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Comment by Animats | Hacker News Reader

Wages aren't growing because people aren't worth more. Most job growth is in low-skill jobs.

For wages to grow, people have to be paid more than they're worth as an economic unit. That's what unions are about. "More", as Samuel Gompers would answer when asked what he wanted.

This was a well understood concept in the 1950s, and was accepted by both management and labor in the major US manufacturing industries. The UAW - auto company contracts of that era explicitly tied wages to increased manufacturing productivity. It still is somewhat accepted in Germany, but is dead in the US.

Part of what killed wage growth was the demise of Communism. Communism was once a serious ideological threat to capitalism. From the 1920s to the early 1980s, there was real fear in the business community that communism might work. It might deliver a better life to workers. There was competition in ideology, and capitalism had to provide an increasing standard of living or risk countries going communist. Communism never did deliver a better standard of living, but the presence of a competing system which more or less worked kept capitalism honest.

With the demise of the USSR, and China moving away from its strict communist roots, the competition disappeared. Capitalism became a monopoly. Then it started acting like one. There was no longer any need to deliver a better life to workers.

That's how we got here.

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That doesn't explain it at all. If you look closely, corporate profits have been increasing (example compared to 90), but wages haven't. That means that workers have been more productive, but are getting paid less (they increased output/efficiency, but their wages have been stagnant).

That means that corporates have leverage over labour (ie, either importing from cheaper countries, or automation, or guest workers, etc).... My hunch is the increase of globalism (since the 90s) caused this. Communism fell, more skilled people available in the market, more open borders, etc... which gives global companies more leverage. It is very easy to spot:

https://cdn.static-economist.com/sites/default/files/imageca...

Because workers being super special is not what has driven productivity gains.

It's not the managers or capital owners that have been driving these productivity gains either, yet they have been the ones benefiting from the gains.

> It's not the managers or capital owners that have been driving these productivity gains either

Citation needed.

I'm under the impression most of the productivity gains since the early 1990s were due to large capital improvements, which aren't paid for by employees. And productivity increases due to decreased costs thanks globalization and open source software.

> yet they have been the ones benefiting from the gains

I think lots of arguments ignore the fact that health care has outpaced wages and CPI by more than 100% in the last 15 years. Companies still pay the lion's share of health insurance costs for employees. You don't see your paycheck getting bigger, but your total compensation (if you get employer sponsored health insurance) has risen.

>> It's not the managers or capital owners that have been driving these productivity gains either

> I'm under the impression most of the productivity gains since the early 1990s were due to large capital improvements, which aren't paid for by employees.

Expanding here, the improvement in information and communication technology (one aspect of capital investment) has dramatically increased the effectiveness of intelligent management at the top. They have vastly more signals, and vastly higher granularity, with which to make decisions.

I don't have data one way or another, but I could believe that managers' productivity-per-unit-talent has improved more than line-workers' productivity-per-unit-talent.

> You don't see your paycheck getting bigger, but your total compensation (if you get employer sponsored health insurance) has risen.

This is wrong. While the majority of people haven't been seeing an increase in wages, the upper-middle class has[1]. Workers don't see things like "total compensation" when it all goes to insurance premiums. If the lower classes continue to experience a declining quality of life while the upper classes live opulently, there will come a time of destabilization. Don't you understand this? Shouldn't we try to avoid that?

[1] http://money.cnn.com/2016/06/21/news/economy/upper-middle-cl...

Total compensation is up that is a fact, healthcare costs have risen dramatically post Obamacare and paying that cost is the raise most Americans got over the last 8 years.

True, but healthcare costs would have risen with or without Obamacare.

> I'm under the impression most of the productivity gains since the early 1990s were due to large capital improvement

Money doesn't magically increase productivity, those gains came from that money going to very smart people who created and/or applied technology to increase productivity. They're called workers, and they are the ones who increased productivity, not the capital holders.

Throwing a billion dollars at a problem to solve it only buys you people capable of solving it, it doesn't mean you solved it.

The productivity gains are due to capital, not to any improvement on the part of the worker. When a more advanced machine lets you replace 10 unskilled workers with 1, you don't pay that operator 10 times the wage, you pay him the same wage or even less. Why less? Because there are 9 people waiting to take his job if he quits.

> The productivity gains are due to capital, not to any improvement on the part of the worker.

Tools that increase productivity however do come from improvements made by workers - namely the workers whose labor is absorbed into the firm that sells the technology.

The money to pay for the machine comes from revenue earned by workers. The company has to value the employee's work more than their wage for this to happen - so there is selection pressure for willingness to accept low wages; lower wages means greater profit; greater profit means greater precarity... etc. Technology devalues worker specialized knowledge by rendering it less useful, while keeping production at least constant (e.g. being computer-literate is as valuable as it is specialized)

Many fewer people (can) produce a disruptive technology compared to the number of people it displaces, but that does not exempt them from the same selection pressure. A technology firm that depends on outcompeting others in its sector still has to make its own productivity gains. They'd likely prefer to do with one inventor what they could do with two. Maybe very long from now there will be a kind of artificial intelligence/singularity perpetual motion machine that - because of its near-zero cost of tinkering to discover improvements in its self over the competition - no other firm can compete with. A cloud "SaaS-as-a-service" like John Lilly's fears of solid state intelligence (SSI)

> The money to pay for the machine comes from revenue earned by workers.

That's kind of the contract between workers and their employer. Workers get short-term benefit of not having any risk, and employers take the risk but receive the long-term benefit of capital.

