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Please do correct me if I am wrong. But isn't the whole reason lower class job salaries increased in the USA was simply because they had just won a world war?

Please do correct me if I am wrong. But isn't the whole reason lower class job salaries increased in the USA was simply because they had just won a world war? I do not know enough about the reasons for affluence in the 50s, but surely it was in large part to success in the war? If so, how could one suggest the minimum wage is just raised without it causing mass unemployment in the present? I must be misunderstanding something.

aninhumer 9y ago
I'm not sure how you think winning a war leads "simply" to higher wages? There were a lot of factors surrounding WW2 which contributed to the success of the US afterwards, but they're nowhere near as simple as the fact that they won. If anything, the most immediate outcome of the victory is a sudden influx of unemployed soldiers needing jobs, which causes downward pressure on wages.
- hueving 9y ago
  The shattered manufacturing capabilities of Europe put the US in a leading position to be the primary provider to take its place. Essentially Europe was gone as a competitor in the global economy and became a consumer. This led to massive demand in the US which of course led to companies paying lots of workers to fulfill it.
- SmellTheGlove 9y ago
  > If anything, the most immediate outcome of the victory is a sudden influx of unemployed soldiers needing jobs, which causes downward pressure on wages. You had fewer soldiers coming back than you had shipping off. You also had worldwide demand for manufactured goods to meet, and Europe lost basically its entire infrastructure and nearly an entire generation of working age men.
  - ionwake 9y ago
    Good points
- dilemma 9y ago
  What the parent is referring to is the US having industrial production capacity that was left intact while Europe was in shambles.
  - aninhumer 9y ago
    Yes, that is one factor, and perhaps the parent was referring to that, but if so I don't feel that "simply because they won the war" expresses that particularly clearly.
matt4077 9y ago
Germany quite definitely lost WW2 and saw incomes rise even faster after the war: wid.world/solo.php#0/countriestimeseries/anninc_pall_992_i/US;DE/last/eu/k/p/yearly/a/false/1844.6039999999998/75000/curve/false "Winning a war" is surprisingly useless, economically. A higher minimum wage would certainly not create "mass unemployment". Most research points to unemployment remaining about the same. That's because there are different mechanisms involved that work in opposite directions. Firstly, very few people would actually lose their jobs. These are the people who create a value of, say, 7$/h, and would therefore be a net loss if their wage were raised above that level. But that's quite rare. Most people working for minimum wage create value >= their wage. Currently, that value is "captured" by their employer and/or by the customers. Raising the minimum wage would just redistribute that surplus value: Instead of getting a Happy Meal for $6, the customer may have to pay $6.25. And instead of making $1 on the sale, McDonald's may only make 75cents. The employee gets 50cents extra. Since, by definition, these are the poorest people, any extra cash they get is usually also spent rather quickly, If our employee uses their extra $100 for this month to get his shower fixed, it means extra business for a plumber. Compare to the current situation, where those $100 end up with McDonald's shareholders, and customers, who may use it to buy more shares and inflating the S&P500 without any effect in the real economy.
- arethuza 9y ago
  The Germans had their WW2 debts largely cancelled in 1953 to aid their industrial growth so that they could help oppose the Soviets: https://en.wikipedia.org/wiki/London_Agreement_on_German_External_Debts https://en.wikipedia.org/wiki/London_Agreement_on_German_Ext... This is currently a bit of a sore point with some Greeks...
  - ionwake 9y ago
    Interesting I did not know this
- firebird84 9y ago
  For your last example, it could give someone the ability to liquidate their position (from the buyers of that stock), get $100 in cash to pay a plumber, or if you're arguing about their social class perhaps the last $100 of down payment needed to finance the new yacht they had built. That yacht-building also creates jobs. Most likely that stock is institutionally owned though, so it goes to a retirement fund redemption somewhere producing income for a retiree to participate in THEIR local economy.
zucchini_head 9y ago
Well, a lot of historians say that the USA's economy flourished post-war not necessarily because they "won" it (hard to define concept these days), but because everybody else's manufacturing infrastructure was completely flattened. Why do you think the USA automobile market exploded post-war? It's because the two biggest automobile manufactures - Germany and Japan - were flattened to smouldering ashes and took around 30-40 years to recover. That's why the USA auto industry declined on an enormous scale after the 80's, because in the end the USA was never automobile king. There was never the "good old Detroit days". It was just a temporary market vacuum that the USA capitalised on, while Germany and Japan, who simply were better at making cars (debatable of course, but they make more money and that's probably the most reliable metric here), were rebuilding their entire country from catastrophe.
- kasey_junk 9y ago
  Were the Japanese auto manufacturers a large player prior to the war? I thought the domestic production there was essentially nothing before the ramp up to war in the 30s.
  - zucchini_head 9y ago
    I'de say it was rather large, since looking around, it's believed that it was very big pre-WWiII, but a quick look for numbers isn't revealing any good sources. I suppose it'll just have to float around as a "general belief" that the Japanese automotive industry was "rather big" pre-WWII. WWII definitely effected the US less than a lot of countries though that is for sure. But I think certain industries benefited more from USA's post-war advantage than others (automotive maybe being an example).
    - maxerickson 9y ago
      Japan was not a big player in the global auto marketplace prior to World War II. Toyota had made less than 2000 vehicles: https://en.wikipedia.org/wiki/Toyota_AA#Toyota_passenger_car_production_from_1935_to_1949 https://en.wikipedia.org/wiki/Toyota_AA#Toyota_passenger_car... Neither was Germany. Hitler started pushing the people's car in 1934 or so. https://en.wikipedia.org/wiki/Volkswagen#1932.E2.80.931938:_People.27s_Car_project https://en.wikipedia.org/wiki/Volkswagen#1932.E2.80.931938:_... They were building nice cars in Germany, they just weren't building a lot of them. Meanwhile Ford had produced ~15 million Model Ts and 4 million Model As prior to 1932 (when production of the Model A was stopped).

