The wage problem in a nutshell

[Craig234]

Contrary to Republican views, wages can be too low. Most people like there to be some idea that the American economy can have prosperity somewhat shared so that at least most Americans are prosperous, not only 10% super-prosperous instead.

But, wages are set almost entirely - outside the minimum wage and minimal laws - by the dictates of the owners. This would itself result in too-low wages. Why wouldn't it?

One alternative would be for the government to dictate wages. This would raise them - but is a very unpopular idea and one with admitted flaws, so it has essentially no chance to happen.

The next thing to offset those low wages is 'the marketplace'. The idea that if employer 1 wants to pay very low wages, that employer 2 will offer a higher wage to 'compete' with employer 1.

Thing is, there is some truth to that but it's of very modest benefit. It SEEMS like it is - because it exists more in an environment that HAS decent wages. But by itself it wouldn't have much effect, in an environment where workers are disposable and there are a pool of unemployed people willing to take less. Looking at how much effect this has on wages for food gatherers comes to mind, for example. That COULD be nearly all employees.

I think people are more comfortable with an idea of some 'magic hand' ensuring fair wages, than any human direction. They don't really trust anyone to run the issue, and want to think 'the market will just take care of it'.

They forget that 'the market' has a very wide variation in what's possible, and those variations include both very low and higher wages, that it's a bit complicated with multiple factors.

People don't really appreciate just how much this mechanism of solely owner-set wages keeps wages down - because historically, wages rose proportionally with the wealth created, but that changed to wear the wealth created had no effect on wages. As the wealth created doubled and doubled again, wages remained flat; all of the increase went into owners' pockets and inequality skyrocketed.

I've seen it suggested that if this change hadn't happened, the average salary would be double what it is. People don't notice because it isn't a pay cut, but the owners sure notice as their wealth balloons.

A problem in people understanding this is that they think any question about fair wages means questioning the entire system of private enterprise - that it means owners not making profits, a collapse of the whole system. It doesn't, but people think it does and resist any question about wages.

The final main issue that could affect wages is the only one that adds some power to employees - labor organization, like unions. But unions have been nearly eliminated in the private sector, with few exceptions such as the handful of Amazon workers who are just organizing. A third of workers used to be organized. As of 1979 there were 21 million union members - the change I mentioned was immediately after that.

That's the fundamental issue with wages. People would like them to be 'decent', but there is no mechanism to ensure that, so a system without that mechanism is deciding them - and deciding to keep them perhaps half of what they 'would be' under historical norms.

We have no clear alternative system. Democrats aren't running regularly on a 'new system for fair wages' I know of. If you asked a person how to ensure fair wages, I doubt almost any would have much answer. Yet we have political forces fighting to keep them down - and succeeding at that. That in a nutshell is the wage problem.

A chart showing the wishbone effect of the change:

A chart showing what Americans think wealth distribution is and should be versus what it is (this is pretty old now, it's now much worse):

 

[Razoo]

$15 an hour is not enough. $35 per hour would barely make it.

 

[gdgyva]

same damn argument that has been said at least 30x in the last 5+ years since i joined....with the exact same charts

and my exact same reply

what happened in the 1970's to where everything started to change? what was the couple of inventions that changed the world?

automation and computers

my office went from 18 column green books for accounting to spreadsheets (lotus 123) i think was the 1st one (been almost 40 years ago

and went from 23 people to 11 in under three years.....same amount of work done by less than half the people

Management and ownership paid for all the computers....and the training.....and everyone that remained got raises

But the total payroll went WAY DOWN.....and profits WAY UP

And this happened in almost every facility, every business across America and across the world over the next 20+ years

The workers had NOTHING to do with making those changes.....they didnt invest in the hardware.....didnt pay for the training

My salary went up a bunch....because i could do more with less....and that is the way corporations work.....and have for quite some time now

 

[Atreus21]

 

[diz]

The idea that wages should necessarily increase with productivity seems like unsupported wishful thinking.

For example, if a person working by hand creates 1 widget and someone invents a machine by which the same worker (+machine) makes 1000 widgets it’s absurd to think the worker’s wages should increase 1000x. Some of the return will go to the inventor of the machine and the capital that was invested in it.

