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A bit of truth in both your statements. Productivity increases are usually due to investments in equipment and training, and employers are keen to recoup this c
by Isamu 2y ago
A bit of truth in both your statements. Productivity increases are usually due to investments in equipment and training, and employers are keen to recoup this cost.
So the employees have to demand a share in increased wages. This may not happen. It is absolutely not automatic. No employer turns over increased profits to the employee (well not usually.)
So what has happened during our lifetime is that jobs have been exported to lower wage markets, since the employer reasons that they can invest in higher productivity in a cheaper job market and pocket the difference.
- ETH_start 2y agoWage increases are fundamentally automatic, because there is a limited pool of labor and higher productivity means companies have more goods/services with which to bid on that labor. In the last three decades of the 19th century in the US, wages doubled despite union membership being at historically low levels. The rise in wages was driven by the same process seen globally in every country that has experienced rapidly growing per capita GDP. As companies produce more per worker and compete for a limited pool of labor, they bid higher for workers. This results in greater value, in terms of goods/services, offered to the average worker, which, in monetary terms, translates to higher inflation-adjusted wages.