aninhumer 9y ago

I'm not sure how you think winning a war leads "simply" to higher wages? There were a lot of factors surrounding WW2 which contributed to the success of the US afterwards, but they're nowhere near as simple as the fact that they won. If anything, the most immediate outcome of the victory is a sudden influx of unemployed soldiers needing jobs, which causes downward pressure on wages.

hueving 9y ago
The shattered manufacturing capabilities of Europe put the US in a leading position to be the primary provider to take its place. Essentially Europe was gone as a competitor in the global economy and became a consumer. This led to massive demand in the US which of course led to companies paying lots of workers to fulfill it.
SmellTheGlove 9y ago
> If anything, the most immediate outcome of the victory is a sudden influx of unemployed soldiers needing jobs, which causes downward pressure on wages. You had fewer soldiers coming back than you had shipping off. You also had worldwide demand for manufactured goods to meet, and Europe lost basically its entire infrastructure and nearly an entire generation of working age men.
- ionwake 9y ago
  Good points
dilemma 9y ago
What the parent is referring to is the US having industrial production capacity that was left intact while Europe was in shambles.
- aninhumer 9y ago
  Yes, that is one factor, and perhaps the parent was referring to that, but if so I don't feel that "simply because they won the war" expresses that particularly clearly.

matt4077 9y ago

Germany quite definitely lost WW2 and saw incomes rise even faster after the war: wid.world/solo.php#0/countriestimeseries/anninc_pall_992_i/US;DE/last/eu/k/p/yearly/a/false/1844.6039999999998/75000/curve/false "Winning a war" is surprisingly useless, economically. A higher minimum wage would certainly not create "mass unemployment". Most research points to unemployment remaining about the same. That's because there are different mechanisms involved that work in opposite directions. Firstly, very few people would actually lose their jobs. These are the people who create a value of, say, 7$/h, and would therefore be a net loss if their wage were raised above that level. But that's quite rare. Most people working for minimum wage create value >= their wage. Currently, that value is "captured" by their employer and/or by the customers. Raising the minimum wage would just redistribute that surplus value: Instead of getting a Happy Meal for $6, the customer may have to pay $6.25. And instead of making $1 on the sale, McDonald's may only make 75cents. The employee gets 50cents extra. Since, by definition, these are the poorest people, any extra cash they get is usually also spent rather quickly, If our employee uses their extra $100 for this month to get his shower fixed, it means extra business for a plumber. Compare to the current situation, where those $100 end up with McDonald's shareholders, and customers, who may use it to buy more shares and inflating the S&P500 without any effect in the real economy.

arethuza 9y ago
The Germans had their WW2 debts largely cancelled in 1953 to aid their industrial growth so that they could help oppose the Soviets: https://en.wikipedia.org/wiki/London_Agreement_on_German_External_Debts https://en.wikipedia.org/wiki/London_Agreement_on_German_Ext... This is currently a bit of a sore point with some Greeks...
- ionwake 9y ago
  Interesting I did not know this
firebird84 9y ago
For your last example, it could give someone the ability to liquidate their position (from the buyers of that stock), get $100 in cash to pay a plumber, or if you're arguing about their social class perhaps the last $100 of down payment needed to finance the new yacht they had built. That yacht-building also creates jobs. Most likely that stock is institutionally owned though, so it goes to a retirement fund redemption somewhere producing income for a retiree to participate in THEIR local economy.

zucchini_head 9y ago

Well, a lot of historians say that the USA's economy flourished post-war not necessarily because they "won" it (hard to define concept these days), but because everybody else's manufacturing infrastructure was completely flattened. Why do you think the USA automobile market exploded post-war? It's because the two biggest automobile manufactures - Germany and Japan - were flattened to smouldering ashes and took around 30-40 years to recover. That's why the USA auto industry declined on an enormous scale after the 80's, because in the end the USA was never automobile king. There was never the "good old Detroit days". It was just a temporary market vacuum that the USA capitalised on, while Germany and Japan, who simply were better at making cars (debatable of course, but they make more money and that's probably the most reliable metric here), were rebuilding their entire country from catastrophe.

kasey_junk 9y ago
Were the Japanese auto manufacturers a large player prior to the war? I thought the domestic production there was essentially nothing before the ramp up to war in the 30s.
- zucchini_head 9y ago
  I'de say it was rather large, since looking around, it's believed that it was very big pre-WWiII, but a quick look for numbers isn't revealing any good sources. I suppose it'll just have to float around as a "general belief" that the Japanese automotive industry was "rather big" pre-WWII. WWII definitely effected the US less than a lot of countries though that is for sure. But I think certain industries benefited more from USA's post-war advantage than others (automotive maybe being an example).
  - maxerickson 9y ago
    Japan was not a big player in the global auto marketplace prior to World War II. Toyota had made less than 2000 vehicles: https://en.wikipedia.org/wiki/Toyota_AA#Toyota_passenger_car_production_from_1935_to_1949 https://en.wikipedia.org/wiki/Toyota_AA#Toyota_passenger_car... Neither was Germany. Hitler started pushing the people's car in 1934 or so. https://en.wikipedia.org/wiki/Volkswagen#1932.E2.80.931938:_People.27s_Car_project https://en.wikipedia.org/wiki/Volkswagen#1932.E2.80.931938:_... They were building nice cars in Germany, they just weren't building a lot of them. Meanwhile Ford had produced ~15 million Model Ts and 4 million Model As prior to 1932 (when production of the Model A was stopped).