "you're
| producing more for the company so here's some free cash"? The
| only role I'm aware of at most companies that directly ties
| your output to your income is sales, and even that can be
| sketchy depending on where you work and how transparent they
| are with the financials.
|
| Most publicly traded company's goals are to pay you as little
| as possible to retain you.
| joshgrib wrote:
| Yeah this seems like a dream world, if you're a publicly
| traded company you have a legal obligation to pay people as
| little as you can, and with most companies in general the
| founder/owner feels like they're entitled to as much as they
| can take for "taking the risk"
| ranma4703 wrote:
| Do you think that companies pay based on productivity, or based
| on the minimum amount they need to pay in order to attract
| workers?
|
| If the former, do you believe that if a remote worker moves
| from NYC to Idaho, and their employer cuts their pay by 25%, it
| is because their productivity has dropped by 25%? Or because
| their employer knows they can get away with paying them less in
| an area with lower cost of living / less high paying jobs?
| BobbyJo wrote:
| > Do you think that companies pay based on productivity, or
| based on the minimum amount they need to pay in order to
| attract workers?
|
| It's both. Productivity has a very direct effect on the
| minimum amount they need to attract workers. If a low skilled
| worker can produce 100$ an hour of value, and you're paying
| them 10$ and hour, someone else will very quickly be willing
| to pay them 11$, or 12$, etc. Suddenly, you have to pay
| several times what you did before in order to keep your
| employees or attract new ones.
|
| > If the former, do you believe that if a remote worker moves
| from NYC to Idaho, and their employer cuts their pay by 25%,
| it is because their productivity has dropped by 25%? Or
| because their employer knows they can get away with paying
| them less in an area with lower cost of living / less high
| paying jobs?
|
| Same as the other answer. In NYC there are more companies
| competing for your employee, so you have to pay more to keep
| them. Competition in the middle of nowhere is restricted more
| so than in the middle of NYC.
| pydry wrote:
| >It's both. Productivity has a very direct effect on the
| minimum amount they need to attract workers.
|
| Productivity only puts a ceiling on the amount they'd be
| prepared to pay for a worker.
|
| It doesn't affect the minimum amount required to attract
| them. That's determined by competition (i.e. who else is
| out there) and leverage (how much they need the job).
|
| This is why business leaders lobby hard to reduce public
| sector wages/pensions (so private sector doesn't have to
| pay as much to compete for workers) and public benefits
| (like universal health care), which reduces worker leverage
| => reducing wages => increasing profits irrespective of
| worker productivity.
| BobbyJo wrote:
| Your second paragraph refutes your first. Productivity is
| an input to the supply of competition, so it does more
| than create a ceiling, it also serves as an upward force
| on the floor.
|
| Do business leaders lobby to reduce public sector wages
| and benefits? That's not something I've heard before. In
| any case, whether or not there is competition from the
| government, if there is a gap between productivity and
| wages, then there are profits to be had by private
| companies willing to do the arbitrage. In the case of
| such a gap, the government doesn't really matter unless
| they are paying above the productivity rate.
| drran wrote:
| Yep, their OVERALL productivity, as part of the system, has
| dropped by 25%. Isn't that obvious? They are not spherical
| workers in vacuum, they are part of economic system. If you
| open a store in the middle of a desert, your overall
| productivity will be zero, regardless of your productivity in
| the store, because no buyers, no roads, no police, no
| electricity, no water, etc.
| mytailorisrich wrote:
| The productivity of a remote worker does not depend on
| their location, obviously.
|
| If you WFH in NYC then move to Idaho while still working
| the same job then your productivity has not moved at all.
| If the employer tries to lower the salary it is simply
| because they think they can.
| drran wrote:
| Remote worker is part of remote economic system, so yes.
| mytailorisrich wrote:
| Companies do pay the minimum amount they can get away with.
|
| That said, lower paid jobs are also lower productivity jobs.
| There is obviously an upper limit to what a company is
| willing to pay that is based on productivity, and higher
| productivity also requires specialised skills.
|
| No-one is going to be paid $100k to flip burgers at
| McDonald's both because that job does not produce anywhere
| near that and because it's easy to find people. If it became
| too difficult to find people salaries would not go very high
| because of the productivity cap and they'd find a way to do
| without people or shut down (because no-one is going to pay
| $100 for a Big Mac, either).
|
| Now, they could pay a medical lawyer minimum wage if they
| could get away with. But the supply is quite small because it
| is highly skilled and productivity is very high, and so pay
| can be high and can remain high.
| ashtonkem wrote:
| This one stuck out to me, because I moved to Idaho.
|
| It's also not clear if a employer could cut such wages by
| 25%; that has less to do with CoL and more to do with the
| labor market. Or to use your formulation; do workers charge
| for their services according to the local cost of living, or
| do they charge for their labor what the market will bear?
| spywaregorilla wrote:
| I don't agree that companies even try to pay based on
| productivity, but the first point is correct. Minimum wage
| workers have generally not gotten anymore productive.
|
| The impact of, say, Microsoft Office has been enormous on the
| median white collar worker's productivity. Such gains have been
| much smaller on low skill manual labor tasks.
|
| Most minimum wage jobs in america are attendants, cooks, aides,
| etc.
|
| Not the classic factory worker failing to reap the profits of
| improved capital machinery.
| jokethrowaway wrote:
| That's one way of seeing it and it could definitely be a
| factor. An increase in the workforce numbers could be another
| factor
| BitwiseFool wrote:
| >"the employers would simply be glad to pay them based on their
| productivity."
