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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

#131

Post by tuatoru »

fred_is_fred wrote: post #82
tuatoru wrote: post #73

Earlier quoted context omitted.

This is the lump of labour fallacy. Edit: in the form, the set of jobs we have right now is fixed and will be the same for all time. The flow of money is circular. If lower-paid people had more disposable income, they would spend more on things that employ other people. Services like restaurants or haircuts or yoga classes or personal trainers or personal shoppers or life coaches, the last three of which are pretty n…

If lower-paid people had more income they would be paying down debt, buying a better used car, paying for daycare, and maybe going on a trip or to. Personal shoppers and life coaches I think kick in a lot higher than you do.

Yeah, those were just random examples from my imagining an alternative universe in which minimum wage had kept pace with productivity.

You are quite right. Another counterargument is that a lot of household income goes into zero-sum, unproductive status signaling, a.k.a. "buying a house in a better neighbourhood", and "sending the kids to a better school".

Still, some of the extra income would be spent on things that employ other people.

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

#132

Post by pessimizer »

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?

It very obviously applies to the workers that saw the least share of productivity gains. What case would you make for raising the salaries of those paid more than their equivalent jobs were paid (adjusted for productivity growth) when the minimum wage began?

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

#133

Post by Rebelgecko »

1. I don't think there's a good argument for tying minimum wage to median productivity gains across the entire economy. Is an accountant today 5x more productive than an accountant in the 1960s? Perhaps. But is a dishwasher or a frycook 5x more productive? Probably not. I also think the biggest problem impacting lower income folks is housing costs and IMO minimum wage is not the best tool for fixing that issue.

2. 1968 as a start year is super mega cherrypicked. A lot of people say "if minimum wage had kept with with CPI inflation since 1968, it'd be $12/hour now!" They usually neglect to mention that if minimum wage had kept up with CPI inflation since 1948, it'd only be $4/hour. The only reason to use 1948 vs 1968 is to massage the data to match your preexisting hypothesis.

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

#134

Post by jrsj »

tshaddox wrote: post #119
jrsj wrote: post #111

Earlier quoted context omitted.

Up to a point this would work but there is a point where stocking shelves at all is no longer worth it when the labor reaches a certain price, and they would probably just start tossing pallets of goods directly onto the sales floor and only support self checkout. And then probably invest in robotics to automate moving the pallets around. You could have an entire Walmart ran by fewer than 10 employees

Sure, robots might be able to do it cheaper in the near future, but that’s unrelated to the question of whether productivity has gone up.

There are many things that may just not get done at all though if they can’t be automated, or if automating them would be too costly. Stocking shelves in particular is probably one of those things. It’s hard to argue the labor is worth $26 an hour based on the total productivity increase of the corporation if they would just stop having you do it at all if it cost that much.

The idea that an individual workers productivity is derived from the total productivity of the business isn’t entirely accurate. In the case of stocking shelves, the value is mostly aesthetics and executing a marketing strategy. The value of stocking shelves is based on the value that stocked shelves provide, which doesn’t increase linearly with the productivity of a store.

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

#135

Post by uoaei »

q1w2 wrote: post #97
drran wrote: post #86

Earlier quoted context omitted.

What stopping you from paying much more to these poor workers?

If a worker wants to partake in the profits of the company, they should work for a public company and buy shares, or be part of a company that offers profit sharing/private shares/options/bonus compensation. Their salary is a cost, like any other expense, and should be kept to a minimum, and only high enough to retain talented employees according to the market rates for those positions. That's a fundamental principle…

This is a stringently normative claim that perpetuates the is-ought fallacy.

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

#136

Post by Rebelgecko »

dangus wrote: post #42
xupybd wrote: post #3

How much of this increase in productivity is the result of off shoring low wage jobs?

Why would overseas workers be counted in a measure of US worker productivity?

If you're measuring average productivity per worker (I don't know if this is the case), removing the least productive workers would increase average productivity

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

#137

Post by BobbyJo »

pydry wrote: post #36
BobbyJo wrote: post #22

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? 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…

Your second paragraph refutes your first. Productivity is an input to the supply of competition, so it does more than create a ceiling, it also serves as an upward force on the floor.

Do business leaders lobby to reduce public sector wages and benefits? That's not something I've heard before. In any case, whether or not there is competition from the government, if there is a gap between productivity and wages, then there are profits to be had by private companies willing to do the arbitrage. In the case of such a gap, the government doesn't really matter unless they are paying above the productivity rate.

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

#138

Post by oh_sigh »

ihumanable wrote: post #117
oh_sigh wrote: post #96

If minimum wage workers aren't responsible for the growth in productivity, why should they be paid as if they were? Would productivity actually be increased, if business owners not only had to invest in, say, machinery to improve productivity, but also needed to pay employees more now that they were using machines that improved their productivity? For example, I build fences for a living. Usually I pay a guy $100/day…

This is the heart of capitalism right, you bought the capital, the post hole digging machine, and so you get to (this next word is being used with its technical definition, make full use of and derive benefit from (a resource), not the emotionally charged one) exploit the value generated by labor using the capital. In your scenario you didn't say how much you charge the customer, but I'll assume that it's more than y…

Do any of the results change if instead of picking a quite high margin in postholes, you pick something more reasonable? What if it takes 15 years to pay off the hole digging machine, not 6 months?

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

#139

Post by Supermancho »

agitator wrote: post #44

I'm struggling to understand how productivity has anything to do with salary. Productivity increases are inevitable for everything as automation keeps improving. Salaries go up with demand for skills. If its more difficult to hire for a critical role (a skilled job or competitive), or the role generates a lot of value for a company, salaries go up. Simple economics. Low skill jobs and physical labor jobs actually req…

> productivity has anything to do with salary.

It's not complicated and it's clearly a weak strawman. Productivity (almost universally) is tied to profit via efficiency. This is known to be astronomical at scale, which is what drives automation.

> Low skill jobs and physical labor jobs actually require less and less skills as automation improves.

I'm not sure there's anything to suggest this. Regulations (primarily about safety, information containment, etc) continue to be additive. There's a certain amount of sophistication necessary just to survive in most urban areas.

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

#140

Post by eloff »

pessimizer wrote: post #129
eloff wrote: post #100

The productivity of minimum wage labor did not increase by that amount. It's largely unchanged. Computers did not do much to revolutionize productivity on your average minimum wage job. This is a major reason why wage growth is unequal across job types.

> The productivity of minimum wage labor did not increase by that amount. Maybe include a link?

I don't have one. Google it if you care enough.

It should be pretty intuitively true if you think about which jobs benefited the most from technology and which benefited the least.

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