But that's the thing, imo. There is a big difference between a contractor and an employee (whose contract is very different).

Does this really mean that the amount of profit the employer makes is an adjustment reflecting how little risk the employees take on because they didn't take a chance to start their own companies? With employees whose income they would then hypothetically make the same adjustments to?

It's not obvious that the employer is justified in protecting themselves from their own risks with money skimmed (relative to market value) from consenting employees. These workers allow it because they still prefer it to being unemployed or a contractor themselves. But in theory they are doing worse being a part of the company than if they did the exact same actions (magically disembodied from the company monad) would be compensated, if they took the risk for themselves. The employer's risk is if they don't find enough people who are willing to risk not taking enough risks!

If having more employees means having more sources of income, big employers would not have as pressing a demand to hedge against catastrophic events; so they would recalculate the risk adjustment fee built into wages. Rarely do you see large employers give their employees better wages to reflect the company getting past earlier stages of high risk.

Basically in the long-term the value to being a capitalist is getting others to pay you for working for you. The ability to suppress wages pays for this profit - and that ability comes from contracts being costly to arrange themselves. If we could reduce the cost of contractual work and more people did it, most if not everybody would be better off, except for the people profiting from mutually-satisfactory contracts being difficult to do often.

Taleb gives this a good treatment:

"If the company man is, sort of, gone, he has been replaced by the companies person, thanks to both an expansion of the gender and a generalization of the function. For the person is no longer owned by a company but by something worse: the idea that he needs to be employable

...

A free market is a place where forces act to determine specialization and information travels via price point; but within a firm these market forces are lifted because they cost more to run than the benefits they bring. So the firm will be at the optimal ratio of employees and outside contractors, where having a certain number of employees, even when directly inefficient, is better than having to spend much resources negotiating contracts.

...

an employee is a risk management strategy"

http://www.fooledbyrandomness.com/employee.pdf

> Why less? Because there are 9 people waiting to take his job if he quits

This is the answer

I wonder where those 9 people are though. Locally, for a given job opening, that could perhaps be true. Nationally however, unemployment is at historically low levels in many Western economies; 4.3% in the UK, 4.4% in the US, 3.9% in Germany, 6.2% in Canada, 4.8% in New Zealand.

Which should then drive an increase in wages. But it hasn't, and economists don't know why - or at least as far as this armchair economist has read ;-)

That guy who works 12 hours a week in the grocery store, because the company doesn't give him any hours most days? Doesn't count as unemployed, but might as well be.

The US unemployment rate is based on the labor participation rate, a measure of the percentage of people who are unemployed and currently looking for work. It does not account for people who are unemployed and not looking for work. There is a real surplus of labor and employers know it. The vanity statistic that the US publishes has no basis in reality.

I don’t think that’s a very good description of U3, which is the headline rate the US typically uses. Specifically, labor force participation is usually a shorthand for overall workforce participation, looking at everyone of prime working age; that’s not U3. All unemployment measures are linguistically indistinguishable from “labor force participation rate”, so there’s nothing special about the US there.

I agree that U6 and prime age labor force participation rates are both weak, and relevant to worker bargaining power, but to argue that U3 has no basis in reality is absurd.

If I’m looking for labor this month, my pool of applicants will be coming from the U3 pool, people who are actively looking for work.

High U6 unemployment suggests I might do better to raise wages slightly, rather than aggressively, if I urgently need workers.

Or, the more likely reason - there are NOT people willing to do those jobs.

> Because there are 9 people waiting to take his job if he quits.

As the article points out, Japan has an unemployment rate of 2.8% and even there wages are not growing.

When the unemployment rate is that low, there will be no one waiting to take on the job if the worker quits.

To be fair, many of these jobs are things like "Irasshai" callers and bank door openers and the guy who literally just stands on a podium at Nagoya station. (Is he still standing there?)

I'll check in an hour.

If it's due to capital then the companies will reduce prices of the goods they produce (assuming there is enough competition). The consumers then can use the savings to spend it on more labor intensive products.

Is that happening at any scale though? Theoretically capitalism would do exactly as described but we are not operating in a purely capitalistic society by any margin

> When a more advanced machine lets you replace 10 unskilled workers with 1, you don't pay that operator 10 times the wage, you pay him the same wage or even less.

But this is an unacceptable, or at least undesirable, outcome - for the majority of people anyway. If there is more wealth sloshing around the system, and fewer people involved in creating it, more of it should go to the person helping to create it. If this is what our economic system encourages our system is sub-optimal.

If Scrooge McDuck gets more money, he won't raise Donald Duck's wage.

Its the technology that make worker more productive not the worker itself.

As other posters have mentioned above, the technology itself is not "invented" on the spot by the capitalist himself, the capitalist is not a magician who can make things show up out of thin air, the technology and the related improvements are put in place by the workers. You pay workers less they have less and less reasons to think about improving the technology owned by the capitalists. It's as simple as that.

Uh, which is why pay for IT/programmers is high, and pay for sales clerks is low. It doesn't matter if your low end worker is doing half as much if technological productivity gains increase 10x.

I've thought that that would be one of the responses, and you're partially right, of course. But in the grander scheme of things better wages for workers (including sales clerks) would, among other possible outcomes, also increase the "talent pool" (for a lack of better word) from which future capitalists will pick their "inventors" and "technicians" 15-20 years down the road.

