7 ms·

That doesn't explain it at all. If you look closely, corporate profits have been increasing (example compared to 90), but wages haven't. That means that worke

That doesn't explain it at all. If you look closely, corporate profits have been increasing (example compared to 90), but wages haven't. That means that workers have been more productive, but are getting paid less (they increased output/efficiency, but their wages have been stagnant). That means that corporates have leverage over labour (ie, either importing from cheaper countries, or automation, or guest workers, etc).... My hunch is the increase of globalism (since the 90s) caused this. Communism fell, more skilled people available in the market, more open borders, etc... which gives global companies more leverage. It is very easy to spot: https://cdn.static-economist.com/sites/default/files/imagecache/640-width/images/print-edition/20160326_FBC779_1.png https://cdn.static-economist.com/sites/default/files/imageca...

ivl 9y ago
Because workers being super special is not what has driven productivity gains.
- TheAdamAndChe 9y ago
  It's not the managers or capital owners that have been driving these productivity gains either, yet they have been the ones benefiting from the gains.
  - thephyber 9y ago
    > It's not the managers or capital owners that have been driving these productivity gains either Citation needed. I'm under the impression most of the productivity gains since the early 1990s were due to large capital improvements, which aren't paid for by employees. And productivity increases due to decreased costs thanks globalization and open source software. > yet they have been the ones benefiting from the gains I think lots of arguments ignore the fact that health care has outpaced wages and CPI by more than 100% in the last 15 years. Companies still pay the lion's share of health insurance costs for employees. You don't see your paycheck getting bigger, but your total compensation (if you get employer sponsored health insurance) has risen.
    - _dps 9y ago
      >> It's not the managers or capital owners that have been driving these productivity gains either > I'm under the impression most of the productivity gains since the early 1990s were due to large capital improvements, which aren't paid for by employees. Expanding here, the improvement in information and communication technology (one aspect of capital investment) has dramatically increased the effectiveness of intelligent management at the top. They have vastly more signals, and vastly higher granularity, with which to make decisions. I don't have data one way or another, but I could believe that managers' productivity-per-unit-talent has improved more than line-workers' productivity-per-unit-talent.
    - TheAdamAndChe 9y ago
      > You don't see your paycheck getting bigger, but your total compensation (if you get employer sponsored health insurance) has risen. This is wrong. While the majority of people haven't been seeing an increase in wages, the upper-middle class has[1]. Workers don't see things like "total compensation" when it all goes to insurance premiums. If the lower classes continue to experience a declining quality of life while the upper classes live opulently, there will come a time of destabilization. Don't you understand this? Shouldn't we try to avoid that? [1] http://money.cnn.com/2016/06/21/news/economy/upper-middle-class/index.html http://money.cnn.com/2016/06/21/news/economy/upper-middle-cl...
      - KekDemaga 9y ago
        Total compensation is up that is a fact, healthcare costs have risen dramatically post Obamacare and paying that cost is the raise most Americans got over the last 8 years.
        nradov 9y ago
        True, but healthcare costs would have risen with or without Obamacare.
    - gnaritas 9y ago
      > I'm under the impression most of the productivity gains since the early 1990s were due to large capital improvement Money doesn't magically increase productivity, those gains came from that money going to very smart people who created and/or applied technology to increase productivity. They're called workers, and they are the ones who increased productivity, not the capital holders. Throwing a billion dollars at a problem to solve it only buys you people capable of solving it, it doesn't mean you solved it.
chongli 9y ago
The productivity gains are due to capital, not to any improvement on the part of the worker. When a more advanced machine lets you replace 10 unskilled workers with 1, you don't pay that operator 10 times the wage, you pay him the same wage or even less. Why less? Because there are 9 people waiting to take his job if he quits.
- pizza 9y ago
  > The productivity gains are due to capital, not to any improvement on the part of the worker. Tools that increase productivity however do come from improvements made by workers - namely the workers whose labor is absorbed into the firm that sells the technology. The money to pay for the machine comes from revenue earned by workers. The company has to value the employee's work more than their wage for this to happen - so there is selection pressure for willingness to accept low wages; lower wages means greater profit; greater profit means greater precarity... etc. Technology devalues worker specialized knowledge by rendering it less useful, while keeping production at least constant (e.g. being computer-literate is as valuable as it is specialized) Many fewer people (can) produce a disruptive technology compared to the number of people it displaces, but that does not exempt them from the same selection pressure. A technology firm that depends on outcompeting others in its sector still has to make its own productivity gains. They'd likely prefer to do with one inventor what they could do with two. Maybe very long from now there will be a kind of artificial intelligence/singularity perpetual motion machine that - because of its near-zero cost of tinkering to discover improvements in its self over the competition - no other firm can compete with. A cloud "SaaS-as-a-service" like John Lilly's fears of solid state intelligence (SSI)
  - amelius 9y ago
    > The money to pay for the machine comes from revenue earned by workers. That's kind of the contract between workers and their employer. Workers get short-term benefit of not having any risk, and employers take the risk but receive the long-term benefit of capital.
