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> It's also worth mentioning that a side effect of efficiency wages is more unemployment. Paying more results in a better class of applicant, meaning that peopl
by gerbal 10y ago
> It's also worth mentioning that a side effect of efficiency wages is more unemployment. Paying more results in a better class of applicant, meaning that people who would normally use WalMart as the bottom rung of their career ladder are shut out.
This assumes that workers are of a fixed quality. I know I worked harder for $10/hour than I did for $7.25. Higher pay means stronger incentives to do well and less stress from poverty.
- winstonewert 10y agoCertainly, people will work harder if you pay them more, you won't just get better people. However: Employers will have to hire fewer workers because their workers are more productive More people will be interested in the jobs, increasing employee competition Since people vary, some people's increase in productivity will be insufficient to cover the increase of wages The end result it seems is that getting a job is made harder. This is not to say that increased wages are bad, they are great.
- gohrt 10y ago"getting a job is made harder" isn't a problem, when the the people are getting better at getting a job. "increase in productivity will be insufficient to cover the increase of wages" is only true if the company isn't turning a profit or paying high salary to managers. This is relevant for some small businesses and bankruptcy-threatened large business, but not for the largest players in the economy, like Walmart.
- winstonewert 10y ago1) Given that there are fewer jobs available, and more people seeking those jobs, its simply absurd to think that people are just going to get better at getting those jobs to make up for it. 2) Whether the company is turning or a profit or paying a high salary is completely irreleavent. The question is whether or not you are productive enough that hiring you makes the company more money then they pay you.
- adventured 10y agoThere aren't fewer jobs available. US full-time job openings are at/near all-time highs and have been for a while now.
- winstonewert 10y agoSure. But I was specifically speaking about these higher-paying jobs at Wal-Mart. The fewer jobs at Wal-Mart are more then offset by increased jobs elsewhere.
- morgante 10y ago> This assumes that workers are of a fixed quality. I know I worked harder for $10/hour than I did for $7.25. Efficiency wage theory definitely doesn't assume that. In fact, a big part of the theory revolves around your existing workers becoming more productive. Even if you assume your applicant pool stays the same, you would see less turnover with efficient wages—and hence fewer job openings.