5 ms·

It makes perfect economic sense: it's a simple supply and demand curve. Increasing the number of workers decreases their value. The only confounding factor is w

by ng12 7y ago

It makes perfect economic sense: it's a simple supply and demand curve. Increasing the number of workers decreases their value. The only confounding factor is whether the increase in workers increases the speed at which the economy grows/ I'd guess it probably does, but not enough to offset the downward pressure on wages.

cortesoft 7y ago
It is pretty well accepted fact in economics that a growing workforce is a good thing for economic growth. > it's a simple supply and demand curve. Increasing the number of workers decreases their value. You are leaving out a crucial factor - the wages that the 'new' workers earn are going to be spent in the economy, growing the economy as a whole. This is increasing the 'demand' side of that supply and demand curve. This is the same flaw that anti-immigrant people use when saying that immigrants 'take our jobs'. They take a job, but they also create jobs by spending the money they earn. That is what an economy is. Every worker creates more value than they take (otherwise no one would hire the worker in the first place!)
- iguy 7y ago
  The most solid argument in this direction (IMHO) is that quite a lot of the extra spending seems to have gone on positional goods, like housing. It's mostly a bidding war, and once every family has two earners, the winning bid is much higher. And, making that worse: Once you have two careers to plan for, it's much harder to move to a smaller cheaper city to escape. Perhaps both of you can find good jobs in the big city, and in 5 smaller places... but not the same 5! So you have to pick the big center.
- ng12 7y ago
  In these types of discussions I think "good for the economy" is a weasel phrase -- what's good for the economy is not necessarily good for the worker. This should be obvious: child labor was great for the economy for the reasons you mentioned. Similarly, we've seen massive economic growth since the 50s but at the same time a single-earner, blue collar family can't afford to buy a house and raise three kids. It's very clear that an increase in labor supply puts downward pressure on wages and there's plenty of evidence that the economy is not growing fast enough to offset that pressure.
- nilkn 7y ago
  Counter-point: my anecdotal observations suggest that folks are so intent on competing for housing that in the decades since dual incomes became commonplace the main effect has been to simply dramatically inflate the price of housing. In other words, the extra money may not be making it into the general economy much and it may instead just be supporting higher home prices. Of course, home prices are not completely isolated from the rest of the US economy, but I think that's a far cry from the idea that each household just now has twice as much money to spend on goods, entertainment, food, etc.
  - kelnos 7y ago
    I was thinking about this, too. In areas where housing supply is constrained, the increasing prevalence of dual incomes means people can bid higher, more competitive offers on housing. And of course they do, because why wouldn't they? I would even expect this to be true, though on a smaller scale, in areas where housing supply isn't constrained, since, in general, each individual house is unique to some extent; two dual-income families fighting over the same house will have more resources to throw at their bids.
  - scruple 7y ago
    > In other words, the extra money may not be making it into the general economy much and it may instead just be supporting higher home prices. This was the topic of conversation this weekend between my wife and I and 4 other couples that we are friends with, each of us with young children. We live in SoCal. We have young kids. We basically can afford to live here, despite having high-paying, dual-income households. That's it, we can afford living. We can't afford to go to Disney very often. We can't afford to go to the San Diego Zoo very often. We're keeping pace with house and car payments (this was a big one for my wife and I, we no longer have car payments and are doing everything we can to make our situation work with the automobiles that we have), with childcare, and trying to put away money for our kids at the expense of the local economy. I somehow don't feel any more financially secure or independent; I don't feel like I have more discretionary income than when I first moved to California and was making $10/hour. My own conclusion is that it's a feature of our economy, it's by design.
- zajio1am 7y ago
  It is more complicated - there is workforce and capital. In order to have higher labor productivity (or GDP per capita), you need higher rate of capital to labor, so you need that capital growth be larger than workforce growth. If you increase workforce but not increase capital (or increase workforce more than capital), then it is true that economy as a whole (GDP) will grow, but GDP per worker will go down, there would be downward pressure to wages and upward pressure for capital yield.
kelnos 7y ago
> It makes perfect economic sense: it's a simple supply and demand curve. Increasing the number of workers decreases their value. That assumes that the number of available jobs is perfectly-sized and fixed, and that there's no other work that could be done (or no under-employed, existing work that could be done better) if we had more workers. That would seem not to be true.
- ng12 7y ago
  > That would seem not to be true. How would you explain the stagnant wages of the last 4+ decades compared to the massive economic growth? I don't think there's much evidence that the relationship between labor supply and economic growth is anywhere near one-to-one (e.g. one more person working means their wage is added to the volume of labor demand).
  - kelnos 7y ago
    Wages have not been stagnant across all sectors of the economy. Certainly some jobs aren't valued as much, and their value hasn't been growing or even keeping pace, but there are plenty of areas where wages have been increasing quite a lot over the last couple decades. Given that this is generally a tech-focused forum, that shouldn't be news to anyone here ;)
- mrfredward 7y ago
  >That assumes that the number of available jobs is perfectly-sized and fixed, and that there's no other work that could be done No it assumes the exact opposite of a fixed number of jobs-- it assumes the other work wasn't being done because wages were too high to make it profitable, but as the workforce grew the price of labor dropped until employers wanted to hire into those jobs. That's the whole idea behind supply and demand.

