4 ms·

what mystery? pay raises haven't kept up with productivity increases. there's also kinds of macro-econ handwaiving that will attempt to drill down into this iss

what mystery? pay raises haven't kept up with productivity increases. there's also kinds of macro-econ handwaiving that will attempt to drill down into this issue but at a fundamental level worker pay is at the discretion of their managers. the problem is the management culture that distributes profits with extreme preference to shareholders and almost no regard at all for the workers.

kesselvon 10y ago
This is it. Rewards have largely gone to the upper echelons of the management tree. With globalization and automation suppressing wage growth for the majority of the population. This is why we're seeing all of the money go towards fields that: a. can't be automated and b. can't be outsourced This is also by design, as this was the Reaganite answer to the stagflation of the 70s and a reversal of the income distribution that was forcibly enacted by the New Deal.
- BoiledCabbage 9y ago
  The default nature of society is are rich and poor. There is by default no middle class. It has essentially always been this way in society. This is because capital accumulates, and rent seeking will always scale better than labor. America had the prosperity of the 20th century due to explicit programs to create a middle class. Beginning immediately following the 1929 stock market crash with the New Deal, and through the social welfare programs of the 40s of the GI bill and mortgage lending we intentionally created a middle class and society prospered. If we as society want a middle class we need to create it. In action will remove it as things fall back to historical normal, and actively working against activities that build and support the middle class (like destroying unions) will end it faster. The other issue is the difference between short term and long term economic efficiency. Optimizing for capitol over labor will almost always provide more short term efficiency. Adding more cheap labor will almost always increase profits. But longer term our society will be always be better off if a larger percentage of our population can be educated, and financially stable enough for invention and improve productivity through technological innovation. The more people who can have an idea and join the capital class, the more efficient our economy will be. A middle class is exactly what provides this. Long term economic productivity is dependent on a middle class. Look back throughout human history, times of huge social and technological innovation almost always follow a sudden increase in free time for the average person (ie time beyond the work needed for survival).
bufordsharkley 10y ago
This is related to one fundamental question: what alternatives do workers have? If their employer is a monopolist of labor, and the laborer has no ability to move and find employment elsewhere, their employer enjoys full rein to demand whatever wage they can. However, if an employer functions within a competitive market of labor, you should see labor fetch a fair wage. This could be in the form of self-employment. ...If employers are able to negotiate more effectively and take more of the share from labor, it almost certainly means that labor is being denied alternatives. The real question, I think, is which alternatives have changed, and why.
- golergka 10y ago
  Are there really situations in modern world where an employer is a monopolist on a labour market in the whole market available to a worker (ie not just this small town with a single factory, but at least the whole state)? It seems to me that the only monopolist player in such a situation could be a union.
  - bufordsharkley 10y ago
    Well, outside of some extreme cases (such as professional sports), I think you see this in a "company town", where laborers could theoretically move, but usually lack the means to do so. (And increasingly can't afford the higher cost of living of the places where the jobs are.) Anyway, when the "company town" economies were thriving, they usually coexisted with unions, to help balance the ability to negotiate wages. ...The fact that we're seeing labor's share decline within cities (where there are clearly many employers) dispels me of the concept that monopolies/oligopolies are responsible for this decline.
golergka 10y ago
Managers don't distribute profits at will according to some abstract 'culture'; both labour and capital are free markets. When workers are easier to find than capital, of course capital is going to be more expensive. Meanwhile, working in a funded startup and just getting a salary is a much better and sure way to earn money than investing in one. Who knew - different supply/demand balance from a mostly automated factory gives you a different outcome.
- metaphorm 10y ago
  > both labour and capital are free markets. surely you're joking. there are not free markets in the entire world. there are only variations (in degree and kind) of market distortions in the real world.
  - __jal 10y ago
    This. The free-market fallacy is rife in this discussion, as it is in economics. Unless you and your counterparty exist in a vacuum, there is no such thing as a free market.
branchless 9y ago
What do we mean by "productivity"? Do we mean that a person is creating more wealth to the benefit of him/herself and fellow citizens? Or do we mean they are accruing more fiat money in a flawed system that does not map wealth creation onto fiat accrual? We've lost control of terminology, we are using rentier terms to debate against them and therefore we are going to lose. This is a classic way to control. edit: But they may well be producing absolutely nothing. If you have one company creating wealth and another appropriating the same amount Bloomberg would say that is twice the "productivity" of one entity. But we don't have more. Often many modern companies, due to our fantastic surpluses as a society, destroy value by inhibiting wealth creation as part of their appropriation. It's critical we get control of these terms otherwise you are walking straight into a trap that will defeat your point.
- metaphorm 9y ago
  I hear you on this one. "productivity" is not a term I like to use when discussing these issues, but it is a term that will be familiar to Bloomberg readers. We can at least accept a basic definition of it where you just look at company revenues divided by worker man hours, so productivity in that sense is $/man-hour.

kesselvon 10y ago

This is it. Rewards have largely gone to the upper echelons of the management tree. With globalization and automation suppressing wage growth for the majority of the population. This is why we're seeing all of the money go towards fields that: a. can't be automated and b. can't be outsourced This is also by design, as this was the Reaganite answer to the stagflation of the 70s and a reversal of the income distribution that was forcibly enacted by the New Deal.

