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:
"Thirty years ago, she says, you could walk into any hotel in America and everyone in the building, from the cleaners to the security guards to the bartenders, was a direct hire, each worker on the same pay scale and enjoying the same benefits as everyone else. Today, they’re almost all indirect hires, employees of random, anonymous contracting companies: Laundry Inc., Rent-A-Guard Inc., Watery Margarita Inc. In 2015, the Government Accountability Office estimated that 40 percent of American workers were employed under some sort of “contingent” arrangement like this—from barbers to midwives to nuclear waste inspectors to symphony cellists. Since the downturn, the industry that has added the most jobs is not tech or retail or nursing. It is “temporary help services”—all the small, no-brand contractors who recruit workers and rent them out to bigger companies.
The effect of all this “domestic outsourcing”—and, let’s be honest, its actual purpose—is that workers get a lot less out of their jobs than they used to. One of Batt’s papers found that employees lose up to 40 percent of their salary when they’re “re-classified” as contractors. In 2013, the city of Memphis reportedly cut wages from $15 an hour to $10 after it fired its school bus drivers and forced them to reapply through a staffing agency. Some Walmart “lumpers,” the warehouse workers who carry boxes from trucks to shelves, have to show up every morning but only get paid if there’s enough work for them that day."
And if they had kept up since 1949, minimum wage would be $4.22 an hour. Two can play the game of cherrypicking troughs and peaks. Additionally, average productivity is not minimum wage productivity. They are separate statistics, and the bulk of the efficiency gains have not been made at the burger flipper level, but at higher levels, where there have been huge gains in pay. The productivity gains in engineering and manufacturing and energy production, etc... have dragged up the average. Someone stocking shelves in 2020 is about productive as someone stocking shelves in 1968.
> And if they had kept up since 1949, minimum wage would be $4.22 an hour. Two can play the game of cherrypicking troughs and peaks.
This is just wrong: the article is not talking about inflation; it is talking about indexing the minimum wage to productivity. Eyeballing the graph from the original article (and projecting productivity back to 1949), if indexed to productivity, then minimum wage would be at ~$15.
Your subsequent criticisms have more merit, but the article addresses them as well. You may disagree with the article's arguments, but you should at least acknowledge them.
> It would be claimed that the productivity of minimum wage workers has not kept pace with average productivity growth, so that it would not be feasible for minimum wage workers to earn pay that rises in step with average productivity growth.
> There is some truth to this claim, but only at a superficial level. The productivity of any individual worker is determined not just by their skills and technology, but also by the institutional structure we put in place.
>Someone stocking shelves in 2020 is about productive as someone stocking shelves in 1968.
This is not completely fair. There are countless innovations that have allowed these low skill jobs to have an increase in efficiency and productivity.
One example, when I was a teen and worked retail I remember we would all have to spend hours going around the store counting every product on the shelves in order to do our routine inventory checks because there was no other reasonable way to track that information. Now many stores have intelligent inventory tracking that requires little to no work from employees. The end result is that these employees are more efficient, stores need less workers, and stores can carry less inventory. Why isn't the benefit of that efficiency passed on to those employees who are now more efficient? How is that any different than a software developer receiving a higher salary because they are more efficient due to computers being more powerful?
Assuming you cherry-picked the lowest wage and this article cheery-picked the highest when compared to productivity gains,
a naive split right down the center would yield a wage of $14.11/hr — or almost double federal minimum wage today.
I throw this number out there not for it to be taken seriously on its own purely because it’s “in the middle”, but to hopefully put into perspective how large this gap is, again naively assuming the “correct” number is somewhere between the two extremes.
I personally find it harder to imagine that the “correct” minimum wage is closer to $4.22 than it is to $14.11 or even $24, but that’s just me.
I think "kept pace" implies that if the trend were to continue. In your link, it looks like the trend for adjusted wages from the 40s to the early 70s is up and to the right, but after that point it reverses. Those two graphs still tell the same story to me.
Help me to understand how you're reading this graph. I understand it to mean that in 1949 minimum wage was $4.22 an hour in 2018 dollars. Does that graph show worker productivity as well?