More to the point, under the present conditions only the kids of capitalists themselves and the kids of some privileged social strata (like IT people's kids) are free to fulfill their intellectual potential 100%, because they don't have to worry if their parents have enough money for rent/putting food on the table/education, and as such they can spend their late teens - early 20s (when they've grown up a little) trying and playing with new stuff, studying whatever university courses they feel fulfills their intellectual potential etc, and not having to worry about finding a McDonald's job because their parents have left them with nothing. But if you pay all the workers a little more then their kids will also be able to follow the intellectual subjects they're really interested in instead of studying and learning only to get a job, any job, in order to pay down the future student-loans faster. These people would very rarely be interested in inventing new stuff for their "capitalist" owners or in becoming entrepreneurs (which it has been proven that it's good for capitalism, I mean, there being more entrepreneurs).

The same argument (only much better put into words) was made by J.S. Mill when he wrote about why women should be fully allowed in the workforce on the same level as men. He found it really, really inefficient that about 50% of the human population was taken out of the intellectual pursuits, which for us, as a species, means that we get to have 50% less inventors/great artists/technicians.

Why would let say business owner care about the increase the "talent pool" 15-20 years down the road ? By then maybe the technology is improving to the point you need even less talent.

Your second paragraph, why would the business owner care about their workers kids ?

> Why would let say business owner care about the increase the "talent pool" 15-20 years down the road ?

Because said capitalist presumably has kids, and he wants his kids to have a bigger talent-pool from where they can choose their future employees so that the company can continue to prosper. But you're right, nowadays "business owners" doesn't mean "capitalist" (or a bunch of capitalists, let's say maxim 3 or 4), it usually means some anonymous pension funds which appoint administrators (i.e. CEOs) to run the business for them. Of course that those CEOs don't have any incentives to look forward in time because their kids' future success doesn't depend on what their present company is doing. Schumpeter decried this phenomenon as early as the 1930s, and predicted that will "help" with the demise of capitalism.

> Your second paragraph, why would the business owner care about their workers kids ?

I hope I answered this in the previous paragraph. In short, the business owners' kids will need to have employees on their own (and good ones at that) and relatively speaking prosperous clients. If you don't care about the kids of today's workers then you're reducing both the numbers of your kids' potential very good employees and prosperous clients.

> corporate profits have been increasing (example compared to 90)

Survivorship bias. Amazon, Wal-Mart and Costco profits have been increasing. Profits of Borders, Mervyn's, The Limited, CompUSA, Linens'n'Things, Fresh'n'Easy, Payless Shoe Center, Blockbuster Video, Hastings Entertainment, Tower Records, FAO Schwartz, KB Toys, Circuit City and RadioShack - not so much.

Internet (or wide availability of catalog shopping combined with reasonable delivery options) concentrates things like retail or media distribution in the hands of the very few.

Corporate profits have risen as a share of the economy[1] and, correspondingly, the share of gdp that's paid in wages and salary has been declining[2].

[1] https://fred.stlouisfed.org/graph/?g=1Pik [2] https://fred.stlouisfed.org/graph/?g=2Xa

The very same St. Louis Fed no longer considers wage/salary data to be a reliable measure - employer healthcare costs per worker are now much more substantial and are growing at much faster rate. "Real compensation" is the preferred nomenclature to account for the total compensation package.

https://fred.stlouisfed.org/graph/?g=74dI and https://www.bloomberg.com/view/articles/2016-09-28/health-ca... for more context.

Remove the tax deductibility of employer healthcare plans and watch the wage/salary graph magically grow, as the funds get reallocated. Sure, the worker now must buy their own health insurance, which potentially leaves them with even less disposable income than before, but the gross wage/salary graph will go up and to the right.

A good reason why healthcare should be removed from employers hands. In fact we should only allow salary increases or money for benefits, not benefits such as healthcare for employees. "Real compensation" is not a good measure because it is so unique to situations, and in most cases benefits are not all that great, workers would always take more money and the consumer economy and individual/family insurance market would benefit from that as well.

Everyone needs to be in their own individual/family insurance, group everyone together across the nation and move it away from business/employers and selective grouping. Employers do not pay your auto, home, liability insurance of your personal property, why should they have anything to do with your health, that alone is an invasion of privacy and not secure for workers when they can't work due to health.

Allowing employers and insurance companies to fix prices in backrooms is part of the problem of wildly inflating healthcare costs due to bad insurance grouping. It also let's companies off from wage increases by saying it is all part of "real compensation" when in actuality the velocity of money is at an all time low[1] in a consumer economy, red alert...

[1] https://fred.stlouisfed.org/series/M2V

For businesses it all comes down to deductibility. Company cars were deductible back in the days, so everyone and their brother drove a company car. Then the tax reform removed that deduction, and all of a sudden company cars were no more.

Making insurance deductible is also advantageous to large caps over small businesses - Amazon will likely negotiate a better insurance package than Joe's E-Commerce Emporium, and all else being equal rational employees will choose Amazon for their amazing benefits. Which then negatively impacts new business creation, small business employment, entrepreneurship rates, geographic mobility, etc.

True, but they could easily get the same deduction for wages/salaries/pay, same rules apply really and labor costs are probably less gamed in terms of balance sheets.

Benefits on the job were probably needed at a time but currently they are favoring large caps like you mention. This is ultimately the worst legacy thing that unions left behind eventhough they helped pay go up and brought some good things. Unions should have always been on more pay not benefits. We have got to start leveling the playing field for small/medium business and even self-proprietors. Removing health insurance from employers is key, this will also help being able to change jobs more frequently and not contribute to ageism so much.

