Minimum wage would be $26 an hour if it had grown in line with productivity • Hacker News Board

Re: Minimum wage would be $26 an hour if it had grown in line with productivity

#21

Post by tw04 » Tue, Sep 14, 2021, 8:15 PM UTC

credit_guy wrote: post #2

No it would not. The average productivity of a US worker might have increased by a certain amount, but not the productivity of the minimum wage earners. If their productivity had gone up that much, there would be no need for a minimum wage law, the employers would simply be glad to pay them based on their productivity.

>the employers would simply be glad to pay them based on their productivity

Based on...? What employer do you know of that just willingly offers employees raises for no reason other than "you're producing more for the company so here's some free cash"? The only role I'm aware of at most companies that directly ties your output to your income is sales, and even that can be sketchy depending on where you work and how transparent they are with the financials.

Most publicly traded company's goals are to pay you as little as possible to retain you.

Re: Minimum wage would be $26 an hour if it had grown in line with productivity

#22

Post by BobbyJo » Tue, Sep 14, 2021, 8:16 PM UTC

ranma4703 wrote: post #6

credit_guy wrote: post #2

No it would not. The average productivity of a US worker might have increased by a certain amount, but not the productivity of the minimum wage earners. If their productivity had gone up that much, there would be no need for a minimum wage law, the employers would simply be glad to pay them based on their productivity.

Do you think that companies pay based on productivity, or based on the minimum amount they need to pay in order to attract workers? If the former, do you believe that if a remote worker moves from NYC to Idaho, and their employer cuts their pay by 25%, it is because their productivity has dropped by 25%? Or because their employer knows they can get away with paying them less in an area with lower cost of living / les…

> Do you think that companies pay based on productivity, or based on the minimum amount they need to pay in order to attract workers?

It's both. Productivity has a very direct effect on the minimum amount they need to attract workers. If a low skilled worker can produce 100$ an hour of value, and you're paying them 10$ and hour, someone else will very quickly be willing to pay them 11$, or 12$, etc. Suddenly, you have to pay several times what you did before in order to keep your employees or attract new ones.

> If the former, do you believe that if a remote worker moves from NYC to Idaho, and their employer cuts their pay by 25%, it is because their productivity has dropped by 25%? Or because their employer knows they can get away with paying them less in an area with lower cost of living / less high paying jobs?

Same as the other answer. In NYC there are more companies competing for your employee, so you have to pay more to keep them. Competition in the middle of nowhere is restricted more so than in the middle of NYC.

Re: Minimum wage would be $26 an hour if it had grown in line with productivity

#23

Post by credit_guy » Tue, Sep 14, 2021, 8:17 PM UTC

omgwtfbyobbq wrote: post #10

vrotaru wrote: post #7

Earlier quoted context omitted.

Why do you think the capitalist pay programmers so much?

Because they don't have an alternative. If the supply of programmers was as large as the supply of minimum wage workers pay would drop significantly.

That is exactly what capitalism is about. Prices being driven by supply and demand. Companies certainly try to pay the minimum they can get away with, just like workers look for jobs that pay them the maximum they can find. Companies are not generous (although some claim they are), and workers aren't either. But the competition drives the prices and, in the case of jobs, the salaries. If you are productive, you'll be in demand, and you'll be paid handsomely. If you are productive but live in communist Soviet Union, you'll get very close to whatever else gets in a similar job.

Re: Minimum wage would be $26 an hour if it had grown in line with productivity

#24

Post by pydry » Tue, Sep 14, 2021, 8:17 PM UTC

randyrand wrote: post #14

When productivity increases, you have 2 choices: 1. increase your wages. pay your suppliers more. 2. decrease your prices. It doesn't really matter which you do. Do we want higher wages or lower prices? You can't do both. Does it even matter? The net effect is the same. Who cares that we've universally chosen #2? Note: I'm assuming there's modest competition. Monopolies have a 3rd option: more profit.

Profits are also a thing.

Business generally prefers to do neither 1 nor 2.

Re: Minimum wage would be $26 an hour if it had grown in line with productivity

#25

Post by ashtonkem » Tue, Sep 14, 2021, 8:18 PM UTC

randyrand wrote: post #14

When productivity increases, you have 2 choices: 1. increase your wages. pay your suppliers more. 2. decrease your prices. It doesn't really matter which you do. Do we want higher wages or lower prices? You can't do both. Does it even matter? The net effect is the same. Who cares that we've universally chosen #2? Note: I'm assuming there's modest competition. Monopolies have a 3rd option: more profit.

