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

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

#131

Post by Ductapemaster » Fri, Oct 09, 2020, 7:39 PM UTC

mortenjorck wrote: post #106

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…

There’s an excellent and frankly damning ProPublica report that serves as a case study in the movement to rely on staffing companies for low-wage labor: https://www.propublica.org/article/meet-the-customer-service... The degree to which both costs and risk are shifted onto workers is at times astonishing: “After paying about $1,500 for home office equipment: a computer, two headsets and a phone line dedicated to Aris…

The really awful thing from that story (Planet Money did a great recent episode on the ProPublica coverage) is that they are able to get away with this through Arbitration clauses. By way of their contracts, they strongarm their contractors into dealing with any "misclassification" issues (eg. exerting too much control over a contractor) individually, silently, and outside of court. Contractors have no ability to sue in a class action suit, and aren't even allowed to speak to fellow contractors if they go through arbitration. It's such a sneaky and frankly complicit way to enforce their business model. They know it's grey, and they put people in the corner so they can't call it grey with a loud enough voice for serious attention to be brought to the issue.

Thankfully some law firms have taken the approach to overwhelm Arise with individual arbitration claims. Arise likely calculated in to their model as a cost of business expense, so the best that can be done is to make that expense grow.

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

#132

Post by dcolkitt » Fri, Oct 09, 2020, 7:41 PM UTC

PaulDavisThe1st wrote: post #35

dcolkitt wrote: post #2

Average annual wages in the United States for was $63,000 for the most recent year available.[1] Average annual hours worked was 1,779 per year.[2] That implies an average wage of $35/hour. [1] https://en.wikipedia.org/wiki/List_of_countries_by_average_w... [2] https://data.oecd.org/emp/hours-worked.htm

"Average" anything in populations with large ranges is a terrible, terrible measure. As the joke goes, Bill Gates walks into a bar, and on average everyone in the bar is a millionaire. Median is the appropriate statistic for such cases.

Yeah, I actually agree. But the article is directly citing productivity, which by definition is the average economic output per hour worked.

It's fine if you want to focus on median wages, but at the same time you need to compare against the median worker's economic output- not aggregate productivity. Otherwise you're just comparing apples to oranges.

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

#133

Post by ivalm » Fri, Oct 09, 2020, 7:41 PM UTC

credit_guy wrote: post #122

In a very simplistic way, shouldn't the average wage keep pace with the average productivity gains and the minimum wage keep pace with the minimum productivity gains? I can see the average farmer making huge productivity strides, since they use much more complex combines, and irrigation systems and such, but did the productivity of a burger flipper go up similarly?

This is not how it works in actuality [0]. Wages are market, not productivity, driven. Even if particular work-field doesn’t increase in productivity, aggregate wage increases (due to perhaps aggregate productivity increases or change in labor relations) cause salary increase. Similarly, productivity increases don’t themselves cause salary increases.

Real life example, factory worker productivity rose dramatically with automation, and salaries did not keep up. Physician productivity did not increase much but salaries grew.

[0] https://en.m.wikipedia.org/wiki/Baumol%27s_cost_disease

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

#134

Post by dredmorbius » Fri, Oct 09, 2020, 7:41 PM UTC

shadowgovt wrote: post #98

exabrial wrote: post #88

Earlier quoted context omitted.

Except that's a temporary solution. Eventually the industry moves it to an area where people are willing to do it cheaper; hence why nearly all manufacturing is now done in poorer countries. Not saying this is correct, just commenting on reality.

It's much harder to move making hamburgers to a foreign country. Those are going to be some terrible hamburgers by the time they're shipped back from Bangladesh to Kansas, and the wait time is going to really change the drive-thru experience. ;)

True, though the substitution then is more likely automation or self-service, to the limit of non-automatable work.

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

#135

Post by anoonmoose » Fri, Oct 09, 2020, 7:41 PM UTC

tasty_freeze wrote: post #110

Many comments are focused on "But why should minimum wage jobs pay scale rise with productivity? The jobs haven't gotten any more demanding." But isn't this logic applied to average CEO pay, which has gone up many times faster than productivity? CEOs work isn't any more demanding than it used to be, either.

It is obvious to me that pushing a broom has not gotten more complex over the last hundred years. It is significantly less obvious that being a CEO has not gotten more complex over the last hundred years.

