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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

#141

Post by SketchySeaBeast »

anoonmoose wrote: post #135
tasty_freeze wrote: post #110

Many comments are focused on "But why should minimum wage jobs pay scale rise with productivity? The jobs haven't gotten any more demanding." But isn't this logic applied to average CEO pay, which has gone up many times faster than productivity? CEOs work isn't any more demanding than it used to be, either.

It is obvious to me that pushing a broom has not gotten more complex over the last hundred years. It is significantly less obvious that being a CEO has not gotten more complex over the last hundred years.

I'd say that "pushing a broom" is a straw-man of a job that doesn't actually exist anymore, if it ever did.

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

#142

Post by dcolkitt »

ardy42 wrote: post #3
dcolkitt wrote: post #2

Average annual wages in the United States for was $63,000 for the most recent year available.[1] Average annual hours worked was 1,779 per year.[2] That implies an average wage of $35/hour. [1] https://en.wikipedia.org/wiki/List_of_countries_by_average_w... [2] https://data.oecd.org/emp/hours-worked.htm

That doesn't contradict the actual article, whose full title is: > If Worker Pay Had Kept Pace With Productivity Gains Since 1968, Today's Minimum Wage Would Be $24 an Hour It looks like when it was shortened one of its most important words were dropped.

That makes more sense. But keep in mind that only 2.3% of hourly workers make minimum wage.[1] It's not really fair to compare productivity (a mean) or even median output to wages at the second percentile.

It's an interesting question in its own right. Do the very lowest paid people in the economy have it better or worse than 50 years ago. I don't know the full answer to that question, but I do know that in 1968 about 5% of American households didn't have full indoor plumbing.[2] Just based on that datum, I'd much rather trade places with a very poor American in 2020 than 1968.

[1] https://www.bls.gov/opub/reports/minimum-wage/2017/home.htm [2] https://www.aceee.org/files/proceedings/2004/data/papers/SS0...

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

#143

Post by [deleted] »

martin_bech wrote: post #140
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…

Hi from Scandinavia, we dont have a monopoly on anything, and no actual minimum wage, yet people make about $20+ at the lowest paying jobs, enjoy 5 weeks paid vacation, free healthcare and cheap childcare..

[deleted]

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

#144

Post by sneak »

SketchySeaBeast wrote: post #141
anoonmoose wrote: post #135

Earlier quoted context omitted.

It is obvious to me that pushing a broom has not gotten more complex over the last hundred years. It is significantly less obvious that being a CEO has not gotten more complex over the last hundred years.

I'd say that "pushing a broom" is a straw-man of a job that doesn't actually exist anymore, if it ever did.

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.

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

#145

Post by oramit »

woo49 wrote: post #76
michaelbuckbee wrote: post #40

There's a lot of reasons for this but one of the largest is the near invisible (to me) structural shift from direct hire to contractors for jobs at the lower end of the wage/salary spectrum. There is a fantastic long form article that articulates this better than I can at: https://highline.huffingtonpost.com/articles/en/poor-millenn... The portion relevant to this discussion: "Thirty years ago, she says, you could wa…

The biggest reason is that there has been almost no productivity gain for cleaning a hotel in the last 20-30 years. It takes same amount of time and effort. So why would the wages go up if productivity is not up? The productivity gains went to either things that got automated (e.g. speciality equipment operator - wages are higher but there are less jobs) or knowledge workers (software engineering salaries have skyroc…

For something like hotel cleaning you also have to take into account the large grey market for labor. There are estimated to be around 10.5-12 million undocumented migrants in the US.

It's not a coincidence that there is a rotating crew of Russian speaking janitors who clean my office building and Spanish speaking landscapers outside my apartment. I'm not discounting that many of them are legal immigrants, just lower skilled and working their way on up. More power to them.

I can also see though how this situation is easily taken advantage of. Contracting firm hires undocumented workers for below market rates and is able to under bid for contracts. Big company fires their in house workers to save money and hires the contracting firm. Big company then gets the advantage of undocumented labor wages without the liability.

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

#146

Post by friedman23 »

martin_bech wrote: post #140
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…

Hi from Scandinavia, we dont have a monopoly on anything, and no actual minimum wage, yet people make about $20+ at the lowest paying jobs, enjoy 5 weeks paid vacation, free healthcare and cheap childcare..

Scandinavia isn't a country

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

#147

Post by norseboar »

staplers wrote: post #112
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…

If nothing gets cheaper Would anything need to get cheaper if everyone was making more money?

It depends on why productivity is increasing. Generally speaking, the employer is pushing productivity increases (implementing better processes like assembly lines, buying equipment that lets an employee do more, etc). If the employer is pushing the increases, they need some incentive to do that.

Often that incentive is making goods cheaper, so they're more competitive. That's a huge generalization, but it makes the point that there's nothing wrong with productivity gains outpacing wages.

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

#148

Post by triceratops »

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…

> if all of it is passed back to the employee, then the goods produced don't actually get cheaper.

There's a spectrum between none and all.

Also, why wouldn't goods get cheaper? Scaling up production is easy so it's not a supply issue. There would be two outcomes: people would buy more goods overall (as has happened over time) or they would work less and enjoy more leisure time.

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

#149

Post by norseboar »

jaggederest wrote: post #102
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…

I think you have to look at the division of the added value by the changes in productivity. Were it something closer to 50-50 that might be reasonable, but so far as I can tell based on changes in wages over time, that's not the case at all.

Totally. I don't think there's anything wrong with saying "Gee, this store is making way more money but its employees are being paid the same, that sucks". I think indexing the minimum wage to inflation makes sense. I think a lot of low-skill jobs should be higher-paid, and I think raising the minimum wage is a good tool in some cases (although I think the people pushing for national increases often overlook the effect that a doubling wage will have in a rural area where the cost of labor really does impact the ability of a smaller store to stay open).

My point is just that I don't think "wages should keep pace with productivity" is true. If wages always rose with productivity, we'd be focusing all the gains on the people in the sectors where productivity is growing, and not lowering the cost of goods for everybody else.

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

#150

Post by try-perforate »

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…

But isn't this the cause of inequality? If you can't pay commensurate with productivity, a larger share of capital flows to capital owners and you stretch out the exponential curve. There are humans on the other side of the equation and there are other costs besides labor involved with operations.

There's a reason why common good capitalism is an increasingly attractive model for a lot of folks. A society cannot maintain the maximize returns to capital model indefinitely. I think many people are realizing that Friedman's economics either cannot be sustained or lead to a place where many would prefer not to go. People, and therefore the invisible hand, are inherently flawed.

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