Similarly I do not understand your assertion that the author is "cherrypicking troughs and peaks". from tfa:
> Until 1968, the minimum wage not only kept pace with inflation, it rose in step with productivity growth. The logic is straightforward; we expect that wages in general will rise in step with productivity growth. For workers at the bottom to share in the overall improvement in society’s living standards, the minimum wage should also rise with productivity.
Is their assertion regarding 1968 and minimum wage factually incorrect?
Also, "total compensation" is the correct thing to compare with, not "wage".
Total compensation includes the value of benefits and the (so-called) employer contribution to taxes. Total compensation can be up to 40% more than salary.
> Someone stocking shelves in 2020 is about productive as someone stocking shelves in 1968.
Note there was an article on the HN front page just in the past week or so about how Amazon warehouse workers were getting more repetitive stress injuries because partial warehouse automation allowed them to fulfill 3x the number of items per hour than before these systems were put in place.
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.
Is there any evidence that whole-workforce productivity applies equally to minimum wage jobs? If not, the claim seems unsustainable.
Completely anecdotally, improvements in labor productivity due to automation (etc) are less likely to be impactful in jobs like waiting tables, delivering newspapers or flipping hamburgers.
That anecdotal evidence is backed by research that shows that service sector productivity tends to lag other sectors significantly.
It absolutely does not. Productivity gains over the past 50 years have been disproportionately concentrated in higher skilled positions (who earn salaries, not wages). If you feel like reading a 66 page extremely dry analysis of the relationship between compensation and productivity then here you go. https://www.nber.org/papers/w24165.pdf
Why would we tie minimum wage to worker productivity OR inflation?
What is the minimum wage trying to accomplish in the first place?
It seems obvious to me that we have to index it to the living wage instead.
A full-time job needs to cover: one half of a 2-bedroom apartment in the outskirts of town, plus food, bills, and basic medical expenses. If it doesn't cover this, then this person is going to rely on government programs.
And if the government programs aren't there, they'll be coming home each night after a full day of work and watching their kid get skinnier, seeing their CEO collect multimillion dollar bonuses in the news, and you can be damn sure they won't stand for it. They'd unionize, protest, and demand higher compensation.
Our social safety nets are an important part of our society, but when they're required and used by full-time employees, it's something of a taxpayer subsidy for the corporations who can now pay their employees less than what's required to live.
And if a job can't be done profitably for a living wage, we need to let that job go. Automate it, outsource it, let the companies that depend on this exploitative labor pivot to new business models, or let them wither and die. The jobs are going to leave eventually anyway - we might as well accelerate the push toward a modern labor economy that's already underway. We can funnel the productivity gains from automation into education, to allow the displaced a chance to retool and learn a new skill, and to bulk up our social safety nets for those who are too old to do so.
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 gets cheaper, there's no incentive for a business to invest in tech that makes employees more productive.
The data in the piece has a lot of problems with it too, but I think the core assumption is fundamentally off-base.
These sorts of comparisons are extremely difficult to make. They depend very strongly on what exactly you’re looking at, how you’re measuring inflation, etc. You can easily make charts that show total worker compensation is closely tracking productivity growth: https://www.americanactionforum.org/research/does-compensati...
(Unlike Common Dreams, this article shows their work and discloses their exact methodology and data sources.)
There’s a couple of big picture issues to consider:
1) Why focus on just wages, rather than just benefits? If productivity doubles, but the cost of providing healthcare triples, should employers cover the increased healthcare costs and also double wages? It’s not Microsoft’s fault that it costs $5,000 to get an MRI. From the perspective of how much is transferred from the employer to the employee, a dollar spent on wages isn’t any different than a dollar spent on healthcare.
Failing to distinguish the two things obscured the real problems. It makes you think something is a structural economic problem when in reality it’s cost disease in a particular industry. Wages aren’t keeping up with the cost of housing in New York and San Francisco. But nationwide, the median mortgage payment as a percentage of the median income has scarcely changed since the 1970s. Are wages the problem or are local laws around housing the problem?
2) There is kind of a metaphysical question about who should get the benefits of investment in technology. If you replace 100 workers with technology + very expensive capital equipment, productivity will increase by a factor of 10. (That’s how labor productivity is measured.) Does that mean wages should go up by a factor of 10?