Insurance companies group people by company usually so small companies are high risk, and individuals even more, the worst way to spread risk. Plus as companies grow more and wages grow less, companies will start to reach a feudal/sharecropper like state where you starting a business is nearly impossible because there is no way to compete.

Which then negatively impacts new business creation, small business employment, entrepreneurship rates, geographic mobility, etc.

Agreed, this also makes it much easier to start companies in places other than the US that also have a single-payer/individual or private market option and not require the employer to provide it. Employers handling our healthcare and benefits really has added drag to our economy and entrepreneurial/innovative spirit.

> Removing health insurance from employers is key, this will also help being able to change jobs more frequently and not contribute to ageism so much.

Agree. Unfortunately, there's zero political will to do this. Republicans seem to be hell-bent on destroying Obamacare as a concept, no matter the consequences, and view decreased number of sign-ups and decreased number of insurance sellers, as positive developments and proof that the system "doesn't work".

Democrats would surely welcome decoupling of employment and health insurance, right? Except ACA mandates employers with headcount 50+ offer health insurance, which robs the exchanges of a fairly healthy portion of the population that's fit enough to be in the workforce (prior to ACA mandatory health coverage applied to employers with 100+ headcount).

Some employers have run the numbers and figured out that if they paid the ACA fines and transferred the employee health coverage to a public exchange, their balance sheet would still be better off. Double win for a federal government - not only there's extra revenue in terms of fines (the money that previously went to a private insurer), the exchange gets bolstered with a significant number of new participants, which dilutes the risk pool and hopefully make everyone's coverage cheaper. Not so fast, said Obama administration, and slapped an extra fine to discourage such behavior https://www.nytimes.com/2014/05/26/us/irs-bars-employers-fro...

I have a fundamental issue with a building block of your argument - Real compensation being a bad measure.

REAL compensation will always exist.

Simple systems, like first order approximations, can always do away with complex balancing constants, or recursive functions/costs, and feedback loops.

Similarly, in any real world situation, some fraction of firms will always find a way to plump up their employee compensation, without having to put a real cost to it.

So for example -

Major tech firms have on campus gyms, doctors, free food and so on. (We'll be ignoring the fact thaty they have campus-es in the first place)

Startups do it by offerring risk/reward tradeoffs.

In India I know Firms that provide complimentary transportation - and manage the insurance for that transportation.

Pilots and their families fly free, hospitals give admin staff better health care access, so on and so forth.

These are descriptive, non exhaustive examples.

The point being made is that Real Compensation in the real world will always have to be a calculated/inferred field/value.

So do you prefer getting more money or that same value or less in benefits that you don't decide?

Cash/pay let's YOU decide what benefits you need.

Yes there may be freebies and certain benefits available such as flying for free if there is a seat available, free food, or free passes to places you work etc, these are designed to keep you at work or involved as well.

However healthcare and insurance should NOT be managed by companies that you don't work at typically longer than 1-2 years on average. Should our companies also pay our auto, home and other insurance? so we can change them all when we change jobs? Benefits should only be freebies that aren't private.

You also have to be careful with benefits if they go too far i.e. in the future work will have apartments on campus like in China and a throwback to feudal/sharecropper kingdoms, then your company completely owns you. Better to just get pay, freebies and handle insurance/health and your own private business on your own.

The problem with real compensation is it is not evenly dispersed, cash/pay is. The real value also needs to be spent. You might have benefits that only 25% of a workforce take advantage of, well the 'real compensation' includes everyone using that, it is a bit like a gift card that you only spent a portion of. It isn't real money and sometimes costs the company little compared to the value that is stated.

You are asking me what I like, I like having freebies. I am unsure how my preference makes a difference to the substance of fact.

They are economically easier, because the firms I know can bring economies of scale to bear on them, which I can't do on my own.

But that's opinion.

You are arguing the merits of Real Comp - as if there is some world in which Real comp will NOT exist.

The issue I am pointing out, is that this is a theoretical world, like round cows.

In the real world, this will always be the case, so aside from a rhetorical device, or thought experiment to examine certain models, its not a practical item.

There will always be a situation, Such that, firms in different industries, will possess capital and service advantages, which make it easier for them to pay X$ in costs to the firm, and provide (1+C)*X$ of benefit to their employees.

You can't escape that.

Therefore, you must deal with it.

Real compensation includes these items below and in typical cases employers say they pay 30-35% in benefits, 65-70% in wages:

- gross wages and salaries earned by employees and payable in cash.

- cash allowances, overtime pay, bonuses, commissions, tips, and gratuities if paid by the employer to the employee.

- remuneration in kind paid by the employer to the employee valued at purchaser's prices, including meals and drinks, personal accommodation, uniforms worn outside of the workplace, vehicles or other durables provided for the personal use of employees, free personal travel, free personal fuel, recreational facilities, transport and parking subsidies, and creches for the children of employees.

- real or imputed social contributions and income taxes to government payable by the employee in respect of employment. the value of the social contributions in respect of labor hired, which are paid by employers – these may be actual social contributions payable by employers to social security schemes or to private funded social insurance schemes for employees; or imputed social contributions by employers providing unfunded social benefits.

- income of students from paid work, including the value they contribute through work for an educational institution.

- income received by shareholders who are also employees of the corporation, and who receive paid remuneration (e.g. stock options) other than dividends.

- income by outworkers who are paid by an enterprise for work done.