Productivity sets an upper bound. As we migrate to a “knowledge economy” the returns will go increasingly to those who bring the knowledge.

 

[eohrnberger]

Contrary to Republican views, wages can be too low. Most people like there to be some idea that the American economy can have prosperity somewhat shared so that at least most Americans are prosperous, not only 10% super-prosperous instead.

But, wages are set almost entirely - outside the minimum wage and minimal laws - by the dictates of the owners. This would itself result in too-low wages. Why wouldn't it?

Wages are dictated by the local job market and what what market will bear for the job in question.

Suppose for a moment that it is that 'wages are set almost entirely . . . by the dictates of the owners'.
An owner sets the wages for a job he needs to be filled below the local job market for that job.
Do you think that he'll have many people applying to fill that job? It's rather doubtful, since he's set the wages below market.
And just suppose, for argument's sake, that a worker applies for and fills that job at that below market wage.
How long do you think they are going to stay in that job, once they find out what the market rate for their job is, and they are being underpaid?

So the logical conclusion isn't that 'wages are set almost entirely . . . by the dictates of the owners'.
Owners are constrained in that they have to compete in the job mark to have the workforce the business needs in order to operate.

. . .Snipped due to posting size limitation.

A chart showing the wishbone effect of the change:

A chart showing what Americans think wealth distribution is and should be versus what it is (this is pretty old now, it's now much worse):

 

[EdwinWillers]

Greed and envy are such ugly vices.

Those who persistently whine about wage disparities, or "living wages", or crap like this where the OP is trotting forth decades old arguments concerning productivity and wages - people knowing absolutely SQUAT about economics or the market, labor supply and demand and etc.

It is chilling though how those lies have eventually found foothold in our culture. The damage they promise to everyone's prosperity is incalculable...

...all because of greed and envy.

 

[soylentgreen]

Those on the wealthy end of the income pool would like us to believe in some sort of trickle down effect of wealth distribution.

But it makes much more sense to give more money to the poorer part of the income pool because they will spend that money. And that is what keeps an economy buoyant.

 

[EdwinWillers]

Those on the wealthy end of the income pool would like us to believe in some sort of trickle down effect of wealth distribution.

But it makes much more sense to give more money to the poorer part of the income pool because they will spend that money. And that is what keeps an economy buoyant.

The "hero" and inspiration for your theory was a thief. And like the Robin Hood of legend, what you believe makes "much more sense" is also just plain old thievery - taking from the rich and giving to the poor.

It's also not sustainable, since for such an economy to actually work, the thievery must be continuous - and you actually tell us why - the "poor" will spend the money given to them.

But then what? The money they were given is gone, spent. What does your theory require now? Well, you just said it - they need to be given more so they can spend more.

Where does "the more" come from? In your theory, the "rich." Well, you just stole their money - your theory being they have plenty of it so you can keep stealing from them.

What you people never ask though is - how did they get their money in the first place? And forget inheritances, good fortune, and luck and all that inane crap - yeah, some get it that way. We're talking about the vast majority of "the rich" - those who got it the hard way - THEY MADE IT, they created their wealth. Ideas, intelligence, skill, talent, ingenuity, hard work, DARING, RISK TAKERS... and honestly? not characteristics that describe the "poorer part of the income pool."

And to be very honest, lacking the means to make more money for themselves (than what they might already have or earn), to generate more wealth for themselves is the very reason they ARE the "poorer part of the income pool." And you and I and likely most everyone else here is part of that "pool."

Those on the "poorer part of the income pool" have two choices: 1) be satisfied with the incomes they can earn, based on what skills or talents or education they do have, working to improve them as they're able and have opportunity (which honestly, is the VAST MAJORITY OF US) or, 2) be ever dependent on the thieves to constantly re-supply them with it.

 

[gdgyva]

Those on the wealthy end of the income pool would like us to believe in some sort of trickle down effect of wealth distribution.

But it makes much more sense to give more money to the poorer part of the income pool because they will spend that money. And that is what keeps an economy buoyant.

