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Supply and Demand Does a Poor Job of Explaining Depressed Wages

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Re: Supply and Demand Does a Poor Job of Explaining Depressed Wages

#111

Post by vkou »

andy_ppp wrote: post #8
readams wrote: post #5

It should be pointed out that studies of small increases of minimum wage that show modest harm do not immediately tell us that huge increases of minimum wage will not cause greater harm. Remember that $15/hour is more than the median wage in much of the country.

These jobs that are worth less than $15 per hour are going to be the first to be replaced by machines so whatever happens we need a solution to give people at the bottom high(er) quality lives.

Why? It makes more sense to automate a $40/hour worker, then a $8/hour one. It's why law offices still have janitors, but have largely replaced junior lawyers combing through the legal library with computers.

Re: Supply and Demand Does a Poor Job of Explaining Depressed Wages

#112

Post by lazerpants »

pedro_hab wrote: post #106
lazerpants wrote: post #83

Earlier quoted context omitted.

I'm don't think most of these conversations are really about material comfort, it's a proxy. I believe most of this deep well of negativity is a reaction to the limited choices individuals perceive themselves to have due to market forces. When wages were a little higher, jobs were easier to find, and housing costs were far lower, people could choose their work, leave jobs, take pay-cuts, and reorient their lives in a…

Yeah, but this kinda proves the point, these luxuries are not luxuries anymore, they became standard. The way the world is portrait by many would make me think the rich are keeping the AC for themselves, and actually they only keep cutting edge technologies, which will be in mass market if proven necessary, as cellphones. Can you believe a "poor" person can have the same cellphone as Bill Gates, there isn't a ultra e…

I think many poorer Americans would gladly trade some of those luxuries for freedoms. The market has made some luxury a commodity (which is good) but it has regressed in terms of security and individual freedom of employment (at least for the poor), making free time and choice of lifestyle a luxury.

As a hyperbolic example to prove the point, would you rather work 40 hours a week at a job you hate, and have a cell phone, or work 20 hours a week at a job you like, and not have one? Neither answer is wrong and some people would choose each, but I think current employment conditions largely cater to the former.

Re: Supply and Demand Does a Poor Job of Explaining Depressed Wages

#113

Post by cortesoft »

js8 wrote: post #47
cortesoft wrote: post #13

Earlier quoted context omitted.

Except it isn’t, it because of the way labor and employers have different costs when an employee leaves, meaning each side has a different equation for how important it is to not sever the employment arrangement. If an employee loses their job, they lose 100% of their income, and for many they are unable to survive this. If an employer loses an employee, they only lose 1/n of their production, where n is the number o…

> That is what prevents the market from being efficient The problem is, nobody really wants labor markets to be efficient. Efficient labor markets mean that we would pay workers the subsistence wages, because, why they should be paid more? That's the thing, labor is not like other commodities, say apples or computers. You want to make the price of other commodities to be as low as possible, and everybody (all humans…

That isn’t true; an efficient market doesn’t imply that we will pay workers subsistence wages. Market rate has nothing to do with what a person needs to survive.

The rate would be set based on competition with other employers for employees; you pay enough to keep a worker from getting a job at another employer.

So the answer to the question, “why would you pay more?” is, “so they don’t start working for someone else instead”

Now, the market system doesn’t work for employment because of the reason I stated in my original comment, but it isn’t related to the ‘minimum wages needed to survive’

Re: Supply and Demand Does a Poor Job of Explaining Depressed Wages

#114

Post by EliRivers »

randomdata wrote: post #96
Frondo wrote: post #67

Earlier quoted context omitted.

You blame women and immigrants, but a much more likely explanation is the decline of union participation in the private American workforce. They've been on the decline since the 1970s, and the more they've declined, the more that productivity has been captured by upper management and shareholders.

