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If pay had kept pace with productivity gains, minimum wage would be $24 an hour

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Re: If pay had kept pace with productivity gains, minimum wage would be $24 an hour

#71

Post by rayiner »

ptmcc wrote: post #65
rayiner wrote: post #57

These sorts of comparisons are extremely difficult to make. They depend very strongly on what exactly you’re looking at, how you’re measuring inflation, etc. You can easily make charts that show total worker compensation is closely tracking productivity growth: https://www.americanactionforum.org/research/does-compensati... (Unlike Common Dreams, this article shows their work and discloses their exact methodology and…

Many (most) minimum wage jobs do not provide any meaningful benefits, so it's tangential to the minimum wage in most cases. There's no doubt some fuzzy math involved to extrapolate inflation over the course of 50+ years, but I don't think that invalidates the fact that minimum wage has objectively not kept up with inflation even remotely. The federal minimum wage has been stuck at $7.25 since 2009, and a handful of s…

Insofar as the article is talking about minimum wage workers specifically, it makes even less sense. Has the productivity of minimum wage workers gone up at the same rate as for all workers? The chart is comparing apples and oranges.

Re: If pay had kept pace with productivity gains, minimum wage would be $24 an hour

#72

Post by css »

PaulDavisThe1st wrote: post #63
css wrote: post #48

Earlier quoted context omitted.

> This is nothing like the economic system in which we live That some theoretical other economy might exist does not belie the one this article discusses correlates wages and scarcity of labor, nor does it preclude anyone from making different decisions about pricing their own labor.

The article discusses a hypothetical timeline in which wage growth tracks productivity. So it's already in the land of hypotheticals. The question is: how far into that land is it worth going to try to illuminate the full range of the possible?

The article contrasts a hypothetical trend with the reality where labor scarcity drives prices.

Re: If pay had kept pace with productivity gains, minimum wage would be $24 an hour

#73

Post by sixstrings »

bhupy wrote: post #32
ruined wrote: post #4

Earlier quoted context omitted.

As noted in your first link, average wage is misleading because the high end is incomprehensibly large (and is where most growth has taken place) and that skews the result. >The wage distribution is right-skewed; the majority of people earn less than the average wage. For an alternative measure, the median household income uses median instead of average.

Yup, you're right. The real median personal income in the US, today is $35,977 -> https://fred.stlouisfed.org/series/MEPAINUSA672N Unfortunately I'm having a hard time finding the median number of annual hours worked. But using the average hours worked, that puts the median worker at $20/hr. Obviously not perfect unless we can get the median hours worked. Also, like other commenters have said, I don't think anyone ha…

Is that net or gross? And assuming 30 days of vacation at 7,5 hours each, are those 225 hours part of the equation?

Interesting to see how those numbers aren’t as drastically different from my country as I’d assumed.

Re: If pay had kept pace with productivity gains, minimum wage would be $24 an hour

#74

Post by leetcrew »

hinkley wrote: post #11
thunderbird120 wrote: post #8

Earlier quoted context omitted.

It absolutely does not. Productivity gains over the past 50 years have been disproportionately concentrated in higher skilled positions (who earn salaries, not wages). If you feel like reading a 66 page extremely dry analysis of the relationship between compensation and productivity then here you go. https://www.nber.org/papers/w24165.pdf

A good follow-on question might be, do we expect more from low-wage employees now than we did then? When I was a teenager, food service proved to be a much more complicated job than I anticipated it to be. My first tech jobs paid better (even though an internship would have paid more), and felt simpler. If only because I'd spread out the effort of learning the skills over 8 years instead of 3 months.

I too was surprised at how complicated my first food service job was. there are so many opportunities to mess up in every minute of peak hours. at the same time, I almost miss it. if food service paid the same as software dev, I might seriously consider switching back. as stressful as it was, there was a sense of closure at the end of every shift. if I messed something up, I would either hear about it by the end of the day, or it just wouldn't matter. in software dev, I can get bitten today by a poor design decision I made last year. nothing is ever fixed or finished; the bugs just haven't been filed yet.

Re: If pay had kept pace with productivity gains, minimum wage would be $24 an hour

#75

Post by [deleted] »

bhupy wrote: post #52
jfengel wrote: post #42

Earlier quoted context omitted.

There isn't a causal link. That's why we have minimum wage laws. The idea is that rather than paying people what we can get away with, we pay them what they are worth to us. If productivity improves, but wages are indexed only to inflation, then the rich get richer and the poor at best stay the same. They produce more but don't see their lives get better. In a country that has produced so much additional wealth, it w…

Well, while it's important that the minimum wage is $24/hr (or $15/hr), none of these results tell us whether the better way to do that is to mandate that employers pay that full wage, or for the government to fill in the blanks with a UBI/NIT funded by progressive taxation.