Listen to yourself.....But it makes much more sense to give more money to the poorer part of the income pool

Not that they EARN it....that you give it to them

What ever happened to the old adage of an honest days work for an honest days pay

If a person feels they are underpaid, especially in this economy, they have every right to ask for a raise

And the owner/manager has every right to give one or say no.....

No one is FORCED to work anywhere.....if unhappy or underpaid.....MOVE or change jobs

But if it is a lack of skills that is the problem, then fix that

 

[Craig234]

But it makes much more sense to give more money to the poorer part of the income pool because they will spend that money. And that is what keeps an economy buoyant.

This stuff gets complicated. Not your point I mostly agree with. But for example.

What do you want to count as wealth? If there are productive corporations built and the wealthy own parts of them - or there is little wealth created but the wealthy own massive amounts of land - what types of wealth do you 'count' for the wealthy having more?

If you wanted to increase the wealth of a few, could you literally enslave a big percent of the population to create wealth for them, and enrich the non-slaves? But how does the math work if having them not be slaves makes them more productive, but they get to keep more?

There are a lot of complications to these things, but it's not that complicated to recognize, I think, the point about how fundamentally flawed our system is to push wealth to the top resulting in more and more extreme inequality. And our political difficulty recognizing the need for changing that, even if it's crudely increasing taxes on the rich.

 

[soylentgreen]

The "hero" and inspiration for your theory was a thief. And like the Robin Hood of legend, what you believe makes "much more sense" is also just plain old thievery - taking from the rich and giving to the poor.

Where as your theory is actually nothing more than just selfishness in disguise.

No one is stealing anything from anyone. The money spent by the poor on luxuries, goods and services go back to the big companies and into the pockets of the wealthy. Who then pay a living standard pay so that the poor have enough money to buy luxuries, goods and services. money can be spent to buy more more goods and services. It is how economies are suppose to work. They break down when the gap between the rich and poor gets to excessive.

It's also not sustainable, since for such an economy to actually work, the thievery must be continuous - and you actually tell us why - the "poor" will spend the money given to them.

This will probably offend but it has to be said. the part in bold is really annoying on the level of 101 economic students asking stupid questions annoying.

Get your head out of a theory and look around you. We are a consumer society. That is how capitalism works, by getting people to spend money.

But then what? The money they were given is gone, spent.

Wow! Do you think the money once spent to buy something then magically disappears?????? I am going to love whatever excuse you give.

What does your theory require now? Well, you just said it - they need to be given more so they can spend more.

The subject matter here is wages earned, not charity.

Where does "the more" come from? In your theory, the "rich." Well, you just stole their money - your theory being they have plenty of it so you can keep stealing from them.

Which they have every opportunity to get it back by selling them more crap. Where do you thing money goes when someone buys a new iphone?

What you people never ask though is - how did they get their money in the first place? And forget inheritances, good fortune, and luck and all that inane crap - yeah, some get it that way. We're talking about the vast majority of "the rich" - those who got it the hard way - THEY MADE IT, they created their wealth. Ideas, intelligence, skill, talent, ingenuity, hard work, DARING, RISK TAKERS... and honestly? not characteristics that describe the "poorer part of the income pool."

That thinking always does appear. Wonderful that you want an economic system that starts with the premise that the poor are worthless. Not a chance that will lead to a revolution.

So your argument here is that it is justified for a person who has become wealthy from all that inspiring description of how to create wealth to then turn around and use that wealth to create poverty and the servitude that will go along with it? And do not tell me you did not say this. The context of your remark implies it.

And to be very honest, lacking the means to make more money for themselves (than what they might already have or earn), to generate more wealth for themselves is the very reason they ARE the "poorer part of the income pool." And you and I and likely most everyone else here is part of that "pool."

You have a weird idea about the poor. Now they appear to have spare cash to invest. But in reality those paid less than a living standard are having to sometimes make decisions between buying shoes for the kids or food for dinner.

Those on the "poorer part of the income pool" have two choices: 1) be satisfied with the incomes they can earn, based on what skills or talents or education they do have, working to improve them as they're able and have opportunity (which honestly, is the VAST MAJORITY OF US) or, 2) be ever dependent on the thieves to constantly re-supply them with it.

