6 ms·

> If a company wants to pay less than market rate for labor they will find themselves without employees. What if multiple companies in an area do that? What i

> If a company wants to pay less than market rate for labor they will find themselves without employees. What if multiple companies in an area do that? What incentive does a entering company have to increase wages if employees will take jobs at lower wages nevertheless because they need to eat? > But, that is the result of people willingly entering a contract for the lower pay. This viewpoint ignores that people need to work in order to eat. It's not exactly willing if your alternatives are "accept this contract or starve".

tastyfreeze 6y ago
You mean price fixing and collusion that are already illegal? Without price fixing and collusion the employers have to compete for labor. Competition that would as a result improve the compensation for employees.
- gjulianm 6y ago
  It's not price fixing nor collusion. It's just the incentives companies have to lower wages. Look at this example: a number of companies in an area are paying a livable wage at time T for low-skilled workers. Now, time goes on and inflation kicks in. Those wages, which did not grow, are not livable now. Workers, however, can't complain too much because they will be fired, and bad income is better than no income (not to mention healthcare tied to the jobs). There are also more workers than job positions, and new young workers are constantly entering the market, so companies will always find someone that needs to work even at that low wage. What incentives do those companies have to increase wages? Absolutely none. In fact, this is what is happening right now. > Without price fixing and collusion the employers have to compete for labor. If employees actually had to compete for labor in all cases, we wouldn't be having this debate and people wouldn't be complaining that their wages are not enough to live.
  - tastyfreeze 6y ago
    That sounds like blaming a broken money supply for lower wages. They are making the same wages. The inflation of money supply makes their dollar worth less. Two separate issues. I would prefer to examine one issue on its own. The company has no say in the money supply. Their money is worth less as well. Do you expect a company to pay more when they are earning the same amount and employee production stays the same? The Fed is the only entity that controls money supply and the purchasing power of a dollar. Upset that what you are earning doesn't buy the same amount of stuff? Blame for that is entirely on us for asking the government for more while demanding lower taxes. Their only alternative to raising taxes is printing more money.
    - gjulianm 6y ago
      The example is not about inflation, it's just a method to show how without any specific action, companies don't have incentives to raise wages. But in fact, it's a real example because it's what has been happening in the US for a while, inflation increasing, company profits increasing but profits stagnating. Anyways, the point is that companies will tend to push for lower wages, always. It's just how capitalism works, it pushes for maximizing profits. If there are more workers than jobs (which is the case almost everywhere) you can't say that competition will push companies to increase wages, because there will be no competition, and workers can't just stay home if there are no satisfying jobs.

tastyfreeze 6y ago

You mean price fixing and collusion that are already illegal? Without price fixing and collusion the employers have to compete for labor. Competition that would as a result improve the compensation for employees.

gjulianm 6y ago
It's not price fixing nor collusion. It's just the incentives companies have to lower wages. Look at this example: a number of companies in an area are paying a livable wage at time T for low-skilled workers. Now, time goes on and inflation kicks in. Those wages, which did not grow, are not livable now. Workers, however, can't complain too much because they will be fired, and bad income is better than no income (not to mention healthcare tied to the jobs). There are also more workers than job positions, and new young workers are constantly entering the market, so companies will always find someone that needs to work even at that low wage. What incentives do those companies have to increase wages? Absolutely none. In fact, this is what is happening right now. > Without price fixing and collusion the employers have to compete for labor. If employees actually had to compete for labor in all cases, we wouldn't be having this debate and people wouldn't be complaining that their wages are not enough to live.
- tastyfreeze 6y ago
  That sounds like blaming a broken money supply for lower wages. They are making the same wages. The inflation of money supply makes their dollar worth less. Two separate issues. I would prefer to examine one issue on its own. The company has no say in the money supply. Their money is worth less as well. Do you expect a company to pay more when they are earning the same amount and employee production stays the same? The Fed is the only entity that controls money supply and the purchasing power of a dollar. Upset that what you are earning doesn't buy the same amount of stuff? Blame for that is entirely on us for asking the government for more while demanding lower taxes. Their only alternative to raising taxes is printing more money.
  - gjulianm 6y ago
    The example is not about inflation, it's just a method to show how without any specific action, companies don't have incentives to raise wages. But in fact, it's a real example because it's what has been happening in the US for a while, inflation increasing, company profits increasing but profits stagnating. Anyways, the point is that companies will tend to push for lower wages, always. It's just how capitalism works, it pushes for maximizing profits. If there are more workers than jobs (which is the case almost everywhere) you can't say that competition will push companies to increase wages, because there will be no competition, and workers can't just stay home if there are no satisfying jobs.