- the value of the interest foregone by employers when they provide loans to employees at reduced, or even zero rates of interest for purposes of buying houses, furniture or other goods or services.

My guess is you don't take advantage of all those items but your 'real compensation' includes it. Companies are paying you 30% in benefits that they retain. Yes there will always be freebies, but those should just be that freebies, nothing to do with personal health insurance and healthcare. Just pay people more.

> Internet (or wide availability of catalog shopping combined with reasonable delivery options) concentrates things like retail or media distribution in the hands of the very few.

Which is crazy if you think about it, decentralization was supposed to allow others in but really the internet gave the bigger companies such an exponential advantage that they ate everything else. Combine that with wage stagnation since 2000 and the consumer economy dwindled and thus killed off many players compounded with the innovation and technology of the web + mobile.

Higher profits aren't always due to increases in productivity. Profits can grow due to decreases in the price of raw materials (e.g. oil), decrease in competition (e.g. due to an aquisition or a bankruptcy of a competitor), relaxation of regulation (e.g due to lobbying), and a variety of other chnges in the market.

> Wages aren't growing because people aren't worth more. Most job growth is in low-skill jobs.

This is a silly, self-defeating argument.

Wages aren't determined by "worth". Wages are dictated through negotiations, and they are set based on the worker's negotiating power. If a worker is incapable of negotiating, nor does he have negotiating power over their company's representatives, then he is bound to get the raw end of the deal.

This is precisely where unions and worker's commissions play a central role in the problem. When an isolated worker tries to negotiate with the company, more often than not he faces professional negotiators skilled in cutting down salary expenses. The odds are, from the start, stacked against the worker's interests. This problem is mitigated with the help of an organized worker force, as they can provide professional services negotiating job offers and leverage more power over the company's representatives. Therefore are able to get much better deals than the average worker acting alone.

If a union wants to negotiate, then you just move the manufacturing to a cheaper country. There is plenty of labor willing to work at a lower price, and that is what happened.

If the union was any good, they would negotiate a price that was better than the individual could get on their own but cheaper to the company than moving a whole factory half way across the world. There is a spectrum between the two extremes where negotiation should take place.

Not really?

I mean I know factories in India which have buildings with asbestos roofs.

China has grizzly videos of workers moving metal scaffolding and then accidentally getting electrocuted as it moves into exposed high voltage cable.

And that is still a step up from the misery there was before.

I don't see how you can afford environmental protections, worker safety, when instead for a small fraction of the cost you can just send the request to a contractor, and then say "Oh we didn't know the conditions in the factory were bad. We thought those quaint third world concepts were just rumors! Oh those poor souls!".

It's going to depend on the widget.

No matter how you cut it there's less overhead in those countries.

Depending on the nature of the good and the scale it's almost impossible to have the price of the good be competitive when it gets to the first world.

At high volume it's easy to amortize the cost cost of teaching a factory in overseas how to make for example a high quality forging that a first world supplier could produce properly the first time without asking questions.

If you're gonna need to make a different forging every year then you might want a supplier closer to home that you don't have to hand hold.

If you're making something with less safety/environmental overhead than the steel forging then that tips things less in favor of off-shoring.

> I mean I know factories in India which have buildings with asbestos roofs.

And how much would your company be forced to pay and abdicate to relocate their headquarters to that asbestos-packed hell-hole?

Do the company's middle and upper management tolerate the idea of moving to a different continent and be forced to live with inhumane infrastructures setup by inhumane and careless middle and upper management types?

Not every job is a factory job or involves low-skilled grunt work. Not all companies are willing to lift the proverbial anchor and relocate to a different continent just because a job seeker has a trade union representative with him during negotiations.

I take it you haven't ever encountered high level union managers, not the sharpest crayons in my experience.

> If a union wants to negotiate, then you just move the manufacturing to a cheaper country.

This is a disingenuous comment. Having a professional negotiation negotiating with a HR representative on behalf of the worker does not force a company to move their offices abroad.

Moreover, moving a company somewhere else entails a heavy cost that more often than not the company is unable to pay.

I don't understand why people assume that the worker force has to bend over repeatedly and perpetually, particularly when we are faced with stagnant wages in a time of low unemployment. This clearly shows that the job market is being manipulated to serve the interests of these corporations, in a time where high-skilled workers remain peddling for cash and without any job security.

I’m not assuming anything. The “heavy cost” you are referring to is obviously not heavy compared to paying US wages and cost of regulations. The proof is the fact that everything you pick up in your room will probably say Made in china and your shirt will say Made in bangladesh.

It's not some law of nature though; that's the result of legal changes making it more appealing to offshore manufacturing.

> I don't understand why people assume that the worker force has to bend over repeatedly and perpetually

At first I was going to correct you and say "bend over backwards" - then I realized you got it exactly right. Some of the high-skilled workers - on hn no less - will say "I'm better off negotiating the angle at which I bend for myself"

The workforce doesn't have to bend over, but there is an inequality in negotiations when the company threatens to ship the work to somewhere where they can pay workers a fraction, even if the quality will be shit.

We don't exactly have a legal framework to prevent companies from doing this either

>This problem is mitigated with the help of an organized worker force, [...]. Therefore are able to get much better deals than the average worker acting alone.

Yes, that's the simplified happy ending for voting in a union but the reality is complicated by factors outside of the union's control.

E.g. A $15/hour worker considering a union weighs the possibilities: a raise of wages to $20/hour or a reduction to $0/hour because there are no jobs at all.