Or else what? You will come after them with guns and death. You wish to rule by fear as well as oppress the majority so the few can live in luxury. That is what actual theft is.

Be grateful, I do not often bother to break down what someone tells me. But yours is an economy that you need to think about more carefully. Your attitude to the poor is the problem here not the economics. Just as you want to paint the wealthy as honest and good so you must also treat the poor or else the bigotry is there for all to see.

 

[soylentgreen]

Listen to yourself.....But it makes much more sense to give more money to the poorer part of the income pool

Not that they EARN it....that you give it to them

What ever happened to the old adage of an honest days work for an honest days pay

If a person feels they are underpaid, especially in this economy, they have every right to ask for a raise

And the owner/manager has every right to give one or say no.....

No one is FORCED to work anywhere.....if unhappy or underpaid.....MOVE or change jobs

But if it is a lack of skills that is the problem, then fix that

My apology I should of realised someone would get hung up on a word. Assuming people can read in the context that the subject matter is wages is a asking a bit to much.

Dumb it down for the readers, thanks got it.

 

[soylentgreen]

This stuff gets complicated. Not your point I mostly agree with. But for example.

What do you want to count as wealth? If there are productive corporations built and the wealthy own parts of them - or there is little wealth created but the wealthy own massive amounts of land - what types of wealth do you 'count' for the wealthy having more?

If you wanted to increase the wealth of a few, could you literally enslave a big percent of the population to create wealth for them, and enrich the non-slaves? But how does the math work if having them not be slaves makes them more productive, but they get to keep more?

There are a lot of complications to these things, but it's not that complicated to recognize, I think, the point about how fundamentally flawed our system is to push wealth to the top resulting in more and more extreme inequality. And our political difficulty recognizing the need for changing that, even if it's crudely increasing taxes on the rich.

That's capitalism for you. The more complicated they tell you it is the more money they are going to ask for to fix it.

I think it far more complicated for america than say england which has a type of governance of political party system. Yours are more individual politicians under an umbrella party system. You need cohesion of a single party to run a welfare system such as england has.

 

[EdwinWillers]

Where as your theory is actually nothing more than just selfishness in disguise.
No one is stealing anything from anyone. The money spent by the poor on luxuries, goods and services go back to the big companies and into the pockets of the wealthy. Who then pay a living standard pay so that the poor have enough money to buy luxuries, goods and services. money can be spent to buy more more goods and services. It is how economies are suppose to work. They break down when the gap between the rich and poor gets to excessive.
This will probably offend but it has to be said. the part in bold is really annoying on the level of 101 economic students asking stupid questions annoying.
Get your head out of a theory and look around you. We are a consumer society. That is how capitalism works, by getting people to spend money.
Wow! Do you think the money once spent to buy something then magically disappears?????? I am going to love whatever excuse you give.
The subject matter here is wages earned, not charity.
Which they have every opportunity to get it back by selling them more crap. Where do you thing money goes when someone buys a new iphone?
That thinking always does appear. Wonderful that you want an economic system that starts with the premise that the poor are worthless. Not a chance that will lead to a revolution.
So your argument here is that it is justified for a person who has become wealthy from all that inspiring description of how to create wealth to then turn around and use that wealth to create poverty and the servitude that will go along with it? And do not tell me you did not say this. The context of your remark implies it.
You have a weird idea about the poor. Now they appear to have spare cash to invest. But in reality those paid less than a living standard are having to sometimes make decisions between buying shoes for the kids or food for dinner.
Or else what? You will come after them with guns and death. You wish to rule by fear as well as oppress the majority so the few can live in luxury. That is what actual theft is.
Be grateful, I do not often bother to break down what someone tells me. But yours is an economy that you need to think about more carefully. Your attitude to the poor is the problem here not the economics. Just as you want to paint the wealthy as honest and good so you must also treat the poor or else the bigotry is there for all to see.

I'd respond, but clearly - what's the point?
Not only did you not grasp a single word I said, but without even trying, you also managed to misconstrue, misrepresent, or just plain miss entirely everything I said as well.
If it weren't so sad, it'd be fascinating.