Many (most) minimum wage jobs do not provide any meaningful benefits, so it's tangential to the minimum wage in most cases.
There's no doubt some fuzzy math involved to extrapolate inflation over the course of 50+ years, but I don't think that invalidates the fact that minimum wage has objectively not kept up with inflation even remotely.
The federal minimum wage has been stuck at $7.25 since 2009, and a handful of states are only just now breaching $15/hr. At this rate by the time a federal increase happens we'll already be another 20 years behind.
Worse yet is that labor data shows that more and more adults are working in minimum wage jobs, so the talking point of "it's just summer jobs for teenagers" and "it's entry level work to move on from" is very out of touch with reality these days. There are millions of people trying to survive on these wage levels and without benefits and it is not working.
I feel this discussion always misses an important point. The value of something has nothing to do with its costs or profits. The value of things (labor included) is subjective and is normally related to its scarcity. In the period analyzed the workforce basically doubled because the inclusion of woman to the workforce, therefore it had a huge pressure to keep it low.
1971, 1968, doesn't really matter. But - many such "negative" effects only really show up after 1981, that is after the peak of the interest rates. RIP Volcker, the last Fed president with vision.
If you're into slightly crazy sounding theories about the cyclical nature of human progress I recommend: https://en.wikipedia.org/wiki/Strauss%E2%80%93Howe_generatio.... Ray Dalio is also writing a lot on his own version of the "around 80 years cycle" theory.
I could have bought into this theory... Except that it has these four generations grouped and seems to just cherry-pick good and bad events for each to meet the narrative. I would have expected that every generation have certain crises and certain renaissances active at the same time, and that the pattern of these might loop over time.
Shipping containers were standardized between 1968-1970. A device that enables efficient outsourcing to cheaper labor is a likely reason for labor wages stagnating while overall productivity rises.
Productivity goes into reducing prices, not increasing pay.
When a whole market can make 10x more solar panels for the same cost, solar prices go down by you guessed it - about 90%.
You don't suddenly have 10x more profit to pay your employees. Maybe a monopoly would, but not a competitive market like most businesses are in. These people have absolutely no clue what they are talking about.
This is an interesting comment and your example is a good one, however, the productivity gains are measured in dollars, so I would assume they account for lower prices already. Unless there is some independent measure of the value of product that doesn't reflect lower prices.
This is so horribly flawed. Productivity improvements have been concentrated at the high end, and those that have occurred in low skilled jobs have been almost entirely due to technology, not to labor efficiency. Technology gains have always disproportionately been captured by the providers of capital over the providers of labor (given they are the ones who invest in said technology).
The data isn't sourced. Most claims of this nature ultimately source back to EPI's faked data that uses two different measures of inflation to falsely portray the productivity gap as far higher than it actually is.
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.
"Average" anything in populations with large ranges is a terrible, terrible measure. As the joke goes, Bill Gates walks into a bar, and on average everyone in the bar is a millionaire.
Median is the appropriate statistic for such cases.
As noted in your first link, average wage is misleading because the high end is incomprehensibly large (and is where most growth has taken place) and that skews the result.
>The wage distribution is right-skewed; the majority of people earn less than the average wage. For an alternative measure, the median household income uses median instead of average.
In a very simplistic way, shouldn't the average wage keep pace with the average productivity gains and the minimum wage keep pace with the minimum productivity gains? I can see the average farmer making huge productivity strides, since they use much more complex combines, and irrigation systems and such, but did the productivity of a burger flipper go up similarly?
This is not how it works in actuality [0]. Wages are market, not productivity, driven. Even if particular work-field doesn’t increase in productivity, aggregate wage increases (due to perhaps aggregate productivity increases or change in labor relations) cause salary increase. Similarly, productivity increases don’t themselves cause salary increases.
Real life example, factory worker productivity rose dramatically with automation, and salaries did not keep up. Physician productivity did not increase much but salaries grew.
Minimum wages are inconsistent with the idea that people should be paid strictly according to their productivity. If society becomes more productive overall, as a matter of fairness I think that “should” result in the minimum wage being increased. The lowest-paid workers “should” enjoy better living conditions today than they did in the 1980s. Productivity gains across the entire economy are easier to quantify than “living conditions,” so I think the article makes a good case that the minimum wage “should” be significantly higher than it is now.
