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

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

#31

Post by dnautics »

JoeAltmaier wrote: post #11
standardUser wrote: post #5

Earlier quoted context omitted.

"employers would simply be glad to pay them based on their productivity." I honestly mean no offense, but that sentiment indicates a spectacular misunderstanding of capitalism.

It indicates the major flaw of capitalism: It has no moral compass whatsoever. Its a vicious meat grinder. I think the comment is quite insightful, in the employers might think one thing while the realities of capitalism dictate another.

s/capitalism/the universe/g

Anyways, your statement is not true. Capitalism absolutely has a moral compass, it had the moral compass of the consumptive patterns of society; if that compass points the wrong way then either we must take a hard look at ourselves, or, think about what policies are twisting consumptive patterns to go the wrong way.... Probably a bit of both.

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

#32

Post by unclebucknasty »

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?

>Does that mean everybody else should be making 3.5x

No, it doesn't necessarily mean that. Productivity gains have not been distributed proportionally; which is what this metric is underscoring for our lowest wage workers.

EDIT: If I'm misreading this, I welcome the enlightenment.

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

#33

Post by joshgrib »

tw04 wrote: post #21
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 t…

Yeah this seems like a dream world, if you're a publicly traded company you have a legal obligation to pay people as little as you can, and with most companies in general the founder/owner feels like they're entitled to as much as they can take for "taking the risk"

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

#34

Post by ashtonkem »

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…

This one stuck out to me, because I moved to Idaho.

It’s also not clear if a employer could cut such wages by 25%; that has less to do with CoL and more to do with the labor market. Or to use your formulation; do workers charge for their services according to the local cost of living, or do they charge for their labor what the market will bear?

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

#35

Post by handrous »

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 can't do both.

I'm being entirely serious: I don't see why not.

> It doesn't really matter which you do.

It really, really matters if productivity increases are uneven.

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

#36

Post by pydry »

BobbyJo wrote: post #22
ranma4703 wrote: post #6

Earlier quoted context omitted.

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 hav…

>It's both. Productivity has a very direct effect on the minimum amount they need to attract workers.

Productivity only puts a ceiling on the amount they'd be prepared to pay for a worker.

It doesn't affect the minimum amount required to attract them. That's determined by competition (i.e. who else is out there) and leverage (how much they need the job).

This is why business leaders lobby hard to reduce public sector wages/pensions (so private sector doesn't have to pay as much to compete for workers) and public benefits (like universal health care), which reduces worker leverage => reducing wages => increasing profits irrespective of worker productivity.

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

#37

Post by runako »

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.

This represents a fairly common misunderstanding of "productivity" as used by economists, as in this story. In economics, labor productivity is simply the output per unit of labor. A common metric is revenue per hour worked.

How does this fit into the discussion here? If a company earns 10% more in inflation-adjusted currency this year than last year, but headcount has increased It's fairly easy for anyone to apply this calculation to the economy as a whole, or to a given subset. Find total revenue in period X and total revenue in a later period Y and the corresponding # of employees, and you can determine whether and how much productivity increased.

Objection: "but the minimum wage earners are not more productive, everyone else is driving the productivity gains." You can run the calculation on any low-wage industry you want, you will likely see roughly similar results.

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

#38

Post by ajsnigrutin »

dangus wrote: post #30
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…

...or they'd just raise the price of a banana to $4, to keep relative profits the same, people would earn more than previously, but everything would be more expensive. Say what you want, we do buy and own a lot more stuff than we did in history.

The only unfair thing here is, why does amazon pay (relatively, percentually) less tax than local banana stand.

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

#39

Post by jrsj »

This might be the case but many jobs I feel like would no longer be worth paying anyone to do at that rate. That would suggest to me that the productivity of minimum/low wage workers has not increased at the same rate as productivity generally. Which would make sense given most of that increase is attributable to technology which isn’t distributed evenly through different sectors of the economy etc.

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

#40

Post by agitator »

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.

3. Collect more profit
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