5 ms·
Well, first of all, many consumers are also low-end salary earners. Second and perhaps more importantly, the more salaries are driven down, the less money thos
by nilkn 10y ago
Well, first of all, many consumers are also low-end salary earners.
Second and perhaps more importantly, the more salaries are driven down, the less money those earners have to spend, which means businesses will see less potential revenue.
- pm90 10y agoYou are assuming a zero sum market. Generally, when the market changes, the labor force changes as well (skills retraining etc.). It might be inelastic (i.e. changes in labor takes more time to adjust to new markets) but it does eventually happen. This is how the US workforce made the jump from agrarian to industrial to service economy.
- nilkn 10y ago> This is just not sound economics at all. Honestly I think the statements I made are extremely simple. Is it false that low-wage earners are also consumers? Is it false that low-wage earners have less money to spend as consumers?
- pm90 10y agoI edited my comment to remove that line.
- nilkn 10y agoThe rest of your post seems to be talking about cases where the market changes and the labor force changes as a result. But we're looking at the opposite, right? We're looking at a direct change to the labor force, and there may or may not be any commensurate change in the market. So I don't see how your example of the transition from agrarian society applies, at least not directly. By the way, I'm asking these questions in earnest -- this isn't a debate to me, and I'm more than happy to "lose". I don't know much about this topic and would like to learn.
- maxerickson 10y agoThe added spending from the additional incomes is likely to be larger than the reduction in spending in the baseline incomes.
- nilkn 10y agoWhy?
- maxerickson 10y agoBecause you end up with more people working and for low wage jobs there isn't all that much room to cut wages. At the moment we have pretty good job growth combined with low unemployment so new people starting working aren't putting downward pressure on wages (evidence of this is that we are seeing wage growth).
- nilkn 10y agoThanks, that explanation makes sense to me.