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

#136

Post by Synaesthesia » Fri, Oct 09, 2020, 7:42 PM UTC

norseboar wrote: post #95

I think there's a bad assumption in here, which is that pay should keep pace with productivity gains in the first place. I'd argue the whole point of productivity gains is that they do outpace pay. The idea is the same work generates more value. Some of that extra value can be passed back to the employee, but if all of it is passed back to the employee, then the goods produced don't actually get cheaper. If nothing g…

The problem is all that extra value that workers have been generating the past 50 years is going into the pockets of the rich.

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

#137

Post by ForHackernews » Fri, Oct 09, 2020, 7:43 PM UTC

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…

Another really great illustration of exactly this subject was this article comparing janitors at Kodak in the 1980s with janitors at Apple (but not employed by Apple) today: https://www.seattletimes.com/business/economy/tale-of-two-ja...

> Yet the biggest difference between their two experiences is in the opportunities they created. A manager learned that Evans was taking computer classes while she was working as a janitor and asked her to teach some other employees how to use spreadsheet software to track inventory. When she eventually finished her college degree in 1987, she was promoted to a professional-track job in information technology.

> Less than a decade later, Evans was chief technology officer of the whole company, and she has had a long career since as a senior executive at other top companies. Ramos sees the only advancement possibility as becoming a team leader keeping tabs on a few other janitors, which pays an extra 50 cents an hour.

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

#138

Post by arcticbull » Fri, Oct 09, 2020, 7:43 PM UTC

charlesu wrote: post #120

tasty_freeze wrote: post #110

Many comments are focused on "But why should minimum wage jobs pay scale rise with productivity? The jobs haven't gotten any more demanding." But isn't this logic applied to average CEO pay, which has gone up many times faster than productivity? CEOs work isn't any more demanding than it used to be, either.

Wages have little to do with productivity and everything to do with bargaining power. CEOs are paid well because we expect them to be and they can demand it, irrespective of their actual contributions to the success of the company. But for some reason only the worker must justify his pay.

CEOs are broadly speaking benchmarked on return on equity for investors. They receive high salaries in anticipation of their doing a good job, and if they don't they're removed. Further, a disproportionate amount of their compensation is equity based to align their incentives. I'm not saying it's right or wrong, just that they are expected to justify their pay too.

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

#139

Post by tomtheelder » Fri, Oct 09, 2020, 7:43 PM UTC

commandlinefan wrote: post #85

shadowgovt wrote: post #80

Earlier quoted context omitted.

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).

Well, any way you slice it - through unionization or through legislation - a $24/hour minimum wage is just going to mean massive unemployment, not 3x more money in everybody's paycheck.

I don't think this is cut and dry whatsosever, and in fact I strongly disagree. This is a hotly debated subject. What you suggest aligns with what classical economics predicts, but real world evidence doesn't necessarily back that up.

Personally I don't think it would cause any significant unemployment as long as you don't do it all at once. Based on my own research, the evidence doesn't support minimum wage hikes increasing unemployment, except possibly in the very short term. The logic is basically that because the marginal propensity to consume is so high for low income workers any increase in the minimum wage creates large spikes in demand. No one wants to fire their workforce in the face of increasing demand. Prices go up some then stabilize. Companies bring in more absolute $s, and employ a similar (or even possibly a larger) workforce. It ends up being a redistribution without meaningful negative consequences. The obvious question becomes "why not keep raising it even more then?" and then answer is basically that at some point the MPC drops too low and you stop getting the positive effects, at which point you'd presumably start driving unemployment.

That's obviously an oversimplification, but so is the simple logic that large changes in minimum wage spike unemployment.

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

#140

Post by martin_bech » Fri, Oct 09, 2020, 7:45 PM UTC

rmason wrote: post #116

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…

All these comparisons miss one thing: after WWII America had a monopoly. We had destroyed our competitors factories in Asia as well as in Europe. It took a while for them to build back and be truly competitive outside their home countries. Here in Michigan we had a front row seat to this happening with manufacturing. Everything peaked in 1973 and has been on a slow decline ever since. Sure there have been booms but t…

Hi from Scandinavia, we dont have a monopoly on anything, and no actual minimum wage, yet people make about $20+ at the lowest paying jobs, enjoy 5 weeks paid vacation, free healthcare and cheap childcare..