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You have just nailed it. I used to work construction in western North Carolina. The large crews paid far, far less than the crew I worked on. Nobody who didn

by JPKab 13y ago

You have just nailed it. I used to work construction in western North Carolina. The large crews paid far, far less than the crew I worked on. Nobody who didn't live in a home where all the bedrooms were shared could make a living on the wages offered by these large crews. The big argument is whether the cost savings passed onto the people buying the homes (construction is a notoriously low margin business) benefit the economy more/less than the wage reductions for the people building them. In this part of the country, the homes were huge mansions for the 1%ers. I doubt it is a net gain for the economy, and certainly results in neighborhoods where there are not-quite developed world living conditions. But what about produce? American born citizens are not willing to pick produce for the wages currently offered, so farmers turn to illegal immigrants. (Why pick vegetables all day when McDonalds pays more per hour?) If farmers were forced to use Americans, they would have to pay significantly more per hour in wages. This cost would be passed on to consumers. Not sure how much more tomatoes would cost in this scenario, but it would be more. Personally, I think I'd rather have significantly higher wages for a larger portion of the population combined with marginally higher prices for a huge portion of the population, rather than the opposite, which is in effect the WalMart model. When money gets concentrated into a smaller and smaller percentage of the population, you start to get similar effects to a Soviet style planned economy. Rich idiots who delegate management of their money to the Morgan Stanleys of the world, while the working classes can't make enough to start a savings account and maybe start a business one day.

rayiner 13y ago
The idea that increased labor costs would be passed onto consumers glosses over the relevant economics. In reality, the increased labor costs will result in both increased prices and decreased corporate profits, with the precise split being determined by demand elasticity. And even to the extent that increased labor costs are passed onto consumers, we have to ask ourselves: what does the economy need? Cheaper products or better-paying jobs?
- gdilla 13y ago
  Drucker famously said that the price of something has nothing to do with it's cost. The market doesn't care how inefficient you are at picking tomatoes. The fact is, you'll be out of business because there will be other farms that can and will get cheap pickers. Also, consumers idea of a fair price of tomatoes does not factor in how much it cost to pick and ship, as is true with anything they buy.
- JPKab 13y ago
  Not sure by your comment, but you and I agree. Although you are right that I glossed over with the old "passed onto consumers" part. I majored in economics, but I forget that on HN people actually know what elasticity is, and therefore I shouldn't dumb down my comments. :)
Daniel_Newby 13y ago
American born citizens are not willing to pick produce for the wages currently offered, ... Yes they are. Robotics engineers stand ready to pick every vegetable in California Coming next: Soylent Undocumented Guest Worker.

by JPKab 13y ago

rayiner 13y ago

The idea that increased labor costs would be passed onto consumers glosses over the relevant economics. In reality, the increased labor costs will result in both increased prices and decreased corporate profits, with the precise split being determined by demand elasticity. And even to the extent that increased labor costs are passed onto consumers, we have to ask ourselves: what does the economy need? Cheaper products or better-paying jobs?

gdilla 13y ago
Drucker famously said that the price of something has nothing to do with it's cost. The market doesn't care how inefficient you are at picking tomatoes. The fact is, you'll be out of business because there will be other farms that can and will get cheap pickers. Also, consumers idea of a fair price of tomatoes does not factor in how much it cost to pick and ship, as is true with anything they buy.
JPKab 13y ago
Not sure by your comment, but you and I agree. Although you are right that I glossed over with the old "passed onto consumers" part. I majored in economics, but I forget that on HN people actually know what elasticity is, and therefore I shouldn't dumb down my comments. :)

Daniel_Newby 13y ago

American born citizens are not willing to pick produce for the wages currently offered, ... Yes they are. Robotics engineers stand ready to pick every vegetable in California Coming next: Soylent Undocumented Guest Worker.