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

#171

Post by qq12as » Fri, Oct 09, 2020, 8:23 PM UTC

ci5er wrote: post #81

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…

That seems more-or-less intuitively plausible, but I often find missing from these discussions, is the aggregate employers' contribution to health insurance plans. If, for example, my employer's contribution to my health insurance premiums go up $500/month - I am going home with $6000 less that year. Now, they probably don't cut my wages, but it's pretty easy to see how they might be frozen for a few years.

great comment -- you may like this https://pubs.aeaweb.org/doi/pdf/10.1257/jep.30.2.53

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

#172

Post by jedberg » Fri, Oct 09, 2020, 8:25 PM UTC

Sohcahtoa82 wrote: post #101

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…

This flies in the face of so many HN readers that claim that salaries are based on the value created by the employee.

> so many HN readers that claim that salaries are based on the value created by the employee.

That's because those people are sadly wrong. Salaries have never been based on value created. They have always been based on the minimum a company could pay for the talent they desire.

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

#173

Post by hownottowrite » Fri, Oct 09, 2020, 8:27 PM UTC

And yet not word on the transfer of trillions of dollars to emerging economies that eliminated wage gains for average Americans while inflating corporate profits and dividends? The gains in “productivity” are a direct result in leveraging a global labor pool.

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

#174

Post by ci5er » Fri, Oct 09, 2020, 8:30 PM UTC

qq12as wrote: post #171

ci5er wrote: post #81

Earlier quoted context omitted.

That seems more-or-less intuitively plausible, but I often find missing from these discussions, is the aggregate employers' contribution to health insurance plans. If, for example, my employer's contribution to my health insurance premiums go up $500/month - I am going home with $6000 less that year. Now, they probably don't cut my wages, but it's pretty easy to see how they might be frozen for a few years.

great comment -- you may like this https://pubs.aeaweb.org/doi/pdf/10.1257/jep.30.2.53

Thanks! I love to read this kind of stuff!

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

#175

Post by qq12as » Fri, Oct 09, 2020, 8:31 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.

CEO wage depends on company size: big companies are willing to pay A LOT for a CEO which screws up with 1% less chance. Other jobs (be it janitor, software engineer) don't scale up as much with company size, since the single tasks remain the same.

So a big reason CEO wages grew is that companies became massive.

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

#176

Post by danans » Fri, Oct 09, 2020, 8:31 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…

> Give America back the monopoly it had in the fifties and sixties and minimum wage would be $24 an hour.

It would take a lot more than that. Remember that the gains labor made after world war II were built upon decades of struggle by labor, including frequently being targets of violence by armed militia hired by corporations [1]. Despite that, America desperately needed labor for world war II (where the alternative was defeat at the hands of the Nazis), so for that moment in history capital and labor found themselves in a obvious win-win scenario. Most of the gains made by labor in America were made during this period.

The minimum wage does not naturally rise - it is a policy decision, one implemented under pressure from labor. And as labor's political power has waned and capital's political power has increased, minimum wage has stagnated.

Under our current system that heavily favors returning productivity gains to capital instead of labor, returning America to that global monopoly (which would require the highly improbable destruction the industrial capacity of the rest of the world while leaving America's untouched) would just turn the hypothetical gains of that monopoly over to the owners of capital.

Realistically, any attempt to return to the prior American monopoly would result in a massive regression in the American standard of living, through the destruction of purchasing power abroad for American goods and services (remember, we have a lot more people today than we did back then, and many of them - especially farmers - work in occupations that sell to other countries).

1. https://en.wikipedia.org/wiki/Anti-union_violence_in_the_Uni...

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

#177

Post by qq12as » Fri, Oct 09, 2020, 8:35 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…

No bad assumption here: people say that productivity growth and wage growth ought be the same. If this was not the case, then in the long run 100% of value added would go to capital! Of course this does not mean that the productivity gains should directly translate into wages.

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

#178

Post by content_sesh » Fri, Oct 09, 2020, 8:38 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…

How would giving workers few places to sell their labor-power result in increased wages?

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

#179

Post by missedthecue » Fri, Oct 09, 2020, 8:39 PM UTC

And if they had kept up since 1949, minimum wage would be $4.22 an hour. Two can play the game of cherrypicking troughs and peaks. Additionally, average productivity is not minimum wage productivity. They are separate statistics, and the bulk of the efficiency gains have not been made at the burger flipper level, but at higher levels, where there have been huge gains in pay. The productivity gains in engineering and manufacturing and energy production, etc... have dragged up the average. Someone stocking shelves in 2020 is about productive as someone stocking shelves in 1968.

https://www.cnn.com/interactive/2019/business/us-minimum-wag...

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

#180

Post by tboyd47 » Fri, Oct 09, 2020, 8:39 PM UTC

> In such a world, a full-time minimum wage worker would be earning $48,000 a year in the United States.

I find it interesting to compare wages in terms of their value in gold. Gold has been used as money for millennia, so it lets us go back even further than we typically do with inflation data.

Everyone always references Henry Ford's $5 a day wage in these discussions. $5 during that time was worth 1/4 oz of gold, so at 260 days a year, they were pulling in the US dollar value of 65 ounces of gold a year.

You would need over $120,000 today to buy 65 ounces of gold. Sure beats the heck out of $48,000. If you buy the notion that wages should track productivity, it makes you wonder what they were doing in 1913 that made everybody so darn productive.