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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

#241

Post by murderfs »

tboyd47 wrote: post #180

> 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, s…

Why not try this with other commodities? Silver was used as currency for longer than gold, and was still legal tender in the time of Henry Ford. Let's see what happens if you do the same analysis with silver instead.

Silver was 1/20 the price of gold back then and 1/80 of the price of gold today, so your $120,000 turns into $30,000. Whoops.

Aluminum? $433.

It turns out that comparing wages over time with an arbitrary natural resource is a terrible idea.

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

#242

Post by blunte »

I recently had a crazy (is it?) thought: what if hourly wages were the same for all jobs. Every human working one hour would be paid the same. The dishwasher in the restaurant would be paid the same as I would for writing software (they would earn more, I would probably earn less).

I like money, but I would like every person giving an hour of their life to be compensated enough to get by measurably above poverty.

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

#243

Post by sjy »

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 article argues that “the minimum wage should keep pace with productivity growth,” not “pay should keep pace with productivity gains.”

Suppose a business with a profit margin of 20% increases its revenue by 10% without increasing labour input. If the owner captures that 10%, the profit margin is now 27%. If the revenue is paid out as higher wages (“pay keeps pace with productivity gains”), the profit margin falls to 18%. If wages increase by 10% (“pay keeps pace with productivity growth”), the profit margin remains constant and profit can also increase by 10%.

What happens to the profit margin of individual businesses will vary. But across the entire economy, it’s reasonable to expect that the wage share will remain pretty constant, and until the 1980s, it did. https://en.wikipedia.org/wiki/Wage_share

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

#244

Post by throw0101a »

slg wrote: post #215
missedthecue wrote: post #179

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…

>Someone stocking shelves in 2020 is about productive as someone stocking shelves in 1968. This is not completely fair. There are countless innovations that have allowed these low skill jobs to have an increase in efficiency and productivity. One example, when I was a teen and worked retail I remember we would all have to spend hours going around the store counting every product on the shelves in order to do our rout…

> One example, when I was a teen and worked retail I remember we would all have to spend hours going around the store counting every product on the shelves in order to do our routine inventory checks because there was no other reasonable way to track that information. Now many stores have intelligent inventory tracking that requires little to no work from employees.

Manual inventory is still done, often quarterly. Shrinkage will never disappear, and it needs to be accounted for regardless of smart or dumb inventory systems are:

* https://www.thebalancesmb.com/top-sources-of-retail-shrinkag...

* https://losspreventionmedia.com/how-to-calculate-shrinkage-i...

* https://paladinsecurity.com/security-prevention/prevent-shri...

* https://en.wikipedia.org/wiki/Shrinkage_(accounting)

An outside team (either in-house or third-party) is brought in so the regular employees aren't doing their own 'audits'.

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

#245

Post by ForHackernews »

908B64B197 wrote: post #217
ForHackernews wrote: post #137

Earlier quoted context omitted.

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 j…

There's an other issue here: Evans bootstrapped herself by getting a (relevant) degree. The spreadsheet story is nice, but even having these skills back in the 80's was way less common than today. The article should also have looked at how much tuition was relative to the cost of living/salary Evans was making, and if Ramos could afford it today.

Did you read the whole article?

> Evans was a full-time employee of Kodak. She received more than four weeks of paid vacation per year, reimbursement of some tuition costs to go to college part time, and a bonus payment every March. When the facility she cleaned was shut down, the company found another job for her: cutting film.

She was able to bootstrap her career at least in part because Kodak offered tuition reimbursement and other benefits.

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

#246

Post by gwright »

pmiller2 wrote: post #187
missedthecue wrote: post #179

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…

It's not cherry picking when wages have been stagnant for the last 40+ years.

I'm not sure exactly what the data shows but total compensation would seem to be the more reasonable thing to look at. In particular the value associated with health insurance and other non-cash compensation has gone up.

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

#247

Post by tylerhou »

missedthecue wrote: post #179

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…

> 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.

This is just wrong: the article is not talking about inflation; it is talking about indexing the minimum wage to productivity. Eyeballing the graph from the original article (and projecting productivity back to 1949), if indexed to productivity, then minimum wage would be at ~$15.

Your subsequent criticisms have more merit, but the article addresses them as well. You may disagree with the article's arguments, but you should at least acknowledge them.

> It would be claimed that the productivity of minimum wage workers has not kept pace with average productivity growth, so that it would not be feasible for minimum wage workers to earn pay that rises in step with average productivity growth.

> There is some truth to this claim, but only at a superficial level. The productivity of any individual worker is determined not just by their skills and technology, but also by the institutional structure we put in place.

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

#248

Post by SketchySeaBeast »

pmiller2 wrote: post #233
SketchySeaBeast wrote: post #206

Earlier quoted context omitted.

https://fred.stlouisfed.org/series/A229RX0 Even here there is a definitive and deliberate bump right during the beginning of the COVID times. I don't believe that's an artifact. Somehow this analysis is saying people are vastly better in August than they were in February. I think that "average" in most of the different versions is useless. The millionaire and billionaire classes can be so over-represented they can dr…

The "COVID bump" is driven primarily by stimulus checks and enhanced unemployment benefits: https://www.marketwatch.com/story/personal-income-surges-105...

In this case it would seem that that money is less "disposable" and more "extremely import to ration". I must not understand the definition of disposable.

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

#249

Post by tboyd47 »

murderfs wrote: post #241
tboyd47 wrote: post #180

> 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, s…

Why not try this with other commodities? Silver was used as currency for longer than gold, and was still legal tender in the time of Henry Ford. Let's see what happens if you do the same analysis with silver instead. Silver was 1/20 the price of gold back then and 1/80 of the price of gold today, so your $120,000 turns into $30,000. Whoops. Aluminum? $433. It turns out that comparing wages over time with an arbitrary…

Gold is obviously not just an "arbitrary natural resource." There's a reason why we say "gold standard" and not "silver standard," "aluminum standard," or even "dollar standard." Nevertheless, it was only a fun thought experiment (which is what most economic arguments boil down to).

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

#250

Post by defertoreptar »

Maybe this has to do with women entering the workforce, increasing supply and putting downward pressure on prices. Look at real median family income:

1968, 55745

2019, 86011

https://fred.stlouisfed.org/series/MEFAINUSA672N

Edit: Real median income has also increased: https://fred.stlouisfed.org/series/MEPAINUSA672N

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