That's the complicated calculation. Union representation can negotiate a Collective Bargaining Agreement to raise wages but a union can't guarantee the existence of the jobs[1] to pay those wages. Many employees know this which is why they reject unions. UAW has tried to unionize workers at Toyota in Kentucky for decades and failed. Nissan workers in Mississippi just rejected a union vote last month. FedEx Freight drivers in North Carolina and Pennsylvania recently voted and decertified their union in July 2017 after voting for it in 2014.

Some workers genuinely feel a union will make their economic lives worse. The unions' promises of better wages mean nothing if the plant closes and workers weigh that possibility when rejecting union representation. What arguments do we use to convince these people that they haven't already heard from pro-union organizers?

[1] examples:

Seattle union can't stop Boeing from locating the new 787 Dreamliner factory in South Carolina with no unions.

Steelworkers union in Indianapolis doesn't stop Rexnard from eliminating $25/hour jobs which cost more than $3/hour jobs in Mexico.

Nabisco (Oreo cookies, etc) moves production to Mexico instead of keeping the higher wage union jobs in Chicago.

The common theme is that the fear of no jobs is not FUD nor a theoretical threat. Workers know it actually happens.

If you're interested in the topic, Jane McAlevey, a labor organizer, has done a lot of interviews (and written a book I haven't read) detailing her theories of why unions have become less effective and less appealing to workers, as well as what she thinks they can do.

And in states with robust worker protection laws the benefits of a union are less valuable.

> Yes, that's the simplified happy ending for voting in a union but the reality is complicated by factors outside of the union's control.

If some factors are outside of of the trade union's control then it's also outside of the worker's control. Therefore, forming an union has no impact on the problem.

A trade union has in fact control over important aspects such as wages. The odds of a negotiation between a candidate and a HR representative benefiting the candidate are fare more favorable to the candidate if he has at his side someone who is informed about the company's hiring practices and salaries and has a vested interest in improving salaries paid by the company to his fellow colleagues. If a job seeker goes into a negotiation room alone then this information asymmetry alone is bound to screw him over during negotiations. The presence of a union representative is very effective at mitigating this problem.

That assumes companies will not try to cut separate deals with unions which are worse for workers.

>If some factors are outside of of the trade union's control then it's also outside of the worker's control. Therefore, forming an union has no impact on the problem.

I think you're oversimplifying again. Many workers who vote "no" and reject union representation believe that unions create problems for workers including the problem of jobs being moved elsewhere.

Also, does "no impact" include workers paying extra ~$1000/year in union dues and the possibility of not having jobs? Many workers don't see the logic in paying more money to make their lives worse. E.g. Why pay my Bakers union rep to play hardball with Nabisco management for high wages of $26/hour so that I end up getting $0/hour? The theoretical "win" of $26/hr becomes a real-world "loss" of no job which pays $0/hour.

There are interesting game theory dynamics of "workers vs unions vs management" that your comment ignores. Each party has different leverage and different ultimatums. A bakers union is in a more precarious economic situation than a teachers union.

>A trade union has in fact control over important aspects such as wages.

Yes, I already stipulated that. Your comment ignores the other things that workers consider besides wages -- e.g. no jobs.

It seems you're not aware of the reasons for workers to deliberately reject unions.

> I think you're oversimplifying again. Many workers who vote "no" and reject union representation believe that unions create problems for workers including the problem of jobs being moved elsewhere.

You're somehow assuming that forming a union involves forcing everyone to join an organization whose membership is purely voluntary.

> Also, does "no impact" include workers paying extra ~$1000/year in union dues

That's an imaginary number that you made up yourself, and it represents only your own imagination.

> Your comment ignores the other things that workers consider besides wages -- e.g. no jobs.

That's your strawman. You somehow made up this argument that having someone at your side helping you out on your negotiation will somehow force a company to stop hire people to fill the positions they've just opened. Meanwhile, agents are a thing, and having third-party help in your negotiations didn't brought the end to western civilization.

He's using hyperbole, but his arguments are valid in explaining the rationale that some workers feel when considering a union.

Some unions are so hawkish that they impose hiring blacklists on affected employers, making membership mandatory instead of voluntary. Additionally, in the rank and file, there's a common fear of union corruption.

> Some unions are so hawkish that

That hypothetical problem is anecdotal, and assumes that a job seeker has no say in how he is represented.

Meanwhile, the whole world is packed with examples of how unions do in fact work for the interests of their associates. For instance, there are companies in Sweden that inform job seekers right at the start of the job application process that they should contact union representatives to help them during the hiring process. This offer is presented to anyone, whether they pay union quotas or not, and anyone decides if they even want to contact the union or not.

Do you believe this is a draconian measure imposed by unions on unsuspecting job seekers, or that this is remotely against the best interest of any worker?

A union is what you make it out to be. Right now, workers are getting screwed over to the point where HN receives a constant scream of posts on how workers should improve their negotiation skills. Hell, if that's so important then why isn't everyone doing the smart thing to do and delegate that activity to a dedicated third-party representing the worker's best interests and specialized in negotiating job offers and working conditions? It's simply stupid to assume that everyone can pick up an O'Reilly-type book on negotiating job offers and suddenly be able to go head-to-head with a professional negotiator paid to drive down your wage.

> That hypothetical problem is anecdotal

If it's anecdotal - that is, it happened at least once, so there's an anecdote of when it happened - then it's not hypothetical.