|
| _Maybe_ for smaller companies, but any business with an HR
| department, investors, or board of directors is going to pocket
| the gains rather than distribute it out via raises. And, in my
| experience, they even resist raising COLA rates despite the
| company consistently growing year over year and inflation
| beginning to rise.
|
| I also assert that people wouldn't need to switch around jobs
| during their careers in order to get substantial pay raises if
| pay rose with productivity.
| runako wrote:
| This represents a fairly common misunderstanding of
| "productivity" as used by economists, as in this story. In
| economics, labor productivity is simply the output per unit of
| labor. A common metric is revenue per hour worked.
|
| How does this fit into the discussion here? If a company earns
| 10% more in inflation-adjusted currency this year than last
| year, but headcount has increased < 10%, by definition the
| staff was more productive this year than last.
|
| It's fairly easy for anyone to apply this calculation to the
| economy as a whole, or to a given subset. Find total revenue in
| period X and total revenue in a later period Y and the
| corresponding # of employees, and you can determine whether and
| how much productivity increased.
|
| Objection: "but the minimum wage earners are not more
| productive, everyone else is driving the productivity gains."
| You can run the calculation on any low-wage industry you want,
| you will likely see roughly similar results.
| acchow wrote:
| When your life (and health coverage!) depends on your job and
| you don't have the energy or time to shop around for
| alternative jobs, you have little negotiating power. Your
| employer will not simply raise your wages just because
| productivity has increased without you finding some negotiating
| power to _demand_ it.
|
| This is why labor unions are so helpful for the working class.
| NovemberWhiskey wrote:
| I think this is probably right?
|
| If you consider positions like janitors, bussers in
| restaurants, hotel housekeepers (etc) and ask the question
| "what has happened since 1968 which would've caused
| productivity for these jobs to increase by 150%?", what would
| the answer be?
| BurningFrog wrote:
| Whenever a minimum wage argument uses 1968, you know you don't
| need to take it too seriously.
|
| That was an outlier year with the highest historical value.
|
| First Google graph: https://www.today.com/money/good-graph-
| friday-minimum-wage-w...
| frankbreetz wrote:
| 1968 appears to be when the correlation between minimum wage
| growth and productivity growth stopped. You could use any year
| between the late 40s and early 70s (it's hard to be precise
| with the chart in the article) and you would get a similar
| result.
| xbpx wrote:
| Yes, weaken labour regulations, allow workarounds like the gig
| economy, break up unions, enforce no increase in minimum,
| tolerate regulatory capture, permit highly wealthy individuals
| and organizations to have substantial say over politics through
| lobbying, campaign donations and think-tank policy marketplaces
| and guess what? The elite will pocket basically all of the
| productivity gains, the more elite the more in your pocket. Those
| with no leverage are left with a dwindling share of the pie.
| Trickle up economics
| newfriend wrote:
| Wages are based on supply and demand. Minimum wage is an
| artificial propping up of wages. If there are too many workers,
| then employers don't need to compete to hire them, and wages are
| depressed.
|
| Meanwhile we import over a million new legal immigrants each year
| (along with unknown numbers of illegal aliens), the vast majority
| of whom are low-skilled workers. The people decrying low-skilled
| wages are the same ones supporting policies that actively reduce
| those wages through increased competition.
| karaterobot wrote:
| > Yet rising productivity is no guarantee of a healthy economy.
| Equally important is how the fruits of productivity are divided.
|
| It sure seems like you can. Isn't the article about how
| productivity has gone up without a commensurate increase in wages
| for the last 50 years? Where's the basis for a skeptical employer
| to buy this seeming counter-factual?
|
| I support a much higher minimum wage, but this article wouldn't
| have convinced me of anything I didn't believe already.
| jrsj wrote:
| This might be the case but many jobs I feel like would no longer
| be worth paying anyone to do at that rate. That would suggest to
| me that the productivity of minimum/low wage workers has not
| increased at the same rate as productivity generally. Which would
| make sense given most of that increase is attributable to
| technology which isn't distributed evenly through different
| sectors of the economy etc.
| ayngg wrote:
| The value of unskilled labor is probably much lower than
| everyone wants to think it is in a global economy. There is no
| incentive to pay workers in developed countries "fair" wages
| when that labor can be done at a fraction of the cost in the
| developing world. Service sector jobs are probably hit by this
| because while they cant be outsourced, all the other employment
| going elsewhere just means they have leverage. Some places like
| Canada even import developing world labor to work these jobs
| because they cant find local employers for the wages they
| offer.
|
| Most of the productivity gains have probably come from finance
| and technology, which would explain why those are some of the
| most lucrative career options now.
| EForEndeavour wrote:
| > Some places like Canada even import developing world labor
| to work these jobs because they cant find local employers for
| the wages they offer.
|
| This might be naive of me, but is it equally valid to say
| that these Canadian employers are only paying such low wages
| _because_ they have access to cheap migrant labor from poorer
| countries who are willing to work for less pay than local
| labor? Without access to their existing low-wage workforce,
| these employers would have to raise wages until they
| attracted enough local labor.
| black_13 wrote:
| I get tired of hearing the term "unskilled labor" all labor
| is labor.
| AuryGlenz wrote:
| "Unskilled labor" is labor that almost anyone can do,
| therefore it is worth less.
| jrsj wrote:
| And what can't be outsourced will be automated whenever it's
| cost effective, and our capacity both to outsource and to
| automate is far greater than it was even just a couple
| decades ago.
| tick_tock_tick wrote:
| The basic example is a janitor in the early 1900s is only
| marginally less productive then a current day one while an
| accountant from the same time is an order of magnitude more
| productive now (excel/etc).
