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I have a problem with "If supply of workers is short of demand, price should go up". In a very basic view this makes sense. But not in even slightly more sophis
by bayesianhorse 13y ago
I have a problem with "If supply of workers is short of demand, price should go up". In a very basic view this makes sense. But not in even slightly more sophisticated models.
A company makes a certain "marginal" revenue off the employee. It's not always easy or even possible to compute the exact amount, but the salary is limited by this marginal revenue. The difference between marginal revenue and salary is the marginal profit. If that profit is too small, management might not be able to get the money to even hire this employee.
Supply and demand in the labor market is a very fickle thing, and I am certainly no expert. But adding job opportunities and subtracting immigrants is not going to fly.
- eli_gottlieb 13y agoIf labor is too scarce for capital to successfully exploit the hell out of it, that mostly means capital should just give up and shut down, handing control over the means of production to labor.
- gloob 13y agoBut first, how about we let capital usurp the political system for its own ends? That seems like a reasonable compromise to me.
- dyno12345 13y agohttp://www.wolframalpha.com/input/?i=revenue+per+employee+apple,+google,+microsoft,+amazon http://www.wolframalpha.com/input/?i=revenue+per+employee+ap... Seems likely to be a pretty safe margin
- TulliusCicero 13y agoYou realize that's revenue, not net income or profit, right?
- dyno12345 13y agohttp://www.wolframalpha.com/input/?i=profit+per+employee+google%2C+apple%2C+microsoft%2C+amazon http://www.wolframalpha.com/input/?i=profit+per+employee+goo...
- eli_gottlieb 13y agoOr in words: each of Google, Apple, and Microsoft make enough profit per man-year that they could double their salaries without becoming unprofitable.
- bayesianhorse 13y agoIf you assume that they can hire for example a 1000 more engineers and receive the same about of "profit per employee", then this is correct. But in reality "hire more people, increase revenue/profit" isn't remotely as simple...
- eli_gottlieb 13y agoNo, I was assuming they can raise salaries for their current employees without affecting productivity levels.