And, in fact, it's not hypothetical. It happens. It has happened. Instances have been cited in this thread. It may not be the statistically most likely outcome, but it does happen.

>You're somehow assuming that forming a union involves forcing everyone to join an organization whose membership is purely voluntary.

Well, the Seattle union is "closed shop" at Boeing which makes union membership mandatory for employment.

>That's an imaginary number that you made up yourself,

The GM union dues are ~$957.[1] The Ford amount is ~$693. The estimated union dues were ~$800 for Nissan workers who voted "no" to union representation. For all 3 examples, the union dues are not static -- they are expected to increase.

We can use the lower $693 figure if you wish. Can you see that many workers don't agree with you that $693 is "no impact"?

https://bigthreeauto.procon.org/view.additional-resource.php...

> The GM union dues

Somehow, you've turned a blind eye to the fact that your own source states that the US national average for union dues are $377 per year.

Let that sink in for a minute. The average union within the US receives only $377 per year.

That's about $32 a month.

So, the median wage for workers in the United States is around $3400 per month. And somehow a $32/month fee is made out to be a deal breaker?

Is that what's stopping you from being repeatedly screwed over by employers who spend more on professional services dedicated to screw employees over than adjusting salaries?

>And somehow a $32/month fee is made out to be a deal breaker?

Yes, it is _if_ workers believe it makes their economic situation worse.

I'm stating that workers weigh the balance of both the positives and the negatives of union representation. You are only stating one side: the positives.

Yes, even $377 can be too much money to pay especially if it has the unwanted effect of incentivizing the company to move somewhere else. Since workers are concerned about this bad outcome, you can't just handwave it away as if their fears are just imaginary.

Perception is an issue. I had a non-unionized coworker claim that union dues were high when I suggested unionizing. When I told her what I payed, she was stunned at how low they are. People often miss the point that unions are about more than exerting power. They also much more efficient at representing workers. (Organizations benefit from that as well, but they are far more concerned with the average worker gaining negotiating power.)

This is entirely accurate. The union has been trying to get workers at Boeing in Charleston to unionize ever since it opened.

The workers don't want to unionize. The reason?

Well, as it turns out...there are jobs there now that weren't there before. Those jobs could have gone somewhere where the union existed...but didn't.

So the people there...pretty happy to have quality jobs from a great company. A company that adds jobs continuously even through a recession...and the union forces a strike every 7 years or so costing the company about $1 billion every time.

Union negotiating power is based almost entirely on it's ability to hold the company hostage. It's the job of executives to look out for the best interest of the company and that, just like infrastructure planning, means redundancy.

It's the same approach as tax policies or raising minimum wage...it only works if the people involved have no other options.

Maybe someone in a union can answer this but from an outsider it appears that unions flatten the salary discrepancy between outstanding performers & poor performers.

I see this in education a lot where bad teachers that parents try to avoid end up making the same as the amazing teachers that parents beg to have. The bad teachers don't get removed so new teachers are prevented from getting a job at that school.

that's classical fud against unions.

incompetent employers might be good political actors in the company and make more than good employees just fine without unions.

unions just help the good, and bad, employees don't have to waste too much time every month fighting for raises.

this is a barely comprehensible mess. Please, type properly next time.

I'm probably not adding much to discussion after many commenters, but this one rings for me as non capital-oriented citizen:

>The common theme is that the fear of no jobs is not FUD nor a theoretical threat. Workers know it actually happens.

Iow, not the one who negotiates wins, but the one who has time on their hands. If workforce "feels" too expensive, average capital can just sit on deposit and wait for new ideas. If worker's salary feels too low, she cannot just sit and wait or requalify for new job quickly. This asymmetry pushes workers down on their wages without a chance to negotiate, because there is nobody to blame. Investments are diversifiable, professions aren't.

While capitalism shown world-wide success, it forces everyone to follow only one life style, otherwise you're wasted. Personally, I'm pretty fine with how I live due to the path chosen from the start and personal interests, but I don't like what all this does to "regular" profession workers. People are almost punished for what they liked to do, or simply for the fact they aren't interested in business, aka someone else's sky-high profit wars.

Otoh, while theoretical basic income program could buy time for workers, it would also demotivate capital builders more. It seems like pretty thin balance there, if it exists at all.

"What arguments do we use to convince these people that they haven't already heard from pro-union organizers?"

Well aside from these studies that correlate unions with better wages for the economy as a whole?

Which studies? I'd like to read them.

The key to almost every politically oriented study I've seen isn't what the study includes, but what it leaves out.

I think the previous comment makes a good point that most new jobs are at Starbucks, Target and Wal-Mart. There is no negotiation for typical hourly wages at these places. They pay the going rate and that's typically poverty level.

>The odds are, from the start, stacked against the worker's interests.

If I negotiate a contract with a child for them to work for me, it is illegal because we realize the power difference between the average child and average adult is bad enough to justify banning child labor. Yet the power difference between trained negotiators and the average job seeker is as big a gap.

True. Also the employer often has leverage. There may be other candidates for the job. The job seeker may be in dire need of a job. Hardly a fair stand for any negotiations at all.

> The job seeker may be in dire need of a job. Hardly a fair stand for any negotiations at all.

Precisely, and that job seeker may be completely oblivious to the fact that the employer may be offering 100 but actually pays 200 to all workers on similar positions within the company filled by less qualified people, and may have some urgency trying to fill the job opening.

As the job seeker falls victim tho the information asymmetry, he proceeds to get screwed over and receive half of what he would otherwise get.

https://www.glassdoor.com/

I do like the trend towards enabling anonymous wage transparency here.