| tuatoru wrote:
| This is the lump of labour fallacy. Edit: in the form, the set
| of jobs we have right now is fixed and will be the same for all
| time.
|
| The flow of money is circular.
|
| If lower-paid people had more disposable income, they would
| spend more on things that employ other people. Services like
| restaurants or haircuts or yoga classes or personal trainers or
| personal shoppers or life coaches, the last three of which are
| pretty niche right now.
|
| The people providing those services would, in turn, consume
| other services and products.
|
| I'm sure a lot of new services and products would appear too.
| jrsj wrote:
| It's absurd to assume that the opposite of this fallacy is
| true indefinitely though. There is a point where someone is
| simply not worth employing to do anything at all. There is a
| finite number of valuable things that can be done with little
| to no skill/education/training. It would take a much greater
| level of investment in our domestic workforce to get around
| this than we currently provide. And at the moment it's simply
| cheaper to effectively outsource this training to other
| countries and bring in skilled workers on visas instead of
| subsidizing training for our own citizens, so that's what
| we've been doing for decades.
|
| There's some truth to what you're saying but IMO it would
| take a lot more to get there than simply having a higher
| minimum wage.
| fred_is_fred wrote:
| If lower-paid people had more income they would be paying
| down debt, buying a better used car, paying for daycare, and
| maybe going on a trip or to.
|
| Personal shoppers and life coaches I think kick in a lot
| higher than you do.
| sophacles wrote:
| At first they would pay down debt, and buy a car that
| actually works, and other stuff that should have always
| just been available to them. Once that debt is paid off,
| and the car is not a constant source of worry - they have
| money to do those other things. For example going on a trip
| is the same type of "luxury" as shoppers, life coaches, etc
| - its spending money on something other survival.
| tuatoru wrote:
| Yeah, those were just random examples from my imagining an
| alternative universe in which minimum wage had kept pace
| with productivity.
|
| You are quite right. Another counterargument is that a lot
| of household income goes into zero-sum, unproductive status
| signaling, a.k.a. "buying a house in a better
| neighbourhood", and "sending the kids to a better school".
|
| Still, some of the extra income would be spent on things
| that employ other people.
| lostapathy wrote:
| Right, this is where this sort of blanket extrapolation breaks
| down.
|
| Has the average productivity grown that much? Sure, I can
| believe that. Has the productivity at the lower margin grown
| that much? I seriously doubt that. The value created by
| stocking shelves at wal-mart just doesn't really change over
| time. There's a lot of labor on the lower end that is a solved
| problem with all the productivity wrung out of it decades ago.
| onlyrealcuzzo wrote:
| It absolutely does! If Wal-Mart can pay more money for
| something, they would be /willing/ to pay it. The same
| stocking of shelves, they are able to capture more value
| from.
|
| Unskilled laborers are just not able to capture that value
| from Wal-Mart because there is an abundance of unskilled
| labor and the average person (the laborer) has to derive
| income from work. They can't just say, "Puh, this isn't worth
| it any more!"
|
| In addition, there's been a ton of improvements in
| productivity for warehouse workers. They are absolutely doing
| more work in the same amount of time.
|
| The same is true at most big businesses.
|
| That being said - at $26 an hour, there would be A LOT more
| pressure to eliminate more jobs.
| celtain wrote:
| >there is an abundance of unskilled labor and the average
| person (the laborer) has to derive income from work. They
| can't just say, "Puh, this isn't worth it any more!"
|
| This was true throughout the 2010s, but under full
| employment even a low-wage/"unskilled" worker can
| realistically go get a different job if they don't like the
| one they have. There's probably an Amazon warehouse nearby
| that would hire them at a higher wage, or a restaurant if
| they're willing to do a different kind of work.
| tshaddox wrote:
| Won't the productivity of stocking shelves go up if, for
| example, technology makes grocery stores more profitable?
| Perhaps technology helps stores order locally customized
| inventory that will sell better (and waste less), or perhaps
| delivery or curbside pickup systems help stores compete
| better against online stores. Even packaging improvements
| could increase productivity.
|
| The fact that the stores themselves are physically able in
| practice to enjoy this increase in productivity without
| increasing pay to the people stocking shelves says very
| little about how the productivity of stocking shelves has
| changed.
| jrsj wrote:
| Up to a point this would work but there is a point where
| stocking shelves at all is no longer worth it when the
| labor reaches a certain price, and they would probably just
| start tossing pallets of goods directly onto the sales
| floor and only support self checkout. And then probably
| invest in robotics to automate moving the pallets around.
| You could have an entire Walmart ran by fewer than 10
| employees
| tshaddox wrote:
| Sure, robots might be able to do it cheaper in the near
| future, but that's unrelated to the question of whether
| productivity has gone up.
| jrsj wrote:
| There are many things that may just not get done at all
| though if they can't be automated, or if automating them
| would be too costly. Stocking shelves in particular is
| probably one of those things. It's hard to argue the
| labor is worth $26 an hour based on the total
| productivity increase of the corporation if they would
| just stop having you do it at all if it cost that much.
|
| The idea that an individual workers productivity is
| derived from the total productivity of the business isn't
| entirely accurate. In the case of stocking shelves, the
| value is mostly aesthetics and executing a marketing
| strategy. The value of stocking shelves is based on the
| value that stocked shelves provide, which doesn't
| increase linearly with the productivity of a store.
| orangeoxidation wrote:
| > Has the productivity at the lower margin grown that much? I
| seriously doubt that.
