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But it is in Boeing's interest to pay workers enough to increase demand for jetliners -- that is, enough that they can afford airline tickets with some frequenc

by gshdg 7y ago

But it is in Boeing's interest to pay workers enough to increase demand for jetliners -- that is, enough that they can afford airline tickets with some frequency.

philwelch 7y ago
Not necessarily! If Boeing decides to pay an employee an extra $50/month, and that employee saves all of that money and spends it on airline tickets, after the money that goes to the airline, the airline workers, the oil companies, and the airports, a small fraction of it returns to Boeing. Whereas if they didn’t pay them that extra $50/month, they would retain 100% of it.
- iso1631 7y ago
  If you pay an extra $50 a month, it forces all the other companies to pay an extra $50 a month, and you get a fraction of everyone's extra $50. If you get 5% of the average $50 a month extra, but only employ 1% of the workers, you make money
  - philwelch 7y ago
    If you only employ 1% of the workers and you pay an extra $50/mo, the rest of the market isn’t necessarily going to keep up with you. You’re probably just gonna end up hiring the top 1%. (Which also had a lot to do with Ford’s success, to be fair!)
- Talanes 7y ago
  And if every business does this, they all retain the $50/month and none of their employees afford anyone's products.
maest 7y ago
Analogous reasoning suggests that, if you have a 401k and thus probably own some shares in, say, Starbucks, then it's in your interest to spend as much as possible at their shops.
rhino369 7y ago
It just doesn't make sense to pay your employees more in hopes that they will spend more and you'll get the revenue back. Even if you could capture 100% of their extra pay (an absurd assumption, realistically 2% is huge) you are better off just keeping that money yourself since you'll have to provide them with whatever product/service you sell, which costs money.
- chromatic 7y ago
  It just doesn't make sense to pay your employees more in hopes that they will spend more and you'll get the revenue back. Not even if their marginal propensity to consume is high?

by gshdg 7y ago

But it is in Boeing's interest to pay workers enough to increase demand for jetliners -- that is, enough that they can afford airline tickets with some frequency.

philwelch 7y ago

Not necessarily! If Boeing decides to pay an employee an extra $50/month, and that employee saves all of that money and spends it on airline tickets, after the money that goes to the airline, the airline workers, the oil companies, and the airports, a small fraction of it returns to Boeing. Whereas if they didn’t pay them that extra $50/month, they would retain 100% of it.

iso1631 7y ago
If you pay an extra $50 a month, it forces all the other companies to pay an extra $50 a month, and you get a fraction of everyone's extra $50. If you get 5% of the average $50 a month extra, but only employ 1% of the workers, you make money
- philwelch 7y ago
  If you only employ 1% of the workers and you pay an extra $50/mo, the rest of the market isn’t necessarily going to keep up with you. You’re probably just gonna end up hiring the top 1%. (Which also had a lot to do with Ford’s success, to be fair!)
Talanes 7y ago
And if every business does this, they all retain the $50/month and none of their employees afford anyone's products.

maest 7y ago

Analogous reasoning suggests that, if you have a 401k and thus probably own some shares in, say, Starbucks, then it's in your interest to spend as much as possible at their shops.

rhino369 7y ago

It just doesn't make sense to pay your employees more in hopes that they will spend more and you'll get the revenue back. Even if you could capture 100% of their extra pay (an absurd assumption, realistically 2% is huge) you are better off just keeping that money yourself since you'll have to provide them with whatever product/service you sell, which costs money.

chromatic 7y ago
It just doesn't make sense to pay your employees more in hopes that they will spend more and you'll get the revenue back. Not even if their marginal propensity to consume is high?