[deleted]

Re: If pay had kept pace with productivity gains, minimum wage would be $24 an hour

#76

Post by woo49 »

michaelbuckbee wrote: post #40

There's a lot of reasons for this but one of the largest is the near invisible (to me) structural shift from direct hire to contractors for jobs at the lower end of the wage/salary spectrum. There is a fantastic long form article that articulates this better than I can at: https://highline.huffingtonpost.com/articles/en/poor-millenn... The portion relevant to this discussion: "Thirty years ago, she says, you could wa…

The biggest reason is that there has been almost no productivity gain for cleaning a hotel in the last 20-30 years. It takes same amount of time and effort. So why would the wages go up if productivity is not up?

The productivity gains went to either things that got automated (e.g. speciality equipment operator - wages are higher but there are less jobs) or knowledge workers (software engineering salaries have skyrocketed).

Re: If pay had kept pace with productivity gains, minimum wage would be $24 an hour

#77

Post by pydry »

exabrial wrote: post #70

Those two things are disconnected. Wages are dictated by supply and demand, not efficiency. An oversimplified example [with lots of nuances I'm sure people will comment on instead of the original point]: The supply of heart surgeons is small, therefore they can command a larger wage and have their choice of jobs. The supply of burger-flippers is much larger and employers can usually find someone willing to do the lab…

Supply and demand isn't purely about total numbers. it's also about the power to walk away.

This is why employer lobbies are very keen on reducing public benefits (means you are more reliant on having a job) and reducing public sector wages (reduces competition in the labor market).

Re: If pay had kept pace with productivity gains, minimum wage would be $24 an hour

#78

Post by SpicyLemonZest »

vannevar wrote: post #38
SpicyLemonZest wrote: post #27

Earlier quoted context omitted.

But do productivity gains occur on the assembly line in the first place? I would guess that people today are about as good at working on an assembly line as they were 50 years ago, and we're more productive only because of capital improvements in machinery and infrastructure. That's not to say we shouldn't work to improve the average worker's wealth and quality of life, of course! I'm all in favor. But it's not a mat…

That "machinery and infrastructure" is on the assembly line, not in the C-suite. It is literally there to make the assembly line workers more productive, so it takes fewer of them to do the same work. Now, you can say that the workers contributed nothing to the improvement, so why should they benefit? But the system is set up so they can't contribute improvement---they can't accumulate the capital it would take to up…

I agree with what you're saying, but I think it's inevitable. The system is set up that way as an inevitable consequence of modern technology; automation and economies of scale are simply better at producing valuable things, so much better that an individual worker with no capital can't compete. We can change who has access to capital or reallocate the benefits of capital, but we can't change the fundamental problem that capital is required to get anything done under modern technological conditions. The most dedicated shopkeeper on the planet couldn't match Amazon's capital-intensive delivery network, nor could the best machinist on the planet make a better washing machine than Whirlpool's capital-intensive assembly line.

Re: If pay had kept pace with productivity gains, minimum wage would be $24 an hour

#79

Post by leetcrew »

lilactown wrote: post #60
qeternity wrote: post #49

This is so horribly flawed. Productivity improvements have been concentrated at the high end, and those that have occurred in low skilled jobs have been almost entirely due to technology, not to labor efficiency. Technology gains have always disproportionately been captured by the providers of capital over the providers of labor (given they are the ones who invest in said technology).

What value does technology provide other than increasing labor efficiency? If tech helps me build 10x the number of widgets, should all of that surplus value only be captured by the technology owners? What about the people who build and service the technology which allows these improvements to be implemented?

> If tech helps me build 10x the number of widgets, should all of that surplus value only be captured by the technology owners?

idk about the owners specifically, but I think it's fair that the lion's share of the gains go to the people who made it happen. in this example at least, the widget maker didn't do anything to increase their productivity.

Re: If pay had kept pace with productivity gains, minimum wage would be $24 an hour

#80

Post by shadowgovt »

exabrial wrote: post #70

Those two things are disconnected. Wages are dictated by supply and demand, not efficiency. An oversimplified example [with lots of nuances I'm sure people will comment on instead of the original point]: The supply of heart surgeons is small, therefore they can command a larger wage and have their choice of jobs. The supply of burger-flippers is much larger and employers can usually find someone willing to do the lab…

Essentially. Which is why unionization is such an important process---it binds the supply-demand curve so that employers are forced to allocate the resources more equitably. Supply suddenly dries up if nobody's willing to work for you because you won't pay a living wage (let alone a decent wage).
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