Look - no one needs some first semester poly sci student coming here, strutting their Che Guevara t-shirt and kerchief, presuming to lecture us with stale, dysfunctional marxist theory about "how economies are supposed to work."
Dose of reality - marxist theory has YET to produce an economy that works - even marginally, mmkay?

I've been in the business world for over 40 years now; my masters IS in business.
I've got more months LIVING this subject matter than you have pages in your textbooks on the subject.

I've neither the time nor the interest in repairing the emotional and intellectual damage done to you in whatever basic econ class it was you took.
Maybe your professor can console you with how wrong I am and how right he is and everything will be hunky dory - until you graduate of course and see the real world for yourself.

For now, you're dismissed. Have a wonderful rest of the day.

 

[aociswundumho]

But, wages are set almost entirely - outside the minimum wage and minimal laws - by the dictates of the owners.

If that were true, then all of the greedy owners would pay no more than the legal minimum, yet only 1.9% off all workers receive minimum wage.

People don't really appreciate just how much this mechanism of solely owner-set wages keeps wages down -

We want wages to be kept down. Wages are a cost, not a benefit. Which benefits society more, a neurosurgeon willing to work for no less than 500k per year, or one willing to work for 50k per year?

A chart showing the wishbone effect of the change:

Lol, the address of the EPI chart you posted is from an article debunking that chart. You have to look at total compensation, not just wages:

US Wages Have Been Rising Faster Than Productivity For Decades

I'm aware that this isn't what you believe, you are sure because the EPI has told you so, that American wages have been falling behind productivity rises over the decades. And there's a lovely piece of new research which shows that this simply isn't true. Far from it in fact, [...]

www.forbes.com

 

[The Mark]

$15 an hour is not enough. $35 per hour would barely make it.

Yep. $15/hr was the goal of a decade ago, maybe longer.

The actual goal should be a minimum wage based on the cost of living in an area, calculated to provide a minimal but comfortable standard of living.

I think they call that a "living" wage.

 

[eohrnberger]

Yep. $15/hr was the goal of a decade ago, maybe longer.

The actual goal should be a minimum wage based on the cost of living in an area, calculated to provide a minimal but comfortable standard of living.

Hasn't this idea already demonstrated itself as failed in history?

"From each according to his ability, to each according to his needs" (German: Jeder nach seinen Fähigkeiten, jedem nach seinen Bedürfnissen) is a slogan popularised by Karl Marx in his 1875 Critique of the Gotha Programme.[1][2] The principle refers to free access to and distribution of goods, capital and services.[3] In the Marxist view, such an arrangement will be made possible by the abundance of goods and services that a developed communist system will be capable to produce; the idea is that, with the full development of socialism and unfettered productive forces, there will be enough to satisfy everyone's needs.[4][5]​

From each according to his ability, to each according to his needs - Wikipedia

en.wikipedia.org

Who get's to decide this cost of living level and what 'a minimal but comfortable standard of living' is defined as?

I think they call that a "living" wage.

Which is rapidly being consumed and destroyed by inflation, for one, and itself adds inflationary pressure.

It's time to ask the question 'And then what will result?' at least 5 times digging deeper in each posing of that question, rather than simply take yet another already proven failed progressive public policy prescription at face value.

 

[gdgyva]

Yep. $15/hr was the goal of a decade ago, maybe longer.

The actual goal should be a minimum wage based on the cost of living in an area, calculated to provide a minimal but comfortable standard of living.

I think they call that a "living" wage.

Well you and your buddies can open up a bakery as a test

Spend 30m just to put the basics in.....and those are second hand

Then pay all your employees $ 35 hour or higher.....

I want to see what your bread and muffins cost.....

If you last a year i will be surprised....6 months is my guess before the red stains everything

Hell i will send you some of my workers.....for $ 35 bucks an hour they will make bread....or eat it

Or whatever you want to make or sell.....best of luck going broke

 

[Lloyd Christmas]

Greed and envy are such ugly vices.

Those who persistently whine about wage disparities, or "living wages", or crap like this where the OP is trotting forth decades old arguments concerning productivity and wages - people knowing absolutely SQUAT about economics or the market, labor supply and demand and etc.