|
| That's the problem. The minimum wage is a legal instrument,
| not just an economic process. It is designed for the lower
| margin to be "overpaid" over what they could get from the
| market otherwise.
|
| It basically says "everyone working should get at least this
| much of our collective production". This is what we have
| decided our society should work like.
|
| Our collective productivity increased much faster than
| minimal wage, making the minimal wage worker much poorer by
| comparison.
| jrsj wrote:
| We've also completely failed to provide adequate
| opportunities for these workers to gain the skills and
| education to be able to do something more valuable with
| their time. That's a problem the minimum wage can't solve.
| There's a threshold where people will just become
| unemployable under that model without more investment in
| them.
| lostapathy wrote:
| I completely agree. However, raising the minimum wage
| does nothing to address the skills gap at the bottom. If
| anything, one could argue raising the minimum wage would
| reduce incentive to acquire better skills and get a
| better job. Why put in the work to level up if those
| better jobs don't pay appreciably better anyway?
| theonlybutlet wrote:
| This does not consider that the job market is actually
| asymmetric. Unfortunately employers hold the cards when it
| comes to wages.
| frankbreetz wrote:
| By this same metric the median household wage would be 140k The
| chart says production per worker has doubled.
|
| Average household income 1970:10k[0] Inflation adjusted: 70k[1]
|
| [1]https://www.census.gov/library/publications/1971/demo/p60-78..
| .
|
| [0]https://www.usinflationcalculator.com/
| xupybd wrote:
| How much of this increase in productivity is the result of off
| shoring low wage jobs?
| dangus wrote:
| Why would overseas workers be counted in a measure of _US
| worker_ productivity?
| Rebelgecko wrote:
| If you're measuring average productivity per worker (I don't
| know if this is the case), removing the least productive
| workers would increase average productivity
| BuckRogers wrote:
| Going off of productivity has a lot of gotchas, I'd go for
| tracking purchasing power for non-imported goods like housing for
| the zip code that the job is located in. There might be some
| interesting side effects to that. Pushing businesses into poor
| areas, which should have a positive effect on society as a whole
| to get money coming into those areas without handouts or
| mandates. It'd be a fun experiment to run.
|
| I see zero arguments against pegging the minimum wage to $12 an
| hour in 2021, maybe a tad more to offset years of what amounts to
| theft from worker's pockets. People on one hand will badmouth
| those on welfare, and then turn around and not want to reward
| those that go to work either. Those two together never sat well
| with me. Seems like people are just envious, bitter creatures all
| around.
| agitator wrote:
| Yeah that's interesting. I think incentivizing distribution of
| jobs might solve a lot of issue... but who knows there are
| always side effects and loop holes.
|
| I agree, might be worth an experiment.
| agitator wrote:
| I'm struggling to understand how productivity has anything to do
| with salary.
|
| Productivity increases are inevitable for everything as
| automation keeps improving. Salaries go up with demand for
| skills. If its more difficult to hire for a critical role (a
| skilled job or competitive), or the role generates a lot of value
| for a company, salaries go up. Simple economics.
|
| Low skill jobs and physical labor jobs actually require less and
| less skills as automation improves. In this situation wages would
| go down. But I do think it's a good idea to have a wage floor to
| account for the inflation and increases in cost of living. A
| social limit to what we all collectively feel is a minimum amount
| of money one of us should make to survive in the society we are
| building. I think universal healthcare and a UBI would solve a
| lot of this. Especially as its only going to get worse for people
| at the bottom.
| Supermancho wrote:
| > productivity has anything to do with salary.
|
| It's not complicated and it's clearly a weak strawman.
| Productivity (almost universally) is tied to profit via
| efficiency. This is known to be astronomical at scale, which is
| what drives automation.
|
| > Low skill jobs and physical labor jobs actually require less
| and less skills as automation improves.
|
| I'm not sure there's anything to suggest this. Regulations
| (primarily about safety, information containment, etc) continue
| to be additive. There's a certain amount of sophistication
| necessary just to survive in most urban areas.
| pessimizer wrote:
| > Salaries go up with demand for skills.
|
| Said while business owners are screaming about a labor
| shortage.
| AuryGlenz wrote:
| I've seen plenty of places suddenly offering $15 an hour or
| more, so clearly the market is responding somewhat. I'm sure
| most businesses were waiting to see the unemployment benefits
| end first though.
| MisterBastahrd wrote:
| In the 1930s, a store clerk in a large city could afford to
| support a family in a home they would eventually own on their
| single income.
|
| Today, a couple with that same job would likely be in public
| housing and would be scraping by.
| maerF0x0 wrote:
| In the 1930s many homes only had icebox "refrigerators" that
| worked by putting Ice in the top to cool whatever was below.
|
| IMO productivity has been absorbed by getting more for your
| money in hidden inflation . Eg: today when you buy a phone
| (and internet access) you get a free encyclopedia
| (wikipedia), movie theater (youtube), camera, Video recorder,
| note pad and pen (app), alarm clock, calendar, ... get my
| drift?
|
| Same with a "home" which is now far more advanced and sq ft
| per person.
|
| That's where all the productivity gains have gone, the basics
| of today are more complex than the "complex" things of the
| past
| thatcat wrote:
| Those aren't economically relevant productivity gains.
| You're basically required to have a phone to participate in
| society, that's more of a monthly tax unless you use it to
| generate income. Same with housing, it costs much more than
| the minor changes that have been made in design saves per
| month.
| maxlybbert wrote:
| Both my parents were raised in houses that were largely
| built by their parents. They both have memories of using
| oil lamps and outhouses for a while due to no electricity
| and no indoor plumbing while that building was taking
| place. And the final homes were tiny by modern standards.
