5 ms·

>> A tight labor market causes the raises Different economic theories can provide different explanations and the statement above is over-simplifying the situat

by eiji 8y ago

>> A tight labor market causes the raises Different economic theories can provide different explanations and the statement above is over-simplifying the situation (It should say 'can cause' raises). I'm not an economist. The labor theory of value (LTV) and other systems of thought would have a different take on this. Wages are not going up because various industries are bumping against hard systemic boundaries. I believe those are hard to see and not much appreciated or studied because they are not merely driven by supply and demand economics. Truckers are not being paid more because if they were, the rate-of-profit in that industry would not be sustainable anymore. But raising prices for logistics is not really an option for that industry, because as soon as you do that, other factors start to depress demand. What you end up with are maxed out industries where you either keep pay at todays levels, or go home and close shop. It's complicated, but just 'A tight labor market causes the raises' does not even start to capture the situation. And it's not just greedy bankers that keep wages depressed. A tight labor market is not going to help increase wages. Not gonna happen because it's not seeing the whole picture.

dahdum 8y ago
"Truckers are not being paid more because if they were, the rate-of-profit in that industry would not be sustainable anymore. But raising prices for logistics is not really an option for that industry, because as soon as you do that, other factors start to depress demand." I don't fully understand this, even if the rate-of-profit were sky high and could support higher wages, there is no incentive to do so without a tight labor market. Once the labor market is tight enough wages are forced up. It's then up to the business to eat that cost or pass it along immediately. If overall logistics demand shrinks due to the higher cost, wages will still remain up unless the labor market shifts.
bcoates 8y ago
The labor theory of value doesn't have any explanatory value, it's just a traditional belief that kept being rediscovered because it seems reasonable and value theories were hard. There really isn't any reason to "teach the controversy": marginal substitution is the only correct theory of value and it is fundamentally incompatible with other intrinsic-value theories like the LTV. It's certainly possible that raising labor prices can make a whole industry nonviable, depressing wages and eventually leading to cost-disease extinction, but there's no reason to think trucking is anything like that -- logistics generates an enormous amount of economic value to its customers and if the labor costs of shipping went up, they'd fork out. You can already see this happen when fuel prices change: everyone adds a fuel surcharge and the customers suck it up.

by eiji 8y ago

dahdum 8y ago

"Truckers are not being paid more because if they were, the rate-of-profit in that industry would not be sustainable anymore. But raising prices for logistics is not really an option for that industry, because as soon as you do that, other factors start to depress demand." I don't fully understand this, even if the rate-of-profit were sky high and could support higher wages, there is no incentive to do so without a tight labor market. Once the labor market is tight enough wages are forced up. It's then up to the business to eat that cost or pass it along immediately. If overall logistics demand shrinks due to the higher cost, wages will still remain up unless the labor market shifts.

bcoates 8y ago

The labor theory of value doesn't have any explanatory value, it's just a traditional belief that kept being rediscovered because it seems reasonable and value theories were hard. There really isn't any reason to "teach the controversy": marginal substitution is the only correct theory of value and it is fundamentally incompatible with other intrinsic-value theories like the LTV. It's certainly possible that raising labor prices can make a whole industry nonviable, depressing wages and eventually leading to cost-disease extinction, but there's no reason to think trucking is anything like that -- logistics generates an enormous amount of economic value to its customers and if the labor costs of shipping went up, they'd fork out. You can already see this happen when fuel prices change: everyone adds a fuel surcharge and the customers suck it up.