    - pizza 9y ago
matz1 9y ago
Its the technology that make worker more productive not the worker itself.
- paganel 9y ago
  As other posters have mentioned above, the technology itself is not "invented" on the spot by the capitalist himself, the capitalist is not a magician who can make things show up out of thin air, the technology and the related improvements are put in place by the workers. You pay workers less they have less and less reasons to think about improving the technology owned by the capitalists. It's as simple as that.
  - pixl97 9y ago
    Uh, which is why pay for IT/programmers is high, and pay for sales clerks is low. It doesn't matter if your low end worker is doing half as much if technological productivity gains increase 10x.
    - paganel 9y ago
      I've thought that that would be one of the responses, and you're partially right, of course. But in the grander scheme of things better wages for workers (including sales clerks) would, among other possible outcomes, also increase the "talent pool" (for a lack of better word) from which future capitalists will pick their "inventors" and "technicians" 15-20 years down the road. More to the point, under the present conditions only the kids of capitalists themselves and the kids of some privileged social strata (like IT people's kids) are free to fulfill their intellectual potential 100%, because they don't have to worry if their parents have enough money for rent/putting food on the table/education, and as such they can spend their late teens - early 20s (when they've grown up a little) trying and playing with new stuff, studying whatever university courses they feel fulfills their intellectual potential etc, and not having to worry about finding a McDonald's job because their parents have left them with nothing. But if you pay all the workers a little more then their kids will also be able to follow the intellectual subjects they're really interested in instead of studying and learning only to get a job, any job, in order to pay down the future student-loans faster. These people would very rarely be interested in inventing new stuff for their "capitalist" owners or in becoming entrepreneurs (which it has been proven that it's good for capitalism, I mean, there being more entrepreneurs). The same argument (only much better put into words) was made by J.S. Mill when he wrote about why women should be fully allowed in the workforce on the same level as men. He found it really, really inefficient that about 50% of the human population was taken out of the intellectual pursuits, which for us, as a species, means that we get to have 50% less inventors/great artists/technicians.
prostoalex 9y ago
> corporate profits have been increasing (example compared to 90) Survivorship bias. Amazon, Wal-Mart and Costco profits have been increasing. Profits of Borders, Mervyn's, The Limited, CompUSA, Linens'n'Things, Fresh'n'Easy, Payless Shoe Center, Blockbuster Video, Hastings Entertainment, Tower Records, FAO Schwartz, KB Toys, Circuit City and RadioShack - not so much. Internet (or wide availability of catalog shopping combined with reasonable delivery options) concentrates things like retail or media distribution in the hands of the very few.
- cheriot 9y ago
  Corporate profits have risen as a share of the economy[1] and, correspondingly, the share of gdp that's paid in wages and salary has been declining[2]. [1] https://fred.stlouisfed.org/graph/?g=1Pik https://fred.stlouisfed.org/graph/?g=1Pik [2] https://fred.stlouisfed.org/graph/?g=2Xa https://fred.stlouisfed.org/graph/?g=2Xa
  - prostoalex 9y ago
    The very same St. Louis Fed no longer considers wage/salary data to be a reliable measure - employer healthcare costs per worker are now much more substantial and are growing at much faster rate. "Real compensation" is the preferred nomenclature to account for the total compensation package. https://fred.stlouisfed.org/graph/?g=74dI https://fred.stlouisfed.org/graph/?g=74dI and https://www.bloomberg.com/view/articles/2016-09-28/health-care-costs-ate-your-pay-raises https://www.bloomberg.com/view/articles/2016-09-28/health-ca... for more context. Remove the tax deductibility of employer healthcare plans and watch the wage/salary graph magically grow, as the funds get reallocated. Sure, the worker now must buy their own health insurance, which potentially leaves them with even less disposable income than before, but the gross wage/salary graph will go up and to the right.
    - drawkbox 9y ago
      A good reason why healthcare should be removed from employers hands. In fact we should only allow salary increases or money for benefits, not benefits such as healthcare for employees. "Real compensation" is not a good measure because it is so unique to situations, and in most cases benefits are not all that great, workers would always take more money and the consumer economy and individual/family insurance market would benefit from that as well. Everyone needs to be in their own individual/family insurance, group everyone together across the nation and move it away from business/employers and selective grouping. Employers do not pay your auto, home, liability insurance of your personal property, why should they have anything to do with your health, that alone is an invasion of privacy and not secure for workers when they can't work due to health. Allowing employers and insurance companies to fix prices in backrooms is part of the problem of wildly inflating healthcare costs due to bad insurance grouping. It also let's companies off from wage increases by saying it is all part of "real compensation" when in actuality the velocity of money is at an all time low[1] in a consumer economy, red alert... [1] https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V
bit48 9y ago
Higher profits aren't always due to increases in productivity. Profits can grow due to decreases in the price of raw materials (e.g. oil), decrease in competition (e.g. due to an aquisition or a bankruptcy of a competitor), relaxation of regulation (e.g due to lobbying), and a variety of other chnges in the market.
hehdjdj728383 9y ago
You said the same thing to my mind. Both posts make the point wage increases should be tied to business success, but also point out they have not.