BoiledCabbage 9y ago
The default nature of society is are rich and poor. There is by default no middle class. It has essentially always been this way in society. This is because capital accumulates, and rent seeking will always scale better than labor. America had the prosperity of the 20th century due to explicit programs to create a middle class. Beginning immediately following the 1929 stock market crash with the New Deal, and through the social welfare programs of the 40s of the GI bill and mortgage lending we intentionally created a middle class and society prospered. If we as society want a middle class we need to create it. In action will remove it as things fall back to historical normal, and actively working against activities that build and support the middle class (like destroying unions) will end it faster. The other issue is the difference between short term and long term economic efficiency. Optimizing for capitol over labor will almost always provide more short term efficiency. Adding more cheap labor will almost always increase profits. But longer term our society will be always be better off if a larger percentage of our population can be educated, and financially stable enough for invention and improve productivity through technological innovation. The more people who can have an idea and join the capital class, the more efficient our economy will be. A middle class is exactly what provides this. Long term economic productivity is dependent on a middle class. Look back throughout human history, times of huge social and technological innovation almost always follow a sudden increase in free time for the average person (ie time beyond the work needed for survival).

bufordsharkley 10y ago

This is related to one fundamental question: what alternatives do workers have? If their employer is a monopolist of labor, and the laborer has no ability to move and find employment elsewhere, their employer enjoys full rein to demand whatever wage they can. However, if an employer functions within a competitive market of labor, you should see labor fetch a fair wage. This could be in the form of self-employment. ...If employers are able to negotiate more effectively and take more of the share from labor, it almost certainly means that labor is being denied alternatives. The real question, I think, is which alternatives have changed, and why.

golergka 10y ago
Are there really situations in modern world where an employer is a monopolist on a labour market in the whole market available to a worker (ie not just this small town with a single factory, but at least the whole state)? It seems to me that the only monopolist player in such a situation could be a union.
- bufordsharkley 10y ago
  Well, outside of some extreme cases (such as professional sports), I think you see this in a "company town", where laborers could theoretically move, but usually lack the means to do so. (And increasingly can't afford the higher cost of living of the places where the jobs are.) Anyway, when the "company town" economies were thriving, they usually coexisted with unions, to help balance the ability to negotiate wages. ...The fact that we're seeing labor's share decline within cities (where there are clearly many employers) dispels me of the concept that monopolies/oligopolies are responsible for this decline.

golergka 10y ago

Managers don't distribute profits at will according to some abstract 'culture'; both labour and capital are free markets. When workers are easier to find than capital, of course capital is going to be more expensive. Meanwhile, working in a funded startup and just getting a salary is a much better and sure way to earn money than investing in one. Who knew - different supply/demand balance from a mostly automated factory gives you a different outcome.

metaphorm 10y ago
> both labour and capital are free markets. surely you're joking. there are not free markets in the entire world. there are only variations (in degree and kind) of market distortions in the real world.
- __jal 10y ago
  This. The free-market fallacy is rife in this discussion, as it is in economics. Unless you and your counterparty exist in a vacuum, there is no such thing as a free market.

branchless 9y ago

What do we mean by "productivity"? Do we mean that a person is creating more wealth to the benefit of him/herself and fellow citizens? Or do we mean they are accruing more fiat money in a flawed system that does not map wealth creation onto fiat accrual? We've lost control of terminology, we are using rentier terms to debate against them and therefore we are going to lose. This is a classic way to control. edit: But they may well be producing absolutely nothing. If you have one company creating wealth and another appropriating the same amount Bloomberg would say that is twice the "productivity" of one entity. But we don't have more. Often many modern companies, due to our fantastic surpluses as a society, destroy value by inhibiting wealth creation as part of their appropriation. It's critical we get control of these terms otherwise you are walking straight into a trap that will defeat your point.

metaphorm 9y ago
I hear you on this one. "productivity" is not a term I like to use when discussing these issues, but it is a term that will be familiar to Bloomberg readers. We can at least accept a basic definition of it where you just look at company revenues divided by worker man hours, so productivity in that sense is $/man-hour.