3 ms·

The actual result there is that companies never "choose" to pay more.

rtkwe 7y ago
Yep, they'll largely only do so when forced by market conditions. Unfortunately there's a lot of other effects that will insulate them from small to medium wage differences: moving is tough, expensive, and affects the whole family not just the worker, in a reasonable commute radius there's often only a handful of potential employers for plant workers, and manufacturing by design has relatively little reliance on individual employees and their skills, tasks are rote and repetitive, and to top it all off getting healthcare outside of an employer in the US is insanely expensive. All of this adds up to a huge barrier to employee power to push for higher wages.
- AnthonyMouse 7y ago
  Those are exactly the things that push wages up, because new or growing companies have to set salaries that overcome them in order to attract a workforce. Then workers at existing companies can go to those companies, get a job offer under those terms and bring it to their existing employer and credibly threaten to leave if they don't get a raise. The existing employer would have to match it anyway in order to replace them (because the replacement employee would have those same costs), so it allows the employee to negotiate a raise -- or take the better paying job at the other company, which had to do better than after-cost breakeven to attract them to begin with.
  - rtkwe 7y ago
    In a vacuum perhaps but that depends on the credibility of them actually leaving and for there to be new jobs coming into a sector. Manufacturing in particular isn't great because any new company is already going to be looking for lower wages just to compete against imported products manufactured overseas. A small difference in wages won't attract people from far away to move to a new location because of all the thing I originally stated and ultimately while there are some good benefits to manufacturing in the US it's hard to beat Mexico or China because the costs are so much lower there for labor. On top of that because it's a relatively low skill field the potential hiring pool is very large so there's little need to pull in veteran higher wage (and higher healthcare cost) employees from other companies.
    - AnthonyMouse 7y ago
      But now you're talking about a completely different issue -- competition from foreign labor pushing wages down. But that's also the same reason why the unions can't really get more money from them. They can't pay US workers more when competitors are able to (and do) pay foreign workers less. You're also now looking at the company's perspective rather than the employee's. The fact that there are other industries is a benefit to the employee -- if you can go to college and get paid twice as much as a software engineer then some people will take that option (benefiting them), which reduces the labor supply in the original industry (benefiting the remaining people).

Yep, they'll largely only do so when forced by market conditions. Unfortunately there's a lot of other effects that will insulate them from small to medium wage differences: moving is tough, expensive, and affects the whole family not just the worker, in a reasonable commute radius there's often only a handful of potential employers for plant workers, and manufacturing by design has relatively little reliance on individual employees and their skills, tasks are rote and repetitive, and to top it all off getting healthcare outside of an employer in the US is insanely expensive. All of this adds up to a huge barrier to employee power to push for higher wages.

AnthonyMouse 7y ago
Those are exactly the things that push wages up, because new or growing companies have to set salaries that overcome them in order to attract a workforce. Then workers at existing companies can go to those companies, get a job offer under those terms and bring it to their existing employer and credibly threaten to leave if they don't get a raise. The existing employer would have to match it anyway in order to replace them (because the replacement employee would have those same costs), so it allows the employee to negotiate a raise -- or take the better paying job at the other company, which had to do better than after-cost breakeven to attract them to begin with.
- rtkwe 7y ago
  In a vacuum perhaps but that depends on the credibility of them actually leaving and for there to be new jobs coming into a sector. Manufacturing in particular isn't great because any new company is already going to be looking for lower wages just to compete against imported products manufactured overseas. A small difference in wages won't attract people from far away to move to a new location because of all the thing I originally stated and ultimately while there are some good benefits to manufacturing in the US it's hard to beat Mexico or China because the costs are so much lower there for labor. On top of that because it's a relatively low skill field the potential hiring pool is very large so there's little need to pull in veteran higher wage (and higher healthcare cost) employees from other companies.
  - AnthonyMouse 7y ago
    But now you're talking about a completely different issue -- competition from foreign labor pushing wages down. But that's also the same reason why the unions can't really get more money from them. They can't pay US workers more when competitors are able to (and do) pay foreign workers less. You're also now looking at the company's perspective rather than the employee's. The fact that there are other industries is a benefit to the employee -- if you can go to college and get paid twice as much as a software engineer then some people will take that option (benefiting them), which reduces the labor supply in the original industry (benefiting the remaining people).