|
| That was 1940s and 1950s. I'm often amused by the "manual
| labor used to pay well enough to buy a house" argument
| since the houses available at the time were much different
| than those available now.
| WarChortle wrote:
| Quarter after quarter companies are posting record profits.
| You aren't getting anything for free. You paid for all of
| that in one way or another. Wikipedia you might not have,
| its kept alive by donations. The others are paid for by
| either sitting through ads or having your data harvested
| and sold. Just because you aren't handing over money
| doesn't mean there is no cost associated with it.
|
| This is a terrible argument that try's to gloss over the
| actual problem. Wages have been stagnant for decades while
| inflation is still a thing. The middle class is dying and
| its not because they have bigger homes and better tech.
| Corporate America is strangling the middle class then cries
| for bailouts when they hit even the tiniest speed bump(and
| gets it without much issue). While helping the average
| American becomes a massive issue.
| Dylan16807 wrote:
| The fridge of today is cheaper than ice deliveries.
|
| A phone is amazing for what it is, but you can't just pile
| on more features and use that as an excuse for lower pay.
| Phones don't _cost_ a budget-breaking amount.
|
| Home size makes sense as an increased cost, but most of the
| reasons that make it hard to afford living space are really
| bad reasons.
| matz1 wrote:
| The world always evolve, so does the person, they too have to
| adapt and evolve to the environment.
|
| you wouldn't pay for a computer today that has the same
| technology as 1930 computer, would you ?
| anchpop wrote:
| To the extent that that's true, it's in large part because
| their income is now absorbed by land rents, which were much
| lower in the 30s. There's an obvious contradiction in the
| american dream: home ownership is the goal, so homes should
| be a good investment. If homes are a good investment, that
| means the price of homes goes up. If the price of homes goes
| up, they get less affordable for everyone who doesn't already
| have one. Look at what happens when you don't institute
| regulation designed to guarantee that homes continue to be a
| depreciating asset: https://pbs.twimg.com/media/E9V_0VBWEAE1i
| xe?format=jpg&name=...
| jkhdigital wrote:
| A person who services horse-drawn buggies would probably have
| made a nice living in 1880, not so much in 1980. There is no
| reason to believe that "the same job" should yield the same
| standard of living across time.
| zsmi wrote:
| The 30s was the great depression. And 1933 was pretty bad.
| $0.5/hr is a typical wage. [1]
|
| In Chicago in 1933 a 4 bdrm apartment was listed for
| $35/month. [2]
|
| So basically, rent was eating half your salary even then. But
| then again, you had a 4 bdrm apartment and not a closet.
|
| Probably would've been tough to buy a house on that though.
|
| And of course, there is this:
|
| https://www.sfchronicle.com/bayarea/place/article/Problems-H.
| ..
|
| "the two great problems it ignored before -- housing and
| traffic.", Herb Caen, 1948
|
| Some things never change.
|
| [1] https://www.jstor.org/stable/41815102 [2]
| https://blog.rentconfident.com/2635/classified-history-
| housi...
| bitexploder wrote:
| What is the comparative quality of life like or those two
| examples?
| bobsmooth wrote:
| Tvs and ipads don't replace owning your ownw home.
| danans wrote:
| The answer to that question seems obvious: it depends.
|
| First, the 1930s aren't a great point of comparison (with
| Great Depression occurring then). The 1950s are a better
| comparison.
|
| Second, yes the broader advance of science and technology
| has lifted many boats simultaneously - we've all benefited
| from the advance of communications, medications, travel
| opportunities, etc (with some notable setbacks for those
| forced to pay the environmental costs of some of those
| advances).
|
| It's unquestionably better to be a non-white person in the
| US today than it was in the 1950s, even with all the
| systemic issues that still disproprortionately hinder them
| today.
|
| But by many other criteria, quality of life is worse:
|
| - Affordability of educational opportunities (i.e. the
| housing/school/childcare cost inflationary nexus,
| university fees)
|
| - Housing insecurity (many families pushed dislocated by
| rapidly rising rents).
|
| - Level of education/qualification required to achieve
| middle class comforts like housing security and good
| education for your kids (it'smuch higher). As others have
| noted, IPads and PlaysStations are not indicators of middle
| class comfort - paid vacation is.
|
| - Increasing despair/hopelessness/alienation/failure due to
| winner-take-all dynamics, with effects like the drug/opioid
| epidemics, mental illnesses, homelessness, high
| concentrations of violent crime in disadvantaged
| populations (despite overall lower crime than in the
| 1970s-1990s).
|
| - The spillover effects of all the above on those who are
| generally better off.
| code_duck wrote:
| Owning any single family home (presumably with a yard)
| seems clearly more attractive than living in a public
| housing apartment complex.
| cperciva wrote:
| I'd rather have an apartment with Internet access than a
| house without.
| InvertedRhodium wrote:
| Not me. Internet can be installed quickly and cheaply,
| but we're yet to discover a way to do the same for land.
| syshum wrote:
| That was not the question. One of the things people never
| factor in is all the government regulations around
| housing.
|
| A single family home from the 1930's would be illegal to
| build today because building codes have been expanded
| some for good reason, others less so.
|
| As such it make is hard to do a apples to apple
| comparison
|
| This is a good video where an economic professor explains
| some of that
|
| https://www.youtube.com/watch?v=4J5s6aZCPSg
| varnaud wrote:
| From the wikipedia article:
|
| >The Foundation for Economic Education (FEE) is an
| American conservative libertarian economic think tank.