ivl 9y ago

Because workers being super special is not what has driven productivity gains.

TheAdamAndChe 9y ago
It's not the managers or capital owners that have been driving these productivity gains either, yet they have been the ones benefiting from the gains.
- thephyber 9y ago
  > It's not the managers or capital owners that have been driving these productivity gains either Citation needed. I'm under the impression most of the productivity gains since the early 1990s were due to large capital improvements, which aren't paid for by employees. And productivity increases due to decreased costs thanks globalization and open source software. > yet they have been the ones benefiting from the gains I think lots of arguments ignore the fact that health care has outpaced wages and CPI by more than 100% in the last 15 years. Companies still pay the lion's share of health insurance costs for employees. You don't see your paycheck getting bigger, but your total compensation (if you get employer sponsored health insurance) has risen.
  - _dps 9y ago
    >> It's not the managers or capital owners that have been driving these productivity gains either > I'm under the impression most of the productivity gains since the early 1990s were due to large capital improvements, which aren't paid for by employees. Expanding here, the improvement in information and communication technology (one aspect of capital investment) has dramatically increased the effectiveness of intelligent management at the top. They have vastly more signals, and vastly higher granularity, with which to make decisions. I don't have data one way or another, but I could believe that managers' productivity-per-unit-talent has improved more than line-workers' productivity-per-unit-talent.
  - TheAdamAndChe 9y ago
    > You don't see your paycheck getting bigger, but your total compensation (if you get employer sponsored health insurance) has risen. This is wrong. While the majority of people haven't been seeing an increase in wages, the upper-middle class has[1]. Workers don't see things like "total compensation" when it all goes to insurance premiums. If the lower classes continue to experience a declining quality of life while the upper classes live opulently, there will come a time of destabilization. Don't you understand this? Shouldn't we try to avoid that? [1] http://money.cnn.com/2016/06/21/news/economy/upper-middle-class/index.html http://money.cnn.com/2016/06/21/news/economy/upper-middle-cl...
    - KekDemaga 9y ago
      Total compensation is up that is a fact, healthcare costs have risen dramatically post Obamacare and paying that cost is the raise most Americans got over the last 8 years.
      - nradov 9y ago
        True, but healthcare costs would have risen with or without Obamacare.
  - gnaritas 9y ago
    > I'm under the impression most of the productivity gains since the early 1990s were due to large capital improvement Money doesn't magically increase productivity, those gains came from that money going to very smart people who created and/or applied technology to increase productivity. They're called workers, and they are the ones who increased productivity, not the capital holders. Throwing a billion dollars at a problem to solve it only buys you people capable of solving it, it doesn't mean you solved it.