That is still explained by supply and demand though. A union works by artificially constraining the labor pool, reducing the employer to buying from (typically) one seller (the union) instead of many (each employee individually). Unionized workers are usually able to make more money than they would in a non-unionized market because of that smaller supply of sellers relative to the demand. However, as a Canadian who s…

A union works by artificially constraining the labor pool, reducing the employer to buying from (typically) one seller (the union) instead of many (each employee individually).

Closed-shop unions, you say? Do they still exist? I work in the UK, and I've worked in many workplaces where there were active unions, and the very idea that you'd have to be a member of the union to work there was laughable and, if I recall correctly, illegal.

In my experience, a union does not work by artificially constraining the labor pool. In every job I've ever had in which I could have joined a union, I only had the opportunity to join the union after I was employed. Before I was employed, I didn't even know there was a union there.

Re: Supply and Demand Does a Poor Job of Explaining Depressed Wages

#115

Post by dang »

Frondo wrote: post #67
sprash wrote: post #24

Supply and demand does a great job of explaining depressed wages. We had two kinds supply shocks in the recent history in the labor market. One is women entering the workforce and the second is mass immigration. Both coincided at the end of the 60s and 70s. Exactly since then wages are not correlated to productivity anymore and are basically stagnating.

You blame women and immigrants, but a much more likely explanation is the decline of union participation in the private American workforce. They've been on the decline since the 1970s, and the more they've declined, the more that productivity has been captured by upper management and shareholders.

> You blame women and immigrants

That's a noticeable step into flamewar. Could you please not do that to the threads here? It isn't necessary to make your point, and in the long run it destroys the site.

Instead, please follow the guidelines at https://news.ycombinator.com/newsguidelines.html, including this one: "Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize."

(Your comment would be fine without that initial phrase.)

Re: Supply and Demand Does a Poor Job of Explaining Depressed Wages

#116

Post by brightball »

crdoconnor wrote: post #100
brightball wrote: post #74

Earlier quoted context omitted.

Exactly. The article implies that bargaining position is the deciding factor here. Bargaining position is ENTIRELY defined by economics. How many options does the company have to fill the role you are applying for? How many jobs do you have the ability to fill? What is the compensation level for those jobs? In a pool of workers, on a sheer measurable and presentable skill set...do you stand out? Networking, creates a…

>Bargaining position is ENTIRELY defined by economics. In theory it is, but I haven't seen much if any economic research that actually analyzes, say, desperation as a factor in aggregate wage levels. Much like the effect of raising the minimum wage on profits ( ridiculously under researched), there are apparently some topics economists simply don't like looking at.

IMO that is the type of thing that could/should be studied in conjunction with basic income.

Re: Supply and Demand Does a Poor Job of Explaining Depressed Wages

#117

Post by pedro_hab »

andmarios wrote: post #68
pedro_hab wrote: post #61

This is an interesting topic, but it is sad to see how people react to it. A lot of comments here saying the whole system is broken. An average poor man in the US probably lives better than kings lived in the past. Food, water, food, hospitals, AC, heaters and such. These evil employers/entrepreneurs are the one creating it. Life by every metric is getting better, can it be better? Maybe. Now we could discuss how to…

Yes, you live better than people 100 years ago. But what about 40 or 20 years ago? Is it easier for an average person to buy a home or car than it was for their parents? Do they work more or less from their parents? Is it easier to have and raise kids?

Well, I think those are localized issues.

For instance, in Brazil its way easier today to buy a car than it was in the past.

But houses are diff, the place I grew up in saw a 50x price increase. It is hard to buy houses there.

To the point where renting is a better investment than buying (not a absolute, obviously), and makes you think that people overvalue property there, the interest rates are insane.

But most statistics are going downward trend, crime for instance, its going down in all developed countries.

Re: Supply and Demand Does a Poor Job of Explaining Depressed Wages

#118

Post by pedro_hab »

lazerpants wrote: post #112
pedro_hab wrote: post #106

Earlier quoted context omitted.

