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> If only 80%, does the Progressive Caucus think that everyone's going to be thrilled at having to take a 20% pay cut? In general, when the supply of something

by mlyle 5y ago

> If only 80%, does the Progressive Caucus think that everyone's going to be thrilled at having to take a 20% pay cut? In general, when the supply of something (labor) falls, the price per unit goes up. There's a whole lot of non-exempt employees working 50 hour weeks now; the employer pays overtime for 25% of their hours. If this changes to paying the overtime rate for 36%, this really increases the pressure to train up more people into these occupations to reduce the overtime overrages. > If the employers have to pay the same for less work (= less stuff produced), is there any realistic scenario where that won't be inflationary? It's certainly a little inflationary, but it does more to affect how much of the share of productivity goes to labor vs. to capital and brings it closer to historic balances.

AnimalMuppet 5y ago
> In general, when the supply of something (labor) falls, the price per unit goes up. That could happen. That turns into raising the price by supply and demand, rather than by legislation. It could work out that way. The problem is that businesses are not bottomless supplies of money. Not all businesses can just raise prices; not all can simply take less profit. Some will fail. (If everything works out just right, that will be the least necessary businesses, and will add up to 20% of hours worked. If everything works out just right.) > > If the employers have to pay the same for less work (= less stuff produced), is there any realistic scenario where that won't be inflationary? > It's certainly a little inflationary, but it does more to affect how much of the share of productivity goes to labor vs. to capital and brings it closer to historic balances. Don't think in terms of money. Think in terms of the economy of stuff (both goods and services). There's 20% less stuff produced. That's 20% less stuff available to consume. I strongly suspect that most of that missing 20% is going to be missed by workers, not by capital. Could this move "closer to historic balances" by hurting capital worse? That's possible. I suspect it's going to hurt small businesses the worst; they may be "capital", but they aren't what people usually want to target when they target capitalists. And, "closer to historic balances"? Historic when? 1950? That was a very unusual time. 1890? That was also an unusual time, but in the other direction. What's your definition of "historic balances"?
- mlyle 5y ago
  > Don't think in terms of money. Think in terms of the economy of stuff (both goods and services). There's 20% less stuff produced. That's 20% less stuff available to consume. You're assuming linear productivity per hour worked, which is a silly assumption. Productivity per hour worked is obviously going to go up when you reduce labor supply, because, uhh: - Data clearly shows people are more productive per hour the fewer hours they work, and, - Presumably businesses not every unit of labor that a business employs enjoys the same return on investment. If the business moves from being able to buy 1000 units of labor to 990 units, they are not going to choose average ROI 10 units of labor to remove. - You're assuming that having the overtime threshold kick in 20% sooner (I favor 36 hours, BTW, not 32) results in 20% fewer hours worked. This seems silly. > And, "closer to historic balances"? Historic when? 1950? Productivity and wages tracked at about the same growth rate from 1920 to 1970. Since then, wages have stagnated but productivity has grown significantly. This has reversed in the last year or so, but it's not clear how much is transient and in any case it is not enough to make up all the lost ground.

by mlyle 5y ago

AnimalMuppet 5y ago

> In general, when the supply of something (labor) falls, the price per unit goes up. That could happen. That turns into raising the price by supply and demand, rather than by legislation. It could work out that way. The problem is that businesses are not bottomless supplies of money. Not all businesses can just raise prices; not all can simply take less profit. Some will fail. (If everything works out just right, that will be the least necessary businesses, and will add up to 20% of hours worked. If everything works out just right.) > > If the employers have to pay the same for less work (= less stuff produced), is there any realistic scenario where that won't be inflationary? > It's certainly a little inflationary, but it does more to affect how much of the share of productivity goes to labor vs. to capital and brings it closer to historic balances. Don't think in terms of money. Think in terms of the economy of stuff (both goods and services). There's 20% less stuff produced. That's 20% less stuff available to consume. I strongly suspect that most of that missing 20% is going to be missed by workers, not by capital. Could this move "closer to historic balances" by hurting capital worse? That's possible. I suspect it's going to hurt small businesses the worst; they may be "capital", but they aren't what people usually want to target when they target capitalists. And, "closer to historic balances"? Historic when? 1950? That was a very unusual time. 1890? That was also an unusual time, but in the other direction. What's your definition of "historic balances"?

mlyle 5y ago
> Don't think in terms of money. Think in terms of the economy of stuff (both goods and services). There's 20% less stuff produced. That's 20% less stuff available to consume. You're assuming linear productivity per hour worked, which is a silly assumption. Productivity per hour worked is obviously going to go up when you reduce labor supply, because, uhh: - Data clearly shows people are more productive per hour the fewer hours they work, and, - Presumably businesses not every unit of labor that a business employs enjoys the same return on investment. If the business moves from being able to buy 1000 units of labor to 990 units, they are not going to choose average ROI 10 units of labor to remove. - You're assuming that having the overtime threshold kick in 20% sooner (I favor 36 hours, BTW, not 32) results in 20% fewer hours worked. This seems silly. > And, "closer to historic balances"? Historic when? 1950? Productivity and wages tracked at about the same growth rate from 1920 to 1970. Since then, wages have stagnated but productivity has grown significantly. This has reversed in the last year or so, but it's not clear how much is transient and in any case it is not enough to make up all the lost ground.