chongli 9y ago

The productivity gains are due to capital, not to any improvement on the part of the worker. When a more advanced machine lets you replace 10 unskilled workers with 1, you don't pay that operator 10 times the wage, you pay him the same wage or even less. Why less? Because there are 9 people waiting to take his job if he quits.

pizza 9y ago
> The productivity gains are due to capital, not to any improvement on the part of the worker. Tools that increase productivity however do come from improvements made by workers - namely the workers whose labor is absorbed into the firm that sells the technology. The money to pay for the machine comes from revenue earned by workers. The company has to value the employee's work more than their wage for this to happen - so there is selection pressure for willingness to accept low wages; lower wages means greater profit; greater profit means greater precarity... etc. Technology devalues worker specialized knowledge by rendering it less useful, while keeping production at least constant (e.g. being computer-literate is as valuable as it is specialized) Many fewer people (can) produce a disruptive technology compared to the number of people it displaces, but that does not exempt them from the same selection pressure. A technology firm that depends on outcompeting others in its sector still has to make its own productivity gains. They'd likely prefer to do with one inventor what they could do with two. Maybe very long from now there will be a kind of artificial intelligence/singularity perpetual motion machine that - because of its near-zero cost of tinkering to discover improvements in its self over the competition - no other firm can compete with. A cloud "SaaS-as-a-service" like John Lilly's fears of solid state intelligence (SSI)
- amelius 9y ago
  > The money to pay for the machine comes from revenue earned by workers. That's kind of the contract between workers and their employer. Workers get short-term benefit of not having any risk, and employers take the risk but receive the long-term benefit of capital.
  - pizza 9y ago

matz1 9y ago

Its the technology that make worker more productive not the worker itself.

paganel 9y ago
As other posters have mentioned above, the technology itself is not "invented" on the spot by the capitalist himself, the capitalist is not a magician who can make things show up out of thin air, the technology and the related improvements are put in place by the workers. You pay workers less they have less and less reasons to think about improving the technology owned by the capitalists. It's as simple as that.
- pixl97 9y ago
  Uh, which is why pay for IT/programmers is high, and pay for sales clerks is low. It doesn't matter if your low end worker is doing half as much if technological productivity gains increase 10x.
  - paganel 9y ago
    I've thought that that would be one of the responses, and you're partially right, of course. But in the grander scheme of things better wages for workers (including sales clerks) would, among other possible outcomes, also increase the "talent pool" (for a lack of better word) from which future capitalists will pick their "inventors" and "technicians" 15-20 years down the road. More to the point, under the present conditions only the kids of capitalists themselves and the kids of some privileged social strata (like IT people's kids) are free to fulfill their intellectual potential 100%, because they don't have to worry if their parents have enough money for rent/putting food on the table/education, and as such they can spend their late teens - early 20s (when they've grown up a little) trying and playing with new stuff, studying whatever university courses they feel fulfills their intellectual potential etc, and not having to worry about finding a McDonald's job because their parents have left them with nothing. But if you pay all the workers a little more then their kids will also be able to follow the intellectual subjects they're really interested in instead of studying and learning only to get a job, any job, in order to pay down the future student-loans faster. These people would very rarely be interested in inventing new stuff for their "capitalist" owners or in becoming entrepreneurs (which it has been proven that it's good for capitalism, I mean, there being more entrepreneurs). The same argument (only much better put into words) was made by J.S. Mill when he wrote about why women should be fully allowed in the workforce on the same level as men. He found it really, really inefficient that about 50% of the human population was taken out of the intellectual pursuits, which for us, as a species, means that we get to have 50% less inventors/great artists/technicians.

