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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 people

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. Citation wanted. It really doesn't make sense. Sure, a different class of applicants may fill those higher paying positions, but either those people weren't employed to begin with, which contradicts your point, or they had to leave other jobs to apply for this one, creating open positions where they left, which results in overall employment staying the same.

winstonewert 10y ago
I think you are missing a person in your analasys. In scenario 1, Person A works for Wal-Mart and Person B works elsewhere. In scenario 2, Person A has no job, and Person B works at Walmart, and Person's B previous position is unfilled.
- adamlett 10y ago
  Yes, in scenario 2 one person is without a job and one job is without a person. You'll never guess what happens next!
  - winstonewert 10y ago
    You are assuming that Person A is capable of taking the job that Person B vacated. That may or may not be the case. Inevitably, there will be come cases where Person A isn't suitable for the position.
    - adamlett 10y ago
      You do realize that we are not talking about three specific persons, right? I will grant you that at any given time there are people who are unemployed even when there is demand for labor, because for some reason or other they do not fit the available positions, right at that moment. Being unskilled is certainly a factor when it comes to that. But I remain highly skeptical of the mechanism described by the grandparent. If wages were to increase at e.g. Walmart and grandparent was right, it would mean that skilled people would leave the jobs they are already doing to come to Walmart to work. Now, maybe the people laid off at Walmart don't have the skills to fill these now vacant positions, but presumably they must still be filled somehow. Which means that either the employers must accept less skilled labor to do the same job or they have to do what Walmart did, and offer higher pay to attract the right workers. I will also grant that as wages rise, certain jobs simply cease to exist, because it becomes uneconomical to pay anyone to do them. Being from Denmark where wages are very high, I was astounded to be greeted by not fewer than ten clerks in a small, mostly empty Swatch store I visited in Beijing. To have that much staff to do mostly nothing can only happen where wages are extremely low. If wages were to rise, one by one those clerks would probably be laid off. But not because a more skilled person would claim their position, but simply because it would become too expensive to pay any person to do that job given the value it creates.
      - winstonewert 10y ago
        I don't think you can assume that the position will be filled. The position may be no longer be economically viable at higher wage rates or lower skill levels and thus be eliminated. However, there are some additional factors that complicate this picture. If there are fewer unskilled jobs, people will adjust by working to become more skilled. If people have higher paying jobs they will spend more, producing more jobs. If there are many unskilled people looking for work, there is incentive for somebody to find a way to make use of that resource. But really, the only point I sought to make here was that your original comment which didn't look at the non-skilled worker was missing a bit part of the equation, and so its logic didn't work.

winstonewert 10y ago

I think you are missing a person in your analasys. In scenario 1, Person A works for Wal-Mart and Person B works elsewhere. In scenario 2, Person A has no job, and Person B works at Walmart, and Person's B previous position is unfilled.

adamlett 10y ago
Yes, in scenario 2 one person is without a job and one job is without a person. You'll never guess what happens next!
- winstonewert 10y ago
  You are assuming that Person A is capable of taking the job that Person B vacated. That may or may not be the case. Inevitably, there will be come cases where Person A isn't suitable for the position.
  - adamlett 10y ago
    You do realize that we are not talking about three specific persons, right? I will grant you that at any given time there are people who are unemployed even when there is demand for labor, because for some reason or other they do not fit the available positions, right at that moment. Being unskilled is certainly a factor when it comes to that. But I remain highly skeptical of the mechanism described by the grandparent. If wages were to increase at e.g. Walmart and grandparent was right, it would mean that skilled people would leave the jobs they are already doing to come to Walmart to work. Now, maybe the people laid off at Walmart don't have the skills to fill these now vacant positions, but presumably they must still be filled somehow. Which means that either the employers must accept less skilled labor to do the same job or they have to do what Walmart did, and offer higher pay to attract the right workers. I will also grant that as wages rise, certain jobs simply cease to exist, because it becomes uneconomical to pay anyone to do them. Being from Denmark where wages are very high, I was astounded to be greeted by not fewer than ten clerks in a small, mostly empty Swatch store I visited in Beijing. To have that much staff to do mostly nothing can only happen where wages are extremely low. If wages were to rise, one by one those clerks would probably be laid off. But not because a more skilled person would claim their position, but simply because it would become too expensive to pay any person to do that job given the value it creates.
    - winstonewert 10y ago
      I don't think you can assume that the position will be filled. The position may be no longer be economically viable at higher wage rates or lower skill levels and thus be eliminated. However, there are some additional factors that complicate this picture. If there are fewer unskilled jobs, people will adjust by working to become more skilled. If people have higher paying jobs they will spend more, producing more jobs. If there are many unskilled people looking for work, there is incentive for somebody to find a way to make use of that resource. But really, the only point I sought to make here was that your original comment which didn't look at the non-skilled worker was missing a bit part of the equation, and so its logic didn't work.