by ng12 7y ago

cortesoft 7y ago

It is pretty well accepted fact in economics that a growing workforce is a good thing for economic growth. > it's a simple supply and demand curve. Increasing the number of workers decreases their value. You are leaving out a crucial factor - the wages that the 'new' workers earn are going to be spent in the economy, growing the economy as a whole. This is increasing the 'demand' side of that supply and demand curve. This is the same flaw that anti-immigrant people use when saying that immigrants 'take our jobs'. They take a job, but they also create jobs by spending the money they earn. That is what an economy is. Every worker creates more value than they take (otherwise no one would hire the worker in the first place!)

iguy 7y ago
The most solid argument in this direction (IMHO) is that quite a lot of the extra spending seems to have gone on positional goods, like housing. It's mostly a bidding war, and once every family has two earners, the winning bid is much higher. And, making that worse: Once you have two careers to plan for, it's much harder to move to a smaller cheaper city to escape. Perhaps both of you can find good jobs in the big city, and in 5 smaller places... but not the same 5! So you have to pick the big center.
ng12 7y ago
In these types of discussions I think "good for the economy" is a weasel phrase -- what's good for the economy is not necessarily good for the worker. This should be obvious: child labor was great for the economy for the reasons you mentioned. Similarly, we've seen massive economic growth since the 50s but at the same time a single-earner, blue collar family can't afford to buy a house and raise three kids. It's very clear that an increase in labor supply puts downward pressure on wages and there's plenty of evidence that the economy is not growing fast enough to offset that pressure.
nilkn 7y ago
Counter-point: my anecdotal observations suggest that folks are so intent on competing for housing that in the decades since dual incomes became commonplace the main effect has been to simply dramatically inflate the price of housing. In other words, the extra money may not be making it into the general economy much and it may instead just be supporting higher home prices. Of course, home prices are not completely isolated from the rest of the US economy, but I think that's a far cry from the idea that each household just now has twice as much money to spend on goods, entertainment, food, etc.
- kelnos 7y ago
  I was thinking about this, too. In areas where housing supply is constrained, the increasing prevalence of dual incomes means people can bid higher, more competitive offers on housing. And of course they do, because why wouldn't they? I would even expect this to be true, though on a smaller scale, in areas where housing supply isn't constrained, since, in general, each individual house is unique to some extent; two dual-income families fighting over the same house will have more resources to throw at their bids.
- scruple 7y ago
  > In other words, the extra money may not be making it into the general economy much and it may instead just be supporting higher home prices. This was the topic of conversation this weekend between my wife and I and 4 other couples that we are friends with, each of us with young children. We live in SoCal. We have young kids. We basically can afford to live here, despite having high-paying, dual-income households. That's it, we can afford living. We can't afford to go to Disney very often. We can't afford to go to the San Diego Zoo very often. We're keeping pace with house and car payments (this was a big one for my wife and I, we no longer have car payments and are doing everything we can to make our situation work with the automobiles that we have), with childcare, and trying to put away money for our kids at the expense of the local economy. I somehow don't feel any more financially secure or independent; I don't feel like I have more discretionary income than when I first moved to California and was making $10/hour. My own conclusion is that it's a feature of our economy, it's by design.
zajio1am 7y ago
It is more complicated - there is workforce and capital. In order to have higher labor productivity (or GDP per capita), you need higher rate of capital to labor, so you need that capital growth be larger than workforce growth. If you increase workforce but not increase capital (or increase workforce more than capital), then it is true that economy as a whole (GDP) will grow, but GDP per worker will go down, there would be downward pressure to wages and upward pressure for capital yield.

kelnos 7y ago

> It makes perfect economic sense: it's a simple supply and demand curve. Increasing the number of workers decreases their value. That assumes that the number of available jobs is perfectly-sized and fixed, and that there's no other work that could be done (or no under-employed, existing work that could be done better) if we had more workers. That would seem not to be true.

ng12 7y ago
> That would seem not to be true. How would you explain the stagnant wages of the last 4+ decades compared to the massive economic growth? I don't think there's much evidence that the relationship between labor supply and economic growth is anywhere near one-to-one (e.g. one more person working means their wage is added to the volume of labor demand).
- kelnos 7y ago
  Wages have not been stagnant across all sectors of the economy. Certainly some jobs aren't valued as much, and their value hasn't been growing or even keeping pace, but there are plenty of areas where wages have been increasing quite a lot over the last couple decades. Given that this is generally a tech-focused forum, that shouldn't be news to anyone here ;)
mrfredward 7y ago
>That assumes that the number of available jobs is perfectly-sized and fixed, and that there's no other work that could be done No it assumes the exact opposite of a fixed number of jobs-- it assumes the other work wasn't being done because wages were too high to make it profitable, but as the workforce grew the price of labor dropped until employers wanted to hire into those jobs. That's the whole idea behind supply and demand.