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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

#271

Post by gridlockd »

danans wrote: post #176
rmason wrote: post #116

Earlier quoted context omitted.

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…

> The minimum wage does not naturally rise

The minimum amount of money you have to pay for someone to show up for any job rises (and falls) alongside demand for labor in the broader economy.

> Under our current system that heavily favors returning productivity gains to capital instead of labor...

If you look at the profit margins of those companies that employ a lot of low-end labor, you will find that they're generally in the single digit percentages. I think that's a pretty fair deal for organizing all that labor and taking on the capital risk. Profits aren't guaranteed, after all. There just isn't that much money to redistribute here, you would have to raise prices, which can make you uncompetitive.

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

#272

Post by segmondy »

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…

The employees are not more efficient because of their effort but because of the tech in inventory management. They are still doing the same amount of human labor that 8hrs a day calls for. Companies don't buy machines to pass on the savings to their employees in form of higher wages, they pass those savings to the owners of the company.

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

#273

Post by gwright »

pmiller2 wrote: post #261
gwright wrote: post #259

Earlier quoted context omitted.

Those benefits are income to you. Not taxable income, but they have a non-zero value. They certainly appear on the balance sheet of your employer and represent an increase in their total payroll costs.

I don't care if they appear on my employer's balance sheet. They don't pay my rent, literally. You can say "screw insurance; we're offering all employees this super expensive concierge medical plan," and that literally has no effect on my balance sheet, which is the problem if you want me to be a good consumer in the economy and buy stuff. Or, if you don't think we need more homeless people in this country. If you wa…

I think you are discounting that the two things are directly related. Your take home pay is affected by the choice of your employer to spend money on the benefits.

Over time, which is what we are talking about here, the choice of the employer to put money into benefits in order to create an attractive compensation package means they are not putting money into wages (assuming for simplicity that those are the only two buckets to consider). So wages can stagnate while total compensation goes up.

Yes you can conclude from this that your take home pay is stagnant, what you can't conclude is that there hasn't been an increase in compensation. And if you are trying to determine if compensation is correlated with productivity gains (i.e. the original article) then you can't just pretend those benefits aren't part of the compensation equation.

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

#274

Post by [deleted] »

yifanl wrote: post #182
sneak wrote: post #144

Earlier quoted context omitted.

There are many millions of busses to drive, bags to load, passengers to drive around, trash bins to empty, and floors to be swept, vacuumed, and mopped. I think perhaps you underestimate the massive size of the unskilled job market.

Tell your CEO to do janitorial work for a day and ask them how qualified they felt to do unskilled work.

[deleted]

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

#275

Post by Traster »

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…

These are relative terms. Let's say in 1980 I was flipping burgers for $3 an hour and making $10 for the company. Let's (just for the sake of argument, ignore inflation) say in 2020 I'm making $20 for the company. For my pay to keep pace with productivity gains I'd be making $6 an hour, leaving my employer $7 better off (they were making $7, now $14). My pay would've kept pace with productvity - it doubled, my pay doubled.

When people say that "wages kept pace with productivity growth" that's what they're saying - that a 10% increase in productivity resulted ina 10% increase in pay, not a $10 increase in productivity resulted ina $10 increase in pay.

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

#276

Post by pmiller2 »

SketchySeaBeast wrote: post #248
pmiller2 wrote: post #233

Earlier quoted context omitted.

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.

I'm guessing the definition is something like "income over and above basic expenses (food, shelter, etc.) over a given period of time."

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

#277

Post by confidantlake »

cafed00d wrote: post #223
slg wrote: post #215

Earlier quoted context omitted.

>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…

> Now many stores have intelligent inventory tracking that requires little to no work from employees. > Why isn't the benefit of that efficiency passed on to those employees who are now more efficient? It is, though, right? It is passed on to the employees who were responsible for the efficiency gains. Those employees who built those innovations — could be employees of retailer, or employees of the companies, say tec…

It feels very arbitrary to claim the employees responsible got the gains. Like take Walmart, the biggest beneficiaries by far are the relatives of Sam Walton. Yet they did nothing to build the automated inventory tracking, the statistical modeling, or the digital systems.