|
| >FEE, founded in 1946, is considered the oldest free-
| market think tank in the United States. An early aim was
| to roll back policies of the New Deal. FEE opposed the
| Marshall Plan, Social Security and minimum wages, among
| other American social and economic policies.
|
| Points of the video:
|
| - Mainstream media sells entertaining truth that are
| mostly negative
|
| - People think gun violence is getting worse every single
| year over a span of 25 years, but it only got worse for 8
| of those years! There is a 50% decrease from the 90s.
|
| - Conveniently remove suicide from the gun violence data
| and ignore the current up trend in homicide
|
| - We shouldn't look at wages, but look at total
| compensation and it's up by 45% for the median worker
| since 1979!
|
| - We have more household that are rich according to this
| data despite what the media says
|
| - You don't need a cellphone, just cancel it if you're
| poor, also don't get medical treatment that didn't exist
| in the 70s if you want to have the same cost of living
| than your grand parents
|
| - Let's compare the average middle class American 100
| years ago to one today and you'll see how much better you
| have it now! Especially if you are a racial minority (he
| don't mention this last part)
|
| - omg, look at how much hours of work was required 100
| years ago to purchase these products (stamp, bread, movie
| ticket, gas, coffee, eggs, butter, milk)
|
| - only movie ticket are more expensive today, but we get
| much nicer movie like the Marvel movies! (But remember to
| cancel your 10$ Netflix subscription if you can't afford
| it) (a previous point he made)
|
| - back in the days, it took 4 years to raise money to buy
| a car, but only 2.5 years now!
|
| - He mention that the minimum wage worker has to pay more
| for housing today, but it's because they are much more
| technologically advanced!
|
| - house 100 years ago: no electricity, no running water,
| no indoor toilet, no AC
|
| - Houses like that are now illegal to buy!
|
| - Thus, the minimum wage worker can't buy house like that
| anymore! (he also can't buy a modern house, but nevermind
| that)
|
| - So poor people today have a better living standard than
| the middle class had 100 years ago and in a 100 years the
| next generation will be even better off with private jets
| and yachts to travel around!
|
| - There is less child labor in the world, less wars and
| stuff!
|
| - So in summary, be humble! Appreciate, be thankful for
| the fact that the world has become a better place. (i.e.
| stop complaining about society because the iphone exists
| type of arguments)
|
| Yikes.
| Hermitian909 wrote:
| Adjusting the time frame a bit:
|
| Many people I know from my parent's generations bought
| their home in the 70s while working low-skill jobs like
| retail. They describe that period of life as fun and
| generally enjoyable. Many started families during that
| time.
|
| Conversely everyone I grew up with who slotted into low
| skilled labor living in those small apartments self-
| describes as miserable. They describe the long hours
| necessary to to maintain what they consider a basic
| existence as soul-crushing.
| jkhdigital wrote:
| This is a normal, expected phenomenon in an economy
| characterized by continuous technological advancement.
| Low-value jobs eventually disappear as technology makes
| them obsolete, and as this process unfolds the people who
| are employed in those jobs will experience a declining
| standard of living.
| exabrial wrote:
| Minimum wages were designed to protect workers live's from being
| wholesale sacrificed in factories. The theory of a government
| mandated "livable wage" is a concept from 3rd wave Socialism.
|
| It is truly the worst possible way to guarantee quality of life
| as it gives employers an excuse to be "legal" while being
| horribly out of line ethically.
| Factorium wrote:
| Wages started to diverge from productivity at about the same time
| as the USA opened up to non-Western immigrants in 1965:
|
| https://en.wikipedia.org/wiki/Immigration_and_Nationality_Ac...
|
| "The act greatly increased the total number of immigrants as well
| as the share of immigrants from Asia and Africa."
|
| Immigrants from poor countries are easier to exploit, and will
| accept lower wages/standard of living, because their 'new life in
| the new world' is still superior to their homeland.
| stickfigure wrote:
| Why should the _minimum_ wage track _average_ productivity?
| HandstandMick wrote:
| Minimum wages and tax reductions should all be indexed. Plenty of
| things are indexed to go up annually based, so why not the few
| things that really matter be it indexed down for taxes and up for
| minimum wages.
| frockington1 wrote:
| The interesting part of the equation is how allocation shifts
| with political parties. In the last few cycles its been best to
| load up on assets when Republicans have more control and then
| switch to more debt when Democrats get in power. Net effect is
| the same but the flipping makes it seem like change is
| happening
| randyrand wrote:
| When productivity increases, you have 2 choices:
|
| 1. increase your wages. pay your suppliers more.
|
| 2. decrease your prices.
|
| It doesn't really matter which you do. Do we want higher wages or
| lower prices? You can't do both. Does it even matter? The net
| effect is the same. Who cares that we've universally chosen #2?
|
| Note: I'm assuming there's modest competition. Monopolies have a
| 3rd option: more profit.
| miduil wrote:
| > [...] their pay has flatlined, or even declined when
| factoring in inflation [...]
|
| Neither #1 NOR #2 are happening, what is instead happening is
| #3
|
| > [...] increased inequality with most gains going to people at
| the top [...]
| randyrand wrote:
| Even if that is true, productivity is not the cause there.
|
| Productivity increases our wages because it naturally
| decreases prices. It's already account for.
|
| Edit: to those that don't believe it, what do you think would
| happen if suddenly 3x more of every product popped into
| existence?
| alice-i-cecile wrote:
| The critique is that much of the investor class has chosen:
|
| 3. Pay yourself more.
| pydry wrote:
| Profits are also a thing.
|
| Business generally prefers to do neither 1 nor 2.