Productivity growth at the bottom end is very low, but wages at the bottom end still need to keep up with the cost of living or people who are in minimum wage jobs will no longer earn enough to survive.
> In a very simplistic way, shouldn't the average wage keep pace with the average productivity gains and the minimum wage keep pace with the minimum productivity gains?
Maybe I’m wrong but what is the causal link between productivity and wages, especially minimum wage?
I always thought that cost of living dictated wages and the so-called wage stagnation was due to relative lack of inflation for basic living expenses over the past 20 years.
Also the past 20 years have seen a relative large influx of immigration compared to the previous 20 years. Increasing the competition between workers and would in turn lowering wages, at least according to supply/demand forces. This effect would be especially pronounced for minimum wage workers but with the expansion of the H1B program it will soon be observed for high income tech workers as well.
There isn't a causal link. That's why we have minimum wage laws. The idea is that rather than paying people what we can get away with, we pay them what they are worth to us.
If productivity improves, but wages are indexed only to inflation, then the rich get richer and the poor at best stay the same. They produce more but don't see their lives get better. In a country that has produced so much additional wealth, it would be nice if the people who produce it became themselves better off, rather than have the gains concentrate in a smaller and smaller minority.
The minimum wage doesn't just stagnate. It's not inflation-indexed, so inflation eats into it: it hasn't increased since 2009, and even though we're often below the Fed's target rate, inflation has still reduced the value of that by 20%. That suggests it's time to raise it, and the $24/hour figure helps put the quantity into context. It makes a $15/hour wage seem very doable, since it's less than half of the productivity increase.
I don't think there is. This is mostly political in that businesses ought to be keeping up wages because that's the right thing to do. If the supply of labor is such that they always have access to lower-paid workers though, there's no real obligation to increase pay.
This is when minimum wage should come in, and this would be an argument for increasing minimum wage to that end, but businesses themselves can just ignore these kinds of arguments. Certain benevolent PR acts run contrary to this where they do increase wages because it's the right thing to do.
Smart-but-lazy employees are interested in efficiency, and will work uncharacteristically hard in order to achieve it.
Bosses and owners are only interested if there's something in it for them. As in does it increase our output without a proportional increase in costs. The bigger the gap the more social capital I will burn on making that change (including, but not limited to, fucking over my loyal employees by replacing half of them with a machine, or imports).
We would have barely any of those productivity gains if they didn't also lower the cost of labor per item. So this number is a largely hypothetical. And perhaps a little unhealthy to dwell on.
Conversely, though, if minimum wage had kept pace with inflation, we might see higher productivity today because process people would have had the ammunition to push for more and bigger improvements to production and overhead costs. New equipment would be rolled out sooner while prices were still high, making a steeper adoption curve and accelerating R&D expenditure.
Still, it would be better if management did not try to keep 99% of every dollar saved. We could easily see a world where, instead of the $12/hr we should have simply to maintain the spirit of the minimum wage as it was conceived, everybody had Seattle's $15/hr minimum wage and big cities were trying to legislate for $20.
[+] [-] michaelbuckbee|5 years ago|reply
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 walk into any hotel in America and everyone in the building, from the cleaners to the security guards to the bartenders, was a direct hire, each worker on the same pay scale and enjoying the same benefits as everyone else. Today, they’re almost all indirect hires, employees of random, anonymous contracting companies: Laundry Inc., Rent-A-Guard Inc., Watery Margarita Inc. In 2015, the Government Accountability Office estimated that 40 percent of American workers were employed under some sort of “contingent” arrangement like this—from barbers to midwives to nuclear waste inspectors to symphony cellists. Since the downturn, the industry that has added the most jobs is not tech or retail or nursing. It is “temporary help services”—all the small, no-brand contractors who recruit workers and rent them out to bigger companies.
