4 ms·

What makes high wages possible is high worker productivity. Or in other words, an employer can't pay more in wages than they make in income.

deleted 5y ago
[deleted]
boomlinde 5y ago
The mere possibility of high wages is of little use. The employer will tend to optimize towards paying as little as possible for as much productive work as possible. With disincentives to work for very little, "as little as possible" grows. In the worst case for the employee it becomes unaffordable, but in many industries there's a lot of headroom. Other industries may have to make headroom by moving costs to e.g. consumers.
- BurningFrog 5y ago
  Unless you have monopoly/strongly cartelized employers, wages will reflect worker productivity. > The employer will tend to optimize towards paying as little as possible Yes, of course.
  - pydry 5y ago
    >Unless you have monopoly/strongly cartelized employers, wages will reflect worker productivity. This was more or less the case until 1981 when Reagan bust the ATC union (followed by multiple private sector union busting attempts). Worker productivity only puts a ceiling on wages. The actual wage is determined by workers' leverage, of which productivity is just one component. This is how Denmark can have lower overall productivity and still have $22 / hr wages. McDs just isnt as profitable there.
    - Aunche 5y ago
      Any individual McDonald's restaurant is just as profitable in Denmark as in any other nation. There are just a lot few McDonald's in Denmark (89), which ensures high demand at each restaurant, so each one has sufficient cash flow to support Denmark's wages. Denmark's relatively high tech economy and highly educated workforce has historically meant that they do not need to worry about creating a lot of lower skill jobs, like those found in McDonald's. >The actual wage is determined by workers' leverage Yes, and the easiest way to increase worker's leverage is to restrict the supply of new workers. The most powerful unions are the ones that are able to do so to the greatest extent. SAG-AFTRA for example, restricts union eligibility to those who star in a "union position", but also forces productions to give most of the union positions to union members. Likewise, with Denmark, you're seeing increasing anti-immigrant sentiment.
  - eoinmurray92 5y ago
    Monopsony can happen too
  - rgbrenner 5y ago
    High productivity enables high wages, but does not necessarily result in high wages. Wages are determined by supply and demand of that position in the labor market. Productivity boosts profits, which will permit an employer to pay higher wages if there is a shortage of a particular position in the labor market. But without the shortage, there's no impetus to pay more.
    - BurningFrog 5y ago
      Time for a basic economics lesson. No shortage is needed, only multiple employers. Let's do the math: Your productivity is worth $100k to an employer. Your current employer (A) pays you $80k. That means another employer (B) can offer you $85k, and make a profit of $15k/year, while A loses $20k/year, and you gain $5k/year. A bit simplified, but the idea should be clear.
      - boomlinde 5y ago
        > That means another employer (B) can offer you $85k, and make a profit of $15k/year, while A loses $20k/year, and you gain $5k/year. That assumes that there aren't other candidates available and competing for the same positions. If there are 100 candidates qualified for one or two positions, the employers have greater leverage: if you cost too much, they can fire you and hire someone else who would much rather have a low paid job than no job at all. You'd also rather have a job and an income at all so you can secure a place to sleep and food to eat than not, so you likely decide not to cost too much. Especially if the work is unskilled and workers are easily replaceable this can lead to a downward spiral towards a pay that's barely manageable by the workers, far removed from their productive output.
moksly 5y ago
> What makes high wages possible is high worker productivity. What makes high wages possibly is strong worker unions that don’t put up with a few people becoming billionaires on the backs of the working class. The world doesn’t actually need Jeff Bezos as much as he needs the world.
- nverno 5y ago
  What is the "working class" nowadays- just anyone who works?
  - beaconstudios 5y ago
    people who labour for wages, rather than those who own capital and earn through profit. Loosely speaking, workers versus investors. Most people on this site would fit the middle class, where you have a foot in both sides.
    - ClumsyPilot 5y ago
      People often categorise themselves as middle class just because they have a decent job and a mortgage - they are in fact just labour. None of their income comes from capital. Middle class is mostly a myth, unless you can quit your job and maintain your lifestyle, you are labour, not capital.
      - beaconstudios 5y ago
        yes, middle class is typically just well-off working class, but with some investments or savings that generate profit for them. I think technically, middle class is associated with small business owners and the self-employed who both own capital, and labour - but people with moderate investments who still work are also receiving capital gains; they're just not capitalist class because they still have to labour to survive.
        nverno 5y ago
ninju 5y ago
Agreed, you are describing the ceiling (high end) of the wage scale. The issue is the floor (i.e. the bottom) of the wages. Employers will try to keep wages lower even when productivity improves
- BurningFrog 5y ago
  Yes. That assumption is baked into all standard economic models. As is the fact that workers will try to keep wages as high as possible.

deleted 5y ago

[deleted]

boomlinde 5y ago

The mere possibility of high wages is of little use. The employer will tend to optimize towards paying as little as possible for as much productive work as possible. With disincentives to work for very little, "as little as possible" grows. In the worst case for the employee it becomes unaffordable, but in many industries there's a lot of headroom. Other industries may have to make headroom by moving costs to e.g. consumers.