| ashtonkem wrote:
| You forgot one option.
|
| 3. Take less profit.
| peer2pay wrote:
| Or you could do either of:
|
| 3. massive bonuses for execs and wage increases for white-
| collar workers
|
| 4. stock buybacks and dividends to directly distribute profits
| to shareholders
|
| Let's not pretend that both of these don't happen at the cost
| of regular employees.
| megaman821 wrote:
| Even if this were true, it provides little in the way of an
| explanation. Why do 10s of thousands of companies across
| hundreds of industries pay their regular employees a small
| fraction of their worth? What is stopping someone else from
| coming along and paying them a larger fraction of their
| worth?
| chewzerita wrote:
| > Why do companies pay their regular employees a small
| fraction of their worth?
|
| A dead German economist might have an answer for you ;)
| megaman821 wrote:
| I am not sure Marx has much to say on why a person
| earning $100/hr for a company and being paid $10/hr
| wouldn't have his earnings potential stolen by another
| company willing to pay him $20/hr. $90/hr of profit is
| great but $80/hr in my pocket is better.
| eugeniub wrote:
| Yes, indeed we have seen decreased prices in housing,
| healthcare, education, etc in the last 40 years.
| randyrand wrote:
| You bring up a good point, but the reasons for that are not
| directly related to productivity. 2 big ones:
|
| 1. money supply. Average wage and population have both
| increased. How can that be possible if the total amount of
| money in the economy is fixed? Well it's not. Increases in
| money supply are slightly more than productivity growth rate
| in order to prevent deflation, and they err on the side
| inflation. There's literally more money in the economy than
| ever before.
|
| 2. monopolies. Healthcare & education & housing are not
| competitive markets. You can't invent more land. Healthcare
| is a basketcase. And schools are in effect a luxury good
| where exclusivity is the main product.
|
| You combine #1 and #2 and you get what you expect.
|
| The solution to this is not to increase minimum wage with
| productivity. That doesn't make sense.
|
| IMO minimum wage should be pegged at some standard of living
| in a 50th percentile cost of living suburb.
| dangus wrote:
| The reason why #2 doesn't have the same effect as #1 is
| _scale_.
|
| Wealthy people are not affected by prices in the same way as
| average people.
|
| I hypothesize that being able to buy more with the same income
| rather than being given a higher income helps the wealthy more.
| Let's take a practical example:
|
| A banana now costs 50 cents. It would have to cost $2 if we
| paid for higher labor costs, for that $20+ minimum wage.
|
| But if you're upper-middle class or above, or _way_ above, it
| doesn 't really matter if that banana costs 50 cents or $2.
| Heck, for some people, it wouldn't really matter if it cost $50
| or $100 or even $1,000 if you're Jeff Bezos.
|
| There are only so many bananas you could possibly want.
|
| In this way, I think that option 1 would be more beneficial for
| the common person. Sure, they'd have to pay for a $2 banana,
| but they'd be making a more comfortable salary and they still
| only want one banana. Meanwhile, Moneybags Factory Owner would
| have to dispense their wealth to labor instead of hoarding it
| in capital.
|
| I'd also argue that we don't do #2 "because of competition,"
| instead that it was an intentional choice not to tie minimum
| wage to inflation and to keep it at rock-bottom levels. That is
| corporations-write-the-laws policy. If the minimum wage were
| raised there would absolutely still be competition and
| companies would still be trying to make productivity gains from
| option #1.
| ajsnigrutin wrote:
| ...or they'd just raise the price of a banana to $4, to keep
| relative profits the same, people would earn more than
| previously, but everything would be more expensive. Say what
| you want, we do buy and own a lot more stuff than we did in
| history.
|
| The only unfair thing here is, why does amazon pay
| (relatively, percentually) less tax than local banana stand.
| dangus wrote:
| > ...or they'd just raise the price of a banana to $4, to
| keep relative profits the same
|
| I'd say for many products they can't actually do that
| because there's only so much demand. Also, because middle
| and higher earners wouldn't be getting the same kind of
| raises that the minimum wage folks would get if the minimum
| wage were raised.
|
| If you're above minimum wage, you're essentially being paid
| at a market equilibrium rate: an intersection of supply and
| demand. But if you're at minimum wage, you're at "the
| company would pay you less if they were legally allowed to"
| territory.
|
| My point is that "everything would be more expensive" would
| actually be a net benefit to the lowest earners.
|
| Labor is very nearly never 100% of the purchase price of a
| product or service.
|
| So, if you increase your labor cost by 100%, that doesn't
| mean the product's price increased by 100%, because labor
| is only one component of a product's price.
|
| It's the same math that makes living in HCOL areas worth
| the expense (e.g.: increase your expenses by 50% and your
| wage by 50%. As long as you are paying less than 100% of
| your wage into your expenses that's a net gain).
|
| McDonald's in Denmark is a great example. Their employees
| make well over $20 an hour and have 6 weeks vacation. Big
| Macs in Denmark don't cost double the price, but the
| workers are paid just about double depending on which
| region in the US you compare to.
| handrous wrote:
| > You can't do both.
|
| I'm being entirely serious: I don't see why not.
|
| > It doesn't really matter which you do.
|
| It really, _really_ matters if productivity increases are
| uneven.
| agitator wrote:
| 3. Collect more profit
| teawrecks wrote:
| > You can't do both.
|
| You can definitely do a bit of both. The sum just can't net you
| less than if you had done neither. Which is why many
| corporations just opt for neither.
| matz1 wrote:
| Because for minimum wage job its the technology that increased
| the productivity, not the worker itself.