The effect of all this “domestic outsourcing”—and, let’s be honest, its actual purpose—is that workers get a lot less out of their jobs than they used to. One of Batt’s papers found that employees lose up to 40 percent of their salary when they’re “re-classified” as contractors. In 2013, the city of Memphis reportedly cut wages from $15 an hour to $10 after it fired its school bus drivers and forced them to reapply through a staffing agency. Some Walmart “lumpers,” the warehouse workers who carry boxes from trucks to shelves, have to show up every morning but only get paid if there’s enough work for them that day."
[+] [-] missedthecue|5 years ago|reply
https://www.cnn.com/interactive/2019/business/us-minimum-wag...
[+] [-] tylerhou|5 years ago|reply
This is just wrong: the article is not talking about inflation; it is talking about indexing the minimum wage to productivity. Eyeballing the graph from the original article (and projecting productivity back to 1949), if indexed to productivity, then minimum wage would be at ~$15.
Your subsequent criticisms have more merit, but the article addresses them as well. You may disagree with the article's arguments, but you should at least acknowledge them.
> It would be claimed that the productivity of minimum wage workers has not kept pace with average productivity growth, so that it would not be feasible for minimum wage workers to earn pay that rises in step with average productivity growth.
> There is some truth to this claim, but only at a superficial level. The productivity of any individual worker is determined not just by their skills and technology, but also by the institutional structure we put in place.
[+] [-] slg|5 years ago|reply
This is not completely fair. There are countless innovations that have allowed these low skill jobs to have an increase in efficiency and productivity.
One example, when I was a teen and worked retail I remember we would all have to spend hours going around the store counting every product on the shelves in order to do our routine inventory checks because there was no other reasonable way to track that information. Now many stores have intelligent inventory tracking that requires little to no work from employees. The end result is that these employees are more efficient, stores need less workers, and stores can carry less inventory. Why isn't the benefit of that efficiency passed on to those employees who are now more efficient? How is that any different than a software developer receiving a higher salary because they are more efficient due to computers being more powerful?
[+] [-] thebradbain|5 years ago|reply
I throw this number out there not for it to be taken seriously on its own purely because it’s “in the middle”, but to hopefully put into perspective how large this gap is, again naively assuming the “correct” number is somewhere between the two extremes.
I personally find it harder to imagine that the “correct” minimum wage is closer to $4.22 than it is to $14.11 or even $24, but that’s just me.
[+] [-] bichiliad|5 years ago|reply
[+] [-] pmiller2|5 years ago|reply
[+] [-] BurningFrog|5 years ago|reply
It was the first thing I thought when opening this, and as so often, it was the case.
[+] [-] lukewrites|5 years ago|reply
Similarly I do not understand your assertion that the author is "cherrypicking troughs and peaks". from tfa:
> Until 1968, the minimum wage not only kept pace with inflation, it rose in step with productivity growth. The logic is straightforward; we expect that wages in general will rise in step with productivity growth. For workers at the bottom to share in the overall improvement in society’s living standards, the minimum wage should also rise with productivity.
Is their assertion regarding 1968 and minimum wage factually incorrect?
[+] [-] WalterBright|5 years ago|reply
Total compensation includes the value of benefits and the (so-called) employer contribution to taxes. Total compensation can be up to 40% more than salary.
[+] [-] hn_throwaway_99|5 years ago|reply
Note there was an article on the HN front page just in the past week or so about how Amazon warehouse workers were getting more repetitive stress injuries because partial warehouse automation allowed them to fulfill 3x the number of items per hour than before these systems were put in place.
[+] [-] tasty_freeze|5 years ago|reply
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.
[+] [-] NovemberWhiskey|5 years ago|reply
Completely anecdotally, improvements in labor productivity due to automation (etc) are less likely to be impactful in jobs like waiting tables, delivering newspapers or flipping hamburgers.
That anecdotal evidence is backed by research that shows that service sector productivity tends to lag other sectors significantly.
[+] [-] thunderbird120|5 years ago|reply
[+] [-] rrrrrrrrrrrryan|5 years ago|reply
Why would we tie minimum wage to worker productivity OR inflation?
What is the minimum wage trying to accomplish in the first place?
It seems obvious to me that we have to index it to the living wage instead.
A full-time job needs to cover: one half of a 2-bedroom apartment in the outskirts of town, plus food, bills, and basic medical expenses. If it doesn't cover this, then this person is going to rely on government programs.
