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Raising wages doesn’t create more workers, though. It will just convince them to leave other jobs for the higher paid alternatives. This creates new job opening

Raising wages doesn’t create more workers, though. It will just convince them to leave other jobs for the higher paid alternatives. This creates new job openings that still need to be backfilled. I don’t think it’s obvious that large numbers of people are choosing to stay home and earn $0/hour instead of getting a job working $10/hour because they really wanted $15/hour. The worker shortage is a real phenomenon of more jobs existing than people in the workforce. On the other hand, raising wages would produce inflationary pressure on everything from housing prices to food prices, which would force more people to get jobs just to survive. Not exactly what you meant, I know.

chrisseaton 5y ago
> Raising wages doesn’t create more workers, though. Of course it does. My wife doesn't work because there's nothing that particularly motivates her to work rather than doing her hobbies. If you offered her more money, it might motivate her to re-enter the work force. And if you can get 100k without a degree people who would be in college will be in the work force instead.
- runeks 5y ago
  Also, there’s less demand to buy labor for $20/hr than to buy it for $10/hr. So, all else being equal, fewer companies will demand workers if they’re more expensive, which will also reduce the deficit. That’s the theory at least.
  - guerby 5y ago
    If I follow you maximum demand to buy labor is at $0/hr. But if don't pay labor, no one is going to buy your product at the end of the day. If you pay more for labour, that's more money to spend on product and services. There's an optimum somewhere between the two. Presenting only one side is a polical statement.
    - Ekaros 5y ago
      Always makes me wonder when people say that about jobs in service and food sector. Isn't those people exactly the ones that spend largest part of their income on those services? So if they earned more they would be first one to spend more... And labour isn't that high percentage of costs anyway...
      - lotsofpulp 5y ago
        Labor is the highest percentage of costs in service industries. Hence the incentive to keep labor costs down.
willcipriano 5y ago
Taking your scenario a bit further all, pay is limited by productivity. As wages rise, the least productive uses of time won't be able to keep up and will either fall out of the economy entirely, find a way to improve productivity, find a workforce that they did not consider previously or find consumers who are willing to pay more. I don't really see how any of this is a bad thing. This has to happen from time to time for the economy to remain efficient. This is the phase in the cycle where the capital owners take their lumps and workers make big career making moves.
- sokoloff 5y ago
  Are capital owners suffering currently or recently? I don’t see a ton of evidence for that and if I turn on CNBC or open up my brokerage and 401(k) statements, I see some evidence to the contrary.
  - willcipriano 5y ago
    I suspect they will be relatively soon, although I never said suffering, just a few lumps. For example I think Amazon is going to have some tough times in regards to workers over the next few years. Similarly, public sentiment is in a place where I can see legislation happening that is unfriendly to capitol. The current ruling party is talking about a new deal fairly often, depending if that pans out over the next few years and what specifically that entails that could hurt a bit. If you zoom in a little closer you can see lots of little victories happening all the time in the boarder economy. Lots of workers moving into better positions for more pay and leaving behind employers who can only find more expensive and less able replacements, if any at all. My personal observation is workers in service industry jobs seem more casual than a year and a half ago, less hurried, perhaps less fearful of losing a job than can be replaced in a few hours.
boc 5y ago
This isn't really how supply and demand work. If I create a job that pays $100,000 per hour for making me a coffee whenever I ask, I assure you that plenty of people will come off the sidelines and apply for that job.
- deleted 5y ago
  [deleted]
AnimalMuppet 5y ago
> Raising wages doesn’t create more workers, though. It will just convince them to leave other jobs for the higher paid alternatives. This creates new job openings that still need to be backfilled. Others have correctly pointed out that the supply curve is not flat. But even if it were, well, economics is about the allocation of scarce resources that have alternate uses (Thomas Sowell's definition). If people are scarce, and they go where they produce the most value, and places where they would produce less value don't get filled, is that a problem? Isn't that exactly what you would want to happen?

chrisseaton 5y ago

> Raising wages doesn’t create more workers, though. Of course it does. My wife doesn't work because there's nothing that particularly motivates her to work rather than doing her hobbies. If you offered her more money, it might motivate her to re-enter the work force. And if you can get 100k without a degree people who would be in college will be in the work force instead.

runeks 5y ago
Also, there’s less demand to buy labor for $20/hr than to buy it for $10/hr. So, all else being equal, fewer companies will demand workers if they’re more expensive, which will also reduce the deficit. That’s the theory at least.
- guerby 5y ago
  If I follow you maximum demand to buy labor is at $0/hr. But if don't pay labor, no one is going to buy your product at the end of the day. If you pay more for labour, that's more money to spend on product and services. There's an optimum somewhere between the two. Presenting only one side is a polical statement.
  - Ekaros 5y ago
    Always makes me wonder when people say that about jobs in service and food sector. Isn't those people exactly the ones that spend largest part of their income on those services? So if they earned more they would be first one to spend more... And labour isn't that high percentage of costs anyway...
    - lotsofpulp 5y ago
      Labor is the highest percentage of costs in service industries. Hence the incentive to keep labor costs down.

willcipriano 5y ago

Taking your scenario a bit further all, pay is limited by productivity. As wages rise, the least productive uses of time won't be able to keep up and will either fall out of the economy entirely, find a way to improve productivity, find a workforce that they did not consider previously or find consumers who are willing to pay more. I don't really see how any of this is a bad thing. This has to happen from time to time for the economy to remain efficient. This is the phase in the cycle where the capital owners take their lumps and workers make big career making moves.

sokoloff 5y ago
Are capital owners suffering currently or recently? I don’t see a ton of evidence for that and if I turn on CNBC or open up my brokerage and 401(k) statements, I see some evidence to the contrary.
- willcipriano 5y ago
  I suspect they will be relatively soon, although I never said suffering, just a few lumps. For example I think Amazon is going to have some tough times in regards to workers over the next few years. Similarly, public sentiment is in a place where I can see legislation happening that is unfriendly to capitol. The current ruling party is talking about a new deal fairly often, depending if that pans out over the next few years and what specifically that entails that could hurt a bit. If you zoom in a little closer you can see lots of little victories happening all the time in the boarder economy. Lots of workers moving into better positions for more pay and leaving behind employers who can only find more expensive and less able replacements, if any at all. My personal observation is workers in service industry jobs seem more casual than a year and a half ago, less hurried, perhaps less fearful of losing a job than can be replaced in a few hours.

boc 5y ago

This isn't really how supply and demand work. If I create a job that pays $100,000 per hour for making me a coffee whenever I ask, I assure you that plenty of people will come off the sidelines and apply for that job.

deleted 5y ago
[deleted]

AnimalMuppet 5y ago

> Raising wages doesn’t create more workers, though. It will just convince them to leave other jobs for the higher paid alternatives. This creates new job openings that still need to be backfilled. Others have correctly pointed out that the supply curve is not flat. But even if it were, well, economics is about the allocation of scarce resources that have alternate uses (Thomas Sowell's definition). If people are scarce, and they go where they produce the most value, and places where they would produce less value don't get filled, is that a problem? Isn't that exactly what you would want to happen?