It is chilling though how those lies have eventually found foothold in our culture. The damage they promise to everyone's prosperity is incalculable...

...all because of greed and envy.

god damn what moronic shit. The greedy are the scumbags taking all the wealthy while their workers are living in poverty. The billionaires while 50% of the country have no saving, millions on the brink of homelessness. As usual, a moronic right wing response is nothing but projection

 

[eohrnberger]

Well you and your buddies can open up a bakery as a test

Spend 30m just to put the basics in.....and those are second hand

Then pay all your employees $ 35 hour or higher.....

I want to see what your bread and muffins cost.....

If you last a year i will be surprised....6 months is my guess before the red stains everything

Hell i will send you some of my workers.....for $ 35 bucks an hour they will make bread....or eat it

Or whatever you want to make or sell.....best of luck going broke

Such is when liberal / progressive / Democrat 'theories' hit business reality. They go broke.

 

[NoMoreDems-Reps]

Contrary to Republican views, wages can be too low. Most people like there to be some idea that the American economy can have prosperity somewhat shared so that at least most Americans are prosperous, not only 10% super-prosperous instead.

But, wages are set almost entirely - outside the minimum wage and minimal laws - by the dictates of the owners. This would itself result in too-low wages. Why wouldn't it?

One alternative would be for the government to dictate wages. This would raise them - but is a very unpopular idea and one with admitted flaws, so it has essentially no chance to happen.

The next thing to offset those low wages is 'the marketplace'. The idea that if employer 1 wants to pay very low wages, that employer 2 will offer a higher wage to 'compete' with employer 1.

Contrary to Liberal views, there has NEVER been any Laws that can Stop "LIBERALS" from creating, or owning businesses. So they can
start all the companies they want and pay THE BEST POSSIBLE WAGES to everyone !!!!
PLEASE GO F'n DO IT and STOP trying to FORCE OTHER PEOPLE TO TAKE CARE OF YOU!!!!!....

Think about it if you did this, you would absolutely have the Best Workers working for you, and all the "BAD" min Wage companies would
go under!!!! So Go do it!!! Ever second you waist complaining about others "NOT DOING WHAT YOU WANT" is a missed second from your liberal utopia, that you keep asking OTHER PEOPLE to Create "FOR YOU" !!!!!.....

 

[EdwinWillers]

god damn what moronic shit. The greedy are the scumbags taking all the wealthy while their workers are living in poverty. The billionaires while 50% of the country have no saving, millions on the brink of homelessness. As usual, a moronic right wing response is nothing but projection

'nuff said in response to that.

 

[The Mark]

Hasn't this idea already demonstrated itself as failed in history?

"From each according to his ability, to each according to his needs" (German: Jeder nach seinen Fähigkeiten, jedem nach seinen Bedürfnissen) is a slogan popularised by Karl Marx in his 1875 Critique of the Gotha Programme.[1][2] The principle refers to free access to and distribution of goods, capital and services.[3] In the Marxist view, such an arrangement will be made possible by the abundance of goods and services that a developed communist system will be capable to produce; the idea is that, with the full development of socialism and unfettered productive forces, there will be enough to satisfy everyone's needs.[4][5]​

From each according to his ability, to each according to his needs - Wikipedia

en.wikipedia.org

Who get's to decide this cost of living level and what 'a minimal but comfortable standard of living' is defined as?


Which is rapidly being consumed and destroyed by inflation, for one, and itself adds inflationary pressure.

It's time to ask the question 'And then what will result?' at least 5 times digging deeper in each posing of that question, rather than simply take yet another already proven failed progressive public policy prescription at face value.

So you're saying that:

1. This idea is communism and/or Marxism, and thus bad because USSR/other communist countries.
2. If everyone had enough to live a mostly comfortable life, there wouldn't be enough supplies to feed demand and thus we would have inflation.

 

[rickc]

The real disconnect was Reagan's tax cuts.

Before Reagan the business owners and ceo's couldn't keep over $200,000 so it was much easier to invest in your company or workers.

After Reagan the wealthy found they could keep it all and they did.

Republicans and their wealthy donors have been working the tax code to their benefit every since.