prostoalex 9y ago

> corporate profits have been increasing (example compared to 90) Survivorship bias. Amazon, Wal-Mart and Costco profits have been increasing. Profits of Borders, Mervyn's, The Limited, CompUSA, Linens'n'Things, Fresh'n'Easy, Payless Shoe Center, Blockbuster Video, Hastings Entertainment, Tower Records, FAO Schwartz, KB Toys, Circuit City and RadioShack - not so much. Internet (or wide availability of catalog shopping combined with reasonable delivery options) concentrates things like retail or media distribution in the hands of the very few.

cheriot 9y ago
Corporate profits have risen as a share of the economy[1] and, correspondingly, the share of gdp that's paid in wages and salary has been declining[2]. [1] https://fred.stlouisfed.org/graph/?g=1Pik https://fred.stlouisfed.org/graph/?g=1Pik [2] https://fred.stlouisfed.org/graph/?g=2Xa https://fred.stlouisfed.org/graph/?g=2Xa
- prostoalex 9y ago
  The very same St. Louis Fed no longer considers wage/salary data to be a reliable measure - employer healthcare costs per worker are now much more substantial and are growing at much faster rate. "Real compensation" is the preferred nomenclature to account for the total compensation package. https://fred.stlouisfed.org/graph/?g=74dI https://fred.stlouisfed.org/graph/?g=74dI and https://www.bloomberg.com/view/articles/2016-09-28/health-care-costs-ate-your-pay-raises https://www.bloomberg.com/view/articles/2016-09-28/health-ca... for more context. Remove the tax deductibility of employer healthcare plans and watch the wage/salary graph magically grow, as the funds get reallocated. Sure, the worker now must buy their own health insurance, which potentially leaves them with even less disposable income than before, but the gross wage/salary graph will go up and to the right.
  - drawkbox 9y ago
    A good reason why healthcare should be removed from employers hands. In fact we should only allow salary increases or money for benefits, not benefits such as healthcare for employees. "Real compensation" is not a good measure because it is so unique to situations, and in most cases benefits are not all that great, workers would always take more money and the consumer economy and individual/family insurance market would benefit from that as well. Everyone needs to be in their own individual/family insurance, group everyone together across the nation and move it away from business/employers and selective grouping. Employers do not pay your auto, home, liability insurance of your personal property, why should they have anything to do with your health, that alone is an invasion of privacy and not secure for workers when they can't work due to health. Allowing employers and insurance companies to fix prices in backrooms is part of the problem of wildly inflating healthcare costs due to bad insurance grouping. It also let's companies off from wage increases by saying it is all part of "real compensation" when in actuality the velocity of money is at an all time low[1] in a consumer economy, red alert... [1] https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V

bit48 9y ago

Higher profits aren't always due to increases in productivity. Profits can grow due to decreases in the price of raw materials (e.g. oil), decrease in competition (e.g. due to an aquisition or a bankruptcy of a competitor), relaxation of regulation (e.g due to lobbying), and a variety of other chnges in the market.

hehdjdj728383 9y ago

You said the same thing to my mind. Both posts make the point wage increases should be tied to business success, but also point out they have not.