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Comment by dibujante | Hacker News Reader

This very exact argument was addressed by the paper. There are industries where productivity doesn't increase, but there are also many industries (within IT and without) where productivity has increased a lot, and a proportional increase in wages has not materialized. It may be that industries with stagnating productivity experience stagnating wages, but when even industries with rapidly growing productivity experience stagnating wages, another explanation is warranted.

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You're right, it does address it, but mostly by a bunch of handwaving. It does not address my central point of why employers aren't luring away these highly producing yet underpaid workers, or why more businesses aren't being started to employ them if there's a surplus of them.

Furthermore, their argument continues to assume that the increasing productivity of an entire business can be assigned more or less equally across all of its employees. However, this is not true by inspection - how did the janitorial staff's productivity improve? The productivity increase of the entire business may be the result of the efforts of a very small number of the employees, such as one who improved the manufacturing process.

And lastly, it assumes that being better educated means more productive. This is not necessarily true if one is in a job that does not make use of that education. For example, it's hard to see how having a degree makes one a more productive cashier.

They're not luring them away because they don't need to. There is a seemingly endless supply of labor willing to work for a tiny fraction of the value they deliver. Why offer $20/hr to lure Bob away from his $10/hr job when there are a hundred other workers lined up outside your door offering to do the job for $9/hr?

Why aren't there a hundred employers springing up to quintuple their money in this way? Businesses constantly are formed to exploit far, far smaller differences in buy low / sell high opportunities.

Heck, I'd do it myself if I could find such opportunities!

Because the supply of capital is kept restricted to ensure that there is not an excess of demand for labor. Do you think the ruling classes are idiots?

When labor was given control of the central banks after the Great Depression we had 40 years of massive growth in productivity and wages. Once the capitalists took back control in the 1970s (after the threat of expropriation had receded) they quickly got things back on track and ever since wages have stagnated while profits have soared.

> Do you think the ruling classes are idiots?

Hey, hey now. The ruling class doesn't disproportionately influence/control the market. It's the magic fairy dust of the Free Market that keeps the Just World as it is. /s

There are, of course. Googling "php programmer for hire" now gives you twenty ads on the right-hand side for Indian-based outsourcing firms. Many of the ads will specifically pitch the low, low cost of hiring overseas.

I don't think we know why this is not happening. The author of the paper doesn't seem to know either. The data simply shows this huge and growing gap between worker productivity and wages.

Are you questioning the accuracy of the data? Perhaps it's not been measured correctly and wages actually HAVE been going up in proportion to productivity since 1973.

No, not the accuracy. I question their determination of worker productivity and wages by using the average and the median, not the distribution. They did not attempt to measure the productivity of particular jobs (admittedly that's difficult to do).

In particular, they did not identify any particular job or category where productivity of that job was far higher than the pay. I do not believe it is accurate to assess the productivity of a job by dividing the productivity of an entire business by the number of employees, in fact, I suspect it to be a fundamental mistake in their methodology.

>Finally, take an industry that these same BLS industry productivity data indicate has seen exceptionally fast productivity growth: textile mills (78 percent productivity growth just since 1997) or transportation equipment (84 percent productivity growth since 1997). (Page 20)

They did! Of course, this is just one example, but they did attempt to point out an industry where productivity growth has been very high but wages have not.

An industry is not a job category.

If the _average_ productivity is higher than the _average_ pay, then there must exist at least one particular job or category where productivity is higher than pay. These "underpaid" jobs may be unevenly or evenly distributed across the entire spectrum of jobs, but they must exist--unless the measurement of productivity is in question.

Sure - if all the jobs were included. You'd have to include things like the CEO, contractors, etc. The accounting for all this isn't easy. If the productivity increase comes from installing a machine, that doesn't mean the machine operator is adding more value - the machine is. The productivity increase would then accrue to whoever took the risk in buying the machine.

I would agree that it is complicated to do the accounting for this, and it's easy to get confused.

I do know of some programmers making million dollar plus salaries. I think it is safe to assume that they are creating huge value for their employers. And we all know of certain programmers that are negatively productive :-)

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