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>Total cost to hire for a job should match the productivity of that job. Total cost is determined by supply and demand. Productivity simply puts a ceiling on w
by crdoconnor 9y ago
>Total cost to hire for a job should match the productivity of that job.
Total cost is determined by supply and demand. Productivity simply puts a ceiling on wages.
Austerian measures in particular are one way whereby demand for labour can be pushed down (by cutting public sector jobs & compensation) and demand for jobs/desperation can be pushed up (by cutting benefits people rely upon). None of this has anything to do with productivity.
>There isn't any free lunch
In healthcare the free lunch are the profits being skimmed by the HMOs, reflected by their greater share of those increasing health care costs driven by their relative market power.
- WalterBright 9y agoOn the other hand, everyone would love to hire someone who produced 10x their compensation, meaning they'd bid up the compensation to their productivity minus the opportunity cost.
- akvadrako 9y agoThat only seems to work if there is infinite demand. If workers at company A are producing 10x their cost, then company B could hire them at twice that and still make 5x returns. But what if there is only enough demand for 20 output units (2 workers) and there are 2 workers in the pool, why would company B ever pay more than company A?
- WalterBright 9y agoB can offer a lower price than A and take their business away. High margin businesses (like A) attract competitors. Everybody wants to be in a high margin business.
- akvadrako 9y agoHow will lowering margins drive wages up?
- WalterBright 9y agoCompany A employs people and gets 10x on their work with high prices, they have a margin of 9x. B entices them away by offering them 2x their pay, and cuts prices 1x. B now has a margin of 7x, and all the business.
- akvadrako 9y agoWhy not just hire the unemployed available workers at the same pay and then have more margin?
- WalterBright 9y agoThen you'd need to lower prices (margins) to attract customers from the other business, and then you aren't getting 10x from the workers. Any way you want to slice it, making 10x off of workers is unstable in that there are market forces acting against it.
- akvadrako 9y agoSure, margins can go down. I thought the claim was wages could rise.
- WalterBright 9y agoGo back 2 posts and you'll see I showed how the wages rose.
- akvadrako 9y agoMaybe you think you did, but I don't even see a hint of the explanation in your posts.
- crdoconnor 9y ago>On the other hand, everyone would love to hire someone who produced 10x their compensation If there was somebody out there who was half the price and produced 20x their compensation they would be less impressed and would probably credit themselves for producing most of that value.