| oh_sigh wrote:
| If minimum wage workers aren't responsible for the growth in
| productivity, why should they be paid as if they were? Would
| productivity actually be increased, if business owners not only
| had to invest in, say, machinery to improve productivity, but
| also needed to pay employees more now that they were using
| machines that improved their productivity?
|
| For example, I build fences for a living. Usually I pay a guy
| $100/day to dig post holes, and he can dig 20 post holes in a 6
| hour day.
|
| I decide to scale up, so I buy a post hole digging machine for
| $20,000. This machine is pretty much point and shoot, and now
| lets the same guy dig 200 post holes in 6 hours. Not only has he
| dug 10x more post holes, but he also feels better at the end of
| the day because he was using a machine and not his own muscles to
| do the job.
|
| How much should that guy get paid now? Is it $1000, since he is
| 10x as productive? Is it $100, because he is working the same
| amount of hours as before? Is it $80, because his job is actually
| easier now because I put in $20k of my own money to make it so?
| ihumanable wrote:
| This is the heart of capitalism right, you bought the capital,
| the post hole digging machine, and so you get to (this next
| word is being used with its technical definition, make full use
| of and derive benefit from (a resource), not the emotionally
| charged one) exploit the value generated by labor using the
| capital.
|
| In your scenario you didn't say how much you charge the
| customer, but I'll assume that it's more than you pay the
| laborer so that you can turn a profit. You are paying the
| laborer $5 per post hole. Let's say you have a healthy profit
| margin so you charge the customer $10 per post hole. The
| laborer makes you $200 each day of which you pay the laborer
| $100 and pocket the other $100 as profit.
|
| Now you have a post hole digging machine, they guy can dig 200
| post holes and that generates $2000 dollars in value for you of
| which you pay out $100 to the laborer and pocket the other
| $1900. Now you used to make $100 profits, so let's subtract
| that out and say you make an additional $1800 per day from that
| laborer. If the capital costs $20,000 you will pay for the
| capital in $20,000 / $1800 = 11.11 days, we can round up and
| say 2 weeks.
|
| So in 2 weeks you will have paid for the capital expenditure
| with the increase in productivity, and then there will be
| upkeep and maintenance on the post hole machine, but every day
| after the first 12 days you go from labor making 50% of the
| value they generated digging holes to labor making 5% of the
| value they generate digging holes.
|
| Now we tell ourselves, this is the system working, you took the
| risk in buying the post hole digging machine. The laborer could
| save up his earnings for 200 days (assuming he had no other
| expenses, which is not realistic) and also have $20k to buy a
| post hole digging machine and then could just go capture the
| full value of his labor himself, or could pay someone $100 to
| operate it and make $1900 a day.
|
| If you are the guy digging the holes though, 6 months after the
| machine is paid off you are still only capturing 5% of the
| value you generate, does that seem like a good deal anymore. At
| what point does your taking 95% of the value someone else
| generate become predatory. We make ourselves feel better by
| saying, it's a free market, if he doesn't like it he can go get
| a different job. But at the end of the day, someone making
| $1900 has a lot more economic power and the options that come
| with it than someone making $100. After a year of hard work
| that laborer has $36,500 and the capitalist has $693,500.
|
| It's not surprising that as the economy has done this day after
| day, year after year, we are faced with massive income
| inequality, and it was really only a matter of time before the
| guy actually digging all the post holes your selling might ask
| how this arrangement is fair.
| newfriend wrote:
| The laborer isn't having 95% of the value they're creating
| taken though. As you said, the labor went from 50% of the
| value created to 5%. The machine is producing most of the
| value.
|
| Now factor in the laborer being easily replaced by any other
| unskilled laborer.
|
| > it was really only a matter of time before the guy actually
| digging all the post holes your selling might ask how this
| arrangement is fair.
|
| No one said it's "fair" as in all outcomes being equal. But
| it is "fair" in the sense that the laborer is being paid in
| proportion to the value they are creating vs the cost to find
| a replacement. If the laborer wants to improve their
| situation, they need to figure something out besides
| mindlessly digging holes someone else tells them to.
| oh_sigh wrote:
| Do any of the results change if instead of picking a quite
| high margin in postholes, you pick something more reasonable?
| What if it takes 15 years to pay off the hole digging
| machine, not 6 months?
| ihumanable wrote:
| 15 years worth of postholes is 200 * 365 * 20 = 1,460,000
| postholes, that would mean a profit of $0.0136 per
| posthole.
|
| 6 months worth of postholes is 200 * 30 * 6 = 36,000
| postholes and a profit of $0.55 per posthole to pay down
| the capital investment.
|
| In my original post I claim $5 per posthole profit can pay
| this off in 11 days.
| megaman821 wrote:
| And if the fencing business dried up the next day, how much
| of that $20k debt should the laborer be responsible for? If
| you take the risks you end up taking the lion's share of the
| rewards. If you want improve the outcomes for the laborer,
| make it easier and less punishing for them to take risks.
| silisili wrote:
| It's getting there. The biggest employer in my hometown, a huge
| shipping conglomerate, was paying $8.50 until a few years back.
| Today, they're starting at $21. That's a huge jump.
| worker767424 wrote:
| Productivity is a price ceiling for labor. It only raises wages
| by allowing marginal producers come online and compete in the
| labor market. It could also reduce the total demand for labor, so
| there's no reason to assume wages and productivity would stay
| linked. The correlation only makes sense in a first-order way: I
| produces twice as many widgets; "you should pay me twice as
| much." But that widget machine wasn't free, and it doesn't mean
| you'll sell twice as many.
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