You forgot one option.

3. Take less profit.

Re: Minimum wage would be $26 an hour if it had grown in line with productivity

#26

Post by peer2pay » Tue, Sep 14, 2021, 8:18 PM UTC

randyrand wrote: post #14

When productivity increases, you have 2 choices: 1. increase your wages. pay your suppliers more. 2. decrease your prices. It doesn't really matter which you do. Do we want higher wages or lower prices? You can't do both. Does it even matter? The net effect is the same. Who cares that we've universally chosen #2? Note: I'm assuming there's modest competition. Monopolies have a 3rd option: more profit.

Or you could do either of:

3. massive bonuses for execs and wage increases for white-collar workers

4. stock buybacks and dividends to directly distribute profits to shareholders

Let’s not pretend that both of these don’t happen at the cost of regular employees.

Re: Minimum wage would be $26 an hour if it had grown in line with productivity

#27

Post by R0b0t1 » Tue, Sep 14, 2021, 8:19 PM UTC

commandlinefan wrote: post #17

Hm - that's about 3.5x what it is now. Does that mean everybody else should be making 3.5x what they're making now, or does this just apply to the lowest earners?

This $25/$26 figure was what was being quoted >5 years ago. It's more now.

The comparison comes from (iirc) purchasing power parity based on the minimum wage when it was first established.

Re: Minimum wage would be $26 an hour if it had grown in line with productivity

#28

Post by eugeniub » Tue, Sep 14, 2021, 8:19 PM UTC

randyrand wrote: post #14

When productivity increases, you have 2 choices: 1. increase your wages. pay your suppliers more. 2. decrease your prices. It doesn't really matter which you do. Do we want higher wages or lower prices? You can't do both. Does it even matter? The net effect is the same. Who cares that we've universally chosen #2? Note: I'm assuming there's modest competition. Monopolies have a 3rd option: more profit.

Yes, indeed we have seen decreased prices in housing, healthcare, education, etc in the last 40 years.

Re: Minimum wage would be $26 an hour if it had grown in line with productivity

#29

Post by jokethrowaway » Tue, Sep 14, 2021, 8:19 PM UTC

credit_guy wrote: post #2

No it would not. The average productivity of a US worker might have increased by a certain amount, but not the productivity of the minimum wage earners. If their productivity had gone up that much, there would be no need for a minimum wage law, the employers would simply be glad to pay them based on their productivity.

That's one way of seeing it and it could definitely be a factor. An increase in the workforce numbers could be another factor

Re: Minimum wage would be $26 an hour if it had grown in line with productivity

#30

Post by dangus » Tue, Sep 14, 2021, 8:19 PM UTC

randyrand wrote: post #14

When productivity increases, you have 2 choices: 1. increase your wages. pay your suppliers more. 2. decrease your prices. It doesn't really matter which you do. Do we want higher wages or lower prices? You can't do both. Does it even matter? The net effect is the same. Who cares that we've universally chosen #2? Note: I'm assuming there's modest competition. Monopolies have a 3rd option: more profit.

The reason why #2 doesn't have the same effect as #1 is scale.

Wealthy people are not affected by prices in the same way as average people.

I hypothesize that being able to buy more with the same income rather than being given a higher income helps the wealthy more. Let's take a practical example:

A banana now costs 50 cents. It would have to cost $2 if we paid for higher labor costs, for that $20+ minimum wage.

But if you're upper-middle class or above, or way above, it doesn't really matter if that banana costs 50 cents or $2. Heck, for some people, it wouldn't really matter if it cost $50 or $100 or even $1,000 if you're Jeff Bezos.

There are only so many bananas you could possibly want.

In this way, I think that option 1 would be more beneficial for the common person. Sure, they'd have to pay for a $2 banana, but they'd be making a more comfortable salary and they still only want one banana. Meanwhile, Moneybags Factory Owner would have to dispense their wealth to labor instead of hoarding it in capital.

I'd also argue that we don't do #2 "because of competition," instead that it was an intentional choice not to tie minimum wage to inflation and to keep it at rock-bottom levels. That is corporations-write-the-laws policy. If the minimum wage were raised there would absolutely still be competition and companies would still be trying to make productivity gains from option #1.