BurningFrog 5y ago
Unless you have monopoly/strongly cartelized employers, wages will reflect worker productivity. > The employer will tend to optimize towards paying as little as possible Yes, of course.
- pydry 5y ago
  >Unless you have monopoly/strongly cartelized employers, wages will reflect worker productivity. This was more or less the case until 1981 when Reagan bust the ATC union (followed by multiple private sector union busting attempts). Worker productivity only puts a ceiling on wages. The actual wage is determined by workers' leverage, of which productivity is just one component. This is how Denmark can have lower overall productivity and still have $22 / hr wages. McDs just isnt as profitable there.
  - Aunche 5y ago
    Any individual McDonald's restaurant is just as profitable in Denmark as in any other nation. There are just a lot few McDonald's in Denmark (89), which ensures high demand at each restaurant, so each one has sufficient cash flow to support Denmark's wages. Denmark's relatively high tech economy and highly educated workforce has historically meant that they do not need to worry about creating a lot of lower skill jobs, like those found in McDonald's. >The actual wage is determined by workers' leverage Yes, and the easiest way to increase worker's leverage is to restrict the supply of new workers. The most powerful unions are the ones that are able to do so to the greatest extent. SAG-AFTRA for example, restricts union eligibility to those who star in a "union position", but also forces productions to give most of the union positions to union members. Likewise, with Denmark, you're seeing increasing anti-immigrant sentiment.
- eoinmurray92 5y ago
  Monopsony can happen too
- rgbrenner 5y ago
  High productivity enables high wages, but does not necessarily result in high wages. Wages are determined by supply and demand of that position in the labor market. Productivity boosts profits, which will permit an employer to pay higher wages if there is a shortage of a particular position in the labor market. But without the shortage, there's no impetus to pay more.
  - BurningFrog 5y ago
    Time for a basic economics lesson. No shortage is needed, only multiple employers. Let's do the math: Your productivity is worth $100k to an employer. Your current employer (A) pays you $80k. That means another employer (B) can offer you $85k, and make a profit of $15k/year, while A loses $20k/year, and you gain $5k/year. A bit simplified, but the idea should be clear.
    - boomlinde 5y ago
      > That means another employer (B) can offer you $85k, and make a profit of $15k/year, while A loses $20k/year, and you gain $5k/year. That assumes that there aren't other candidates available and competing for the same positions. If there are 100 candidates qualified for one or two positions, the employers have greater leverage: if you cost too much, they can fire you and hire someone else who would much rather have a low paid job than no job at all. You'd also rather have a job and an income at all so you can secure a place to sleep and food to eat than not, so you likely decide not to cost too much. Especially if the work is unskilled and workers are easily replaceable this can lead to a downward spiral towards a pay that's barely manageable by the workers, far removed from their productive output.

moksly 5y ago

> What makes high wages possible is high worker productivity. What makes high wages possibly is strong worker unions that don’t put up with a few people becoming billionaires on the backs of the working class. The world doesn’t actually need Jeff Bezos as much as he needs the world.

nverno 5y ago
What is the "working class" nowadays- just anyone who works?
- beaconstudios 5y ago
  people who labour for wages, rather than those who own capital and earn through profit. Loosely speaking, workers versus investors. Most people on this site would fit the middle class, where you have a foot in both sides.
  - ClumsyPilot 5y ago
    People often categorise themselves as middle class just because they have a decent job and a mortgage - they are in fact just labour. None of their income comes from capital. Middle class is mostly a myth, unless you can quit your job and maintain your lifestyle, you are labour, not capital.
    - beaconstudios 5y ago
      yes, middle class is typically just well-off working class, but with some investments or savings that generate profit for them. I think technically, middle class is associated with small business owners and the self-employed who both own capital, and labour - but people with moderate investments who still work are also receiving capital gains; they're just not capitalist class because they still have to labour to survive.
      - nverno 5y ago

ninju 5y ago

Agreed, you are describing the ceiling (high end) of the wage scale. The issue is the floor (i.e. the bottom) of the wages. Employers will try to keep wages lower even when productivity improves

BurningFrog 5y ago
Yes. That assumption is baked into all standard economic models. As is the fact that workers will try to keep wages as high as possible.