And if the government programs aren't there, they'll be coming home each night after a full day of work and watching their kid get skinnier, seeing their CEO collect multimillion dollar bonuses in the news, and you can be damn sure they won't stand for it. They'd unionize, protest, and demand higher compensation.
Our social safety nets are an important part of our society, but when they're required and used by full-time employees, it's something of a taxpayer subsidy for the corporations who can now pay their employees less than what's required to live.
And if a job can't be done profitably for a living wage, we need to let that job go. Automate it, outsource it, let the companies that depend on this exploitative labor pivot to new business models, or let them wither and die. The jobs are going to leave eventually anyway - we might as well accelerate the push toward a modern labor economy that's already underway. We can funnel the productivity gains from automation into education, to allow the displaced a chance to retool and learn a new skill, and to bulk up our social safety nets for those who are too old to do so.
[+] [-] ahoy|5 years ago|reply
[+] [-] ikeboy|5 years ago|reply
[+] [-] gowld|5 years ago|reply
[+] [-] norseboar|5 years ago|reply
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 gets cheaper, there's no incentive for a business to invest in tech that makes employees more productive.
The data in the piece has a lot of problems with it too, but I think the core assumption is fundamentally off-base.
[+] [-] rayiner|5 years ago|reply
(Unlike Common Dreams, this article shows their work and discloses their exact methodology and data sources.)
There’s a couple of big picture issues to consider:
1) Why focus on just wages, rather than just benefits? If productivity doubles, but the cost of providing healthcare triples, should employers cover the increased healthcare costs and also double wages? It’s not Microsoft’s fault that it costs $5,000 to get an MRI. From the perspective of how much is transferred from the employer to the employee, a dollar spent on wages isn’t any different than a dollar spent on healthcare.
Failing to distinguish the two things obscured the real problems. It makes you think something is a structural economic problem when in reality it’s cost disease in a particular industry. Wages aren’t keeping up with the cost of housing in New York and San Francisco. But nationwide, the median mortgage payment as a percentage of the median income has scarcely changed since the 1970s. Are wages the problem or are local laws around housing the problem?
2) There is kind of a metaphysical question about who should get the benefits of investment in technology. If you replace 100 workers with technology + very expensive capital equipment, productivity will increase by a factor of 10. (That’s how labor productivity is measured.) Does that mean wages should go up by a factor of 10?
[+] [-] ptmcc|5 years ago|reply
There's no doubt some fuzzy math involved to extrapolate inflation over the course of 50+ years, but I don't think that invalidates the fact that minimum wage has objectively not kept up with inflation even remotely.
The federal minimum wage has been stuck at $7.25 since 2009, and a handful of states are only just now breaching $15/hr. At this rate by the time a federal increase happens we'll already be another 20 years behind.
Worse yet is that labor data shows that more and more adults are working in minimum wage jobs, so the talking point of "it's just summer jobs for teenagers" and "it's entry level work to move on from" is very out of touch with reality these days. There are millions of people trying to survive on these wage levels and without benefits and it is not working.
[+] [-] olvar_|5 years ago|reply
[+] [-] H8crilA|5 years ago|reply
1971, 1968, doesn't really matter. But - many such "negative" effects only really show up after 1981, that is after the peak of the interest rates. RIP Volcker, the last Fed president with vision.
If you're into slightly crazy sounding theories about the cyclical nature of human progress I recommend: https://en.wikipedia.org/wiki/Strauss%E2%80%93Howe_generatio.... Ray Dalio is also writing a lot on his own version of the "around 80 years cycle" theory.
[+] [-] jdmichal|5 years ago|reply
[+] [-] decker|5 years ago|reply
https://en.wikipedia.org/wiki/Intermodal_container#History
[+] [-] randyrand|5 years ago|reply
When a whole market can make 10x more solar panels for the same cost, solar prices go down by you guessed it - about 90%.
You don't suddenly have 10x more profit to pay your employees. Maybe a monopoly would, but not a competitive market like most businesses are in. These people have absolutely no clue what they are talking about.