Or take the programmers who worked on Walmart.com. They didn't invent the transistor, Linux, or Java. They just used them to build a crud app.

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

#278

Post by pmiller2 »

gwright wrote: post #273
pmiller2 wrote: post #261

Earlier quoted context omitted.

I don't care if they appear on my employer's balance sheet. They don't pay my rent, literally. You can say "screw insurance; we're offering all employees this super expensive concierge medical plan," and that literally has no effect on my balance sheet, which is the problem if you want me to be a good consumer in the economy and buy stuff. Or, if you don't think we need more homeless people in this country. If you wa…

I think you are discounting that the two things are directly related. Your take home pay is affected by the choice of your employer to spend money on the benefits. Over time, which is what we are talking about here, the choice of the employer to put money into benefits in order to create an attractive compensation package means they are not putting money into wages (assuming for simplicity that those are the only two…

I never said there was not an increase in compensation (vs. wages). I am saying that's not relevant to the economic picture of the American worker today vs 50 years ago. To be perfectly clear: I don't care if "total compensation" has increased with productivity; what I care about is "Is the American worker better off today, in dollar terms, than they were in the 70s?"

Again, I literally don't care what my employer spends its money on in this calculation, other than my paycheck, and discounts on things I would use anyway such as health insurance they pass along from bulk buying. So, you can't say, "well, if they didn't offer insurance, and instead passed along savings in your paycheck, then your income would increase." Yes, I still need to buy insurance, so only the discount I get from obtaining it via my employer is relevant -- my literal bottom line does not change. (Actually, my bottom line is worse in this scenario because I don't get the tax break, but let's just ignore that). And, if a benefit isn't something I would use (let's say a childcare allowance, if I don't have children), that also goes on the company balance sheet and could potentially increase my "total compensation," but literally does nothing for me, hence its value to me is $0.

You seem to be talking past my point, which is that the American worker is getting screwed from all sides by stagnating wages and skyrocketing healthcare, housing, and education costs. In America, for most employees, those expenses come out of wages, so wages are what we ought to be concerned with.

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

#279

Post by blunte »

creata wrote: post #267
blunte wrote: post #242

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.

But then why would anyone do a hard or dangerous job? (That's not to suggest that software engineering is hard or dangerous.)

People do all kinds of things we might think is nuts, for reasons often unknown to anyone. But true, some jobs are so crazy that nobody in their right mind would do them. But hey, there still may be people in a different mind who would.

Paul Graham once explained the power of prestige - http://www.paulgraham.com/love.html . I daresay some people would do hard or dangerous jobs primarily because of the prestige of being known to do them.

And as for "dirty jobs", equal wages doesn't mean that everyone has a choice in which jobs they are capable of doing (or which jobs are locally accessible).

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

#280

Post by mgolawala »

deathanatos wrote: post #269
slg wrote: post #238

Earlier quoted context omitted.

>What makes you feel that Software developer salary is linked to computing power? In fact, even if we were to consider it a fair comparison, computing power, if measured by Moore's law has doubled every 2 years. Software Engineer salaries have lagged far far behind. Honestly, I don't think there is any relation between developer salary and computational power. I was just reaching for a possible explanation for this[1…

That graph is not very well laid out; in order to see the effect it purports to show, you'd want to scale the SWE salary to all salaries to compare them; otherwise, you're just looking at "SWE is paid more than most occupations" → "SWE is still paid more than most occupations". Both clearly experienced growth, but did SWE experience more growth, or did it grow proportionally? The SWE line in that graph grows by ~74%,…

Housing, Healthcare and Education. Those three have eaten up a larger and larger chunk of people's paychecks over the years.

In regards to the cost of housing, I came across an adage a while back that has stuck with me, "Housing can either be affordable, or a great investment, not both". I think the real solution is a change in policy for housing to no longer be treated as a great investment. Not that I have high hopes of this ever coming about.

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