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Lean that an artificial increase of the cost of labor causes some of the most vulnerable and lowest income workers be squeezed out of the labor market. Once too
by x38iq84n 8y ago
Lean that an artificial increase of the cost of labor causes some of the most vulnerable and lowest income workers be squeezed out of the labor market. Once too expensive, they get replaced by a machine (e.g. taking fast food orders) or the staff is downsized. Either way, those who were supposed to be helped are made worse off.
- tenpies 8y agoAs my possibly-psychopathic, but well-intended manager once said: "the more you cost, the more we want to replace you". Other gems include: "I love when employees buy houses or have children. It means now they're tied down and are less willing to leave".
- astazangasta 8y agoThe cost of labor doesn't behave like other things, because people spend their wages. Raising wages can boost aggregate demand, making more work for everyone, including low wage workers displaced by increasing productivity. Artifically increasing wages has the effect of forcing investment in productivity (rather than relying on the low cost of labor). Increasing demand also makes the labor market tighter, which boosts wages and encourages further productivity increases. Boosting wages for the lowest paid workers also has good distributional effects because wages have higher utility, are spent more, etc. Etc.