[+] [-] refurb|5 years ago|reply
[+] [-] mercutio2|5 years ago|reply
[+] [-] qeternity|5 years ago|reply
[+] [-] ikeboy|5 years ago|reply
See https://www.reddit.com/r/badeconomics/comments/6rtoh4/produc... for details. I'm almost positive the same is going on here.
[+] [-] dcolkitt|5 years ago|reply
[1]https://en.wikipedia.org/wiki/List_of_countries_by_average_w... [2]https://data.oecd.org/emp/hours-worked.htm
[+] [-] ardy42|5 years ago|reply
> 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.
[+] [-] PaulDavisThe1st|5 years ago|reply
Median is the appropriate statistic for such cases.
[+] [-] ruined|5 years ago|reply
>The wage distribution is right-skewed; the majority of people earn less than the average wage. For an alternative measure, the median household income uses median instead of average.
[+] [-] downrightmike|5 years ago|reply
[+] [-] unknown|5 years ago|reply
[deleted]
[+] [-] carry_bit|5 years ago|reply
[+] [-] credit_guy|5 years ago|reply
[+] [-] ivalm|5 years ago|reply
Real life example, factory worker productivity rose dramatically with automation, and salaries did not keep up. Physician productivity did not increase much but salaries grew.
[0] https://en.m.wikipedia.org/wiki/Baumol%27s_cost_disease
[+] [-] sjy|5 years ago|reply
[+] [-] bleepblorp|5 years ago|reply
[+] [-] chrisseaton|5 years ago|reply
Wages are set by the market, not by productivity.
[+] [-] CyberRabbi|5 years ago|reply
I always thought that cost of living dictated wages and the so-called wage stagnation was due to relative lack of inflation for basic living expenses over the past 20 years.
Also the past 20 years have seen a relative large influx of immigration compared to the previous 20 years. Increasing the competition between workers and would in turn lowering wages, at least according to supply/demand forces. This effect would be especially pronounced for minimum wage workers but with the expansion of the H1B program it will soon be observed for high income tech workers as well.
[+] [-] jfengel|5 years ago|reply
If productivity improves, but wages are indexed only to inflation, then the rich get richer and the poor at best stay the same. They produce more but don't see their lives get better. In a country that has produced so much additional wealth, it would be nice if the people who produce it became themselves better off, rather than have the gains concentrate in a smaller and smaller minority.
The minimum wage doesn't just stagnate. It's not inflation-indexed, so inflation eats into it: it hasn't increased since 2009, and even though we're often below the Fed's target rate, inflation has still reduced the value of that by 20%. That suggests it's time to raise it, and the $24/hour figure helps put the quantity into context. It makes a $15/hour wage seem very doable, since it's less than half of the productivity increase.
[+] [-] vsareto|5 years ago|reply
This is when minimum wage should come in, and this would be an argument for increasing minimum wage to that end, but businesses themselves can just ignore these kinds of arguments. Certain benevolent PR acts run contrary to this where they do increase wages because it's the right thing to do.
[+] [-] sudosysgen|5 years ago|reply
[+] [-] unknown|5 years ago|reply
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[+] [-] hinkley|5 years ago|reply
Bosses and owners are only interested if there's something in it for them. As in does it increase our output without a proportional increase in costs. The bigger the gap the more social capital I will burn on making that change (including, but not limited to, fucking over my loyal employees by replacing half of them with a machine, or imports).
We would have barely any of those productivity gains if they didn't also lower the cost of labor per item. So this number is a largely hypothetical. And perhaps a little unhealthy to dwell on.
Conversely, though, if minimum wage had kept pace with inflation, we might see higher productivity today because process people would have had the ammunition to push for more and bigger improvements to production and overhead costs. New equipment would be rolled out sooner while prices were still high, making a steeper adoption curve and accelerating R&D expenditure.
Still, it would be better if management did not try to keep 99% of every dollar saved. We could easily see a world where, instead of the $12/hr we should have simply to maintain the spirit of the minimum wage as it was conceived, everybody had Seattle's $15/hr minimum wage and big cities were trying to legislate for $20.
[+] [-] jankotek|5 years ago|reply
So if their job could be replaced with simple script....
[+] [-] unknown|5 years ago|reply
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