Yeah, but this kinda proves the point, these luxuries are not luxuries anymore, they became standard. The way the world is portrait by many would make me think the rich are keeping the AC for themselves, and actually they only keep cutting edge technologies, which will be in mass market if proven necessary, as cellphones. Can you believe a "poor" person can have the same cellphone as Bill Gates, there isn't a ultra e…

I think many poorer Americans would gladly trade some of those luxuries for freedoms. The market has made some luxury a commodity (which is good) but it has regressed in terms of security and individual freedom of employment (at least for the poor), making free time and choice of lifestyle a luxury. As a hyperbolic example to prove the point, would you rather work 40 hours a week at a job you hate, and have a cell ph…

Yes, I agree, I was blown away on how much Americans work, it makes me think is this a reason why this place is so great.

It seems to be in the culture, which is better than a being lazy IMO.

But also raises the question: Are americans happy with it?

A lot of countries have protections for the employees, in Brazil you can't work too many extra hours, even if you want to. I know people that work 60-80hrs a week in the US, and they want to.

Re: Supply and Demand Does a Poor Job of Explaining Depressed Wages

#119

Post by randomdata »

cosmic_ape wrote: post #108
randomdata wrote: post #98

Earlier quoted context omitted.

Unionization is a form of supply management (as is minimum wage[1]). A union does not change the rules of supply and demand, it exploits the rules of supply and demand for the benefit of the employees by artificially limiting the supply. With the reduced supply of workers, the power of the workers increases as I described in the final paragraph of my previous comment. [1] https://news.ycombinator.com/item?id=16775810

ok, we can define it like that. but its useful to distinguish between these different ways supply and demand can act then, under your definition. One is concerned with just the number of available jobs, and concerns the "efficient market" situation where employers simply can not increase wages and stay profitable. This is the more common "supply and demand" notion, afaik. The other is artificial - workers can unioniz…

> One is concerned with just the number of available jobs

I am given the impression that you may still have some misconceptions about what supply and demand means. Supply and demand, in the labor market, does not mean the number of jobs available.

The best way I can describe supply and demand in a short comment on the internet is that supply and demand is about competition. The supply is those willing (and able) to offer something better to those who want what you have. In labour this could mean doing a better job, or simply offering to do it for less money. The demand is those willing (and able) to offer something better to suppliers. In labor this could mean a business offering free lunches, or simply more money.

When there is nobody willing to offer more, and nobody willing to give for less, you have reached equilibrium.

To be abundantly clear, someone saying that they have a job is not demand. For argument's sake, if we say all programmers are paid $30/hr. and a business wants to hire a programmer for $10/hr., there is no incentive for anyone to take that job. As far as supply and demand goes, that job does not exist.

I will point out that this is also why the formal definition of shortage, not the colloquial one you sometimes see used on HN, is a situation where an external mechanism, such as government intervention, prevents price from rising. The $10/hr. programming job does not increase the demand for programmers. It is not a shortage because the business couldn't find anyone at $10/hr. The business trying to offer $10/hr. is not in the market to begin with.

Re: Supply and Demand Does a Poor Job of Explaining Depressed Wages

#120

Post by jrs235 »

TheAdamAndChe wrote: post #48
crabasa wrote: post #38

One thing worth noting is that one of the clearest paths to earning higher wages and being more successful in a career lies in networking and learning how to leverage that network. In theory, the dominant tool for this should be LinkedIn. But LinkedIn decided early on that serving professionals was less lucrative than serving companies. So the vast majority of products and capabilities that LinkedIn has shipped over…

I'm terrible at networking, and I feel it is the largest factor holding me back in my career. I have been coding off and on since I was 14, have a bachelors degree in IT, and have a year and a half of tech support experience, yet can't for the life of me get a job that pays over $25k. Do you have any advice on how to get started networking? What do you feel most people bad at it lack?

Networking isn't a one way street or flow. Bob networks in hopes that others will look out for him and tell him about opportunities. But Bob never thinks about helping and sharing opportunities that others in his network might care about. Seek first to understand, then be understood. Seek first to serve, then be served. (And if your network isn't reciprocating opportunities, make sure you haven't networked with only self serving people.)
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