Glassdoor is nice, but fully transparent non-anonymous salary data is even better: http://www.sacbee.com/site-services/databases/state-pay/arti...

Exactly. The worth argument is a diversion and bait set out by hiring side. It is only in play when the employee is purely driven by performance, like in professional sport. That is also why sport personalities have agents.

Just because regular business profits are several layers removed from a regular employee does not mean that there's no link to performance as well, but business usually does not like to share( raise salary ) to not set a precedent.

I for one would love to have an professional agent that looked after me in return for good career progression. Even the rock starts among us know that it takes skill and luck to get paid what we are really worth

This is something Robert Reich wrote about in his books, but he described it in terms of a postwar "pact" between labor and management wherein in exchange for stability in labor availability (no strikes and revolts), management would accede to unions' demands for living wages and other benefits for workers.

The idea was that this provided a mutual benefit for both sides by enabling both growth and predictability. As another benefit, better pay allowed workers to increase their own consumption of goods, which also fueled growth, continuing a pattern stretching back at least as far as Henry Ford.

But according to Mark Blyth, the result of this was major inflation, caused by a positive feedback between between the cost of labor and the cost of goods. This inflation was great for debtors (predominantly labor), who saw the real size of their debts (mostly mortgages) whittled down [1], but bad for creditors (predominantly capitalists), who saw the value of the debt as an asset crumble.

Blyth claims that the globalist system was fashioned by the creditor class to hobble inflation by lowering the costs of production by lowering trade barriers and allowing goods to be produced in the places that could do so at the lowest cost. The idea was that it would simultaneously lower the cost of goods and labor, while also checking inflation, creating a more favorable situation for the debt owned by creditors.

The upside of this has been a dramatic reduction in the number of people living in poverty globally, especially in Asia. But there were unintended(?) consequences, including the demise of entire US domestic economic sectors (i.e. textiles) that used low skilled labor.

The part that segues with the demise of Communism was that at the time (the 80s), there was growing belief among labor that the advocacy of unions was unnecessary, that they could get by, and perhaps even do better, as individuals without such organizations fighting for them.

This probably was and is true for certain industries where workers inherently had more power due to either the uniqueness of their skill-sets or some other factor. But for a lot of workers, this has not been the case, and their total compensation as employees has diminished over time. This doesn't even consider the situation with the growing segment of lower-skilled "gig" contract workers.

[1] As a corollary, those who couldn't get favorable mortgages in those days due to the systemic biases at play was not able to participate in this upside of inflation. https://en.wikipedia.org/wiki/Redlining

> Part of what killed wage growth was the demise of Communism.

Also, communism was so inefficient that it basically took the countries under it from international competition - they couldn't develop anything advanced that would match products created under capitalism, and so were essentially forced to sell resources (eg. minerals, food) or low-processed industrial products (eg. steel) in exchange for more advanced stuff such as medicine or electronics, for which they paid through the nose. Basically, the process was not dissimilar to colonialism that preceeded it, and created massive growth for capitalist countries - so much so that in the US people doing unskilled work could afford a good life for their family on a single salary. Now that communism is dead, those unskilled people in the West are unfortunately in for some rude awakening (already in progress).

Please point out a country that actually implemented Communism. The Soviet Union never got past Socialism, where capital was owned by the state, not by workers. Communism doesn't imply a state-controlled economy, and that's the inefficient part. Socialism combines the worst aspects of a late-stage capital ruling class with a command economy.

Oh yeah, by "communism" I mean whatever was implemented in Soviet block, China, India, Vietnam etc., not what Marx and others envisioned in their theories.

I think it's a big difference, and one of the enduring legacies of cold-war propaganda is the confusion of the issue by conflating the two. A market economy is better at allocating resources efficiently than a command economy, but the argument over whether to have a command economy or market economy is separable from tendency of wealth to concentrate. The existance of winners is important to a market economy, but it also serves as an entaxic force (inverse of entropy, analogous to gravity) in the system that moves it towards greater order and centralization, until the corporate winners become de-facto states unto themselves with their own command-setting potential. Keeping the winners from leveraging their winnings to also win every subsequent round is the game we're playing to keep the field fair. That points to ideas from communism, but it has nothing to do with whether there's a command economy. Socialism is what happens when the demagogues get control of the ideology, just as they have in the US.

What we need are anti-trust protections that prevent the formation of `too-big-to-fail` entities of all stripes.

Just to be clear, when people say "Communism" and specify "the Soviet Union", that's adequate for rhetorical purposes. You can clarify that the Soviets were merely extremely socialist if you want, but everyone else understood what he was saying.

"A market economy is better at allocating resources efficiently than a command economy"

It was that way, agreed but might not always be that way.

Because free market economies have their own share of inefficiencies and moral hazards and certainly cannot be the efficiency pinnacle of human civilization.

I don't know what computers and networks will be capable of in the future, but it's worth noting that command economies failed in the time before these things really took off. The weak link has always been people who's brains developed in a time when they were monkeys scrabbling under trees and screeching at their fellows. No wonder they can't efficiently run big systems. But it's becoming evident maybe these tiny self centered brains are just big enough to design something that _can_ run a complex system efficiently.

Market economies are good at allocating resources, but they're also good at concentrating resources, which kills the market. And in some sectors, markets don't benefit the social fabric as a whole, hence why intervention into markets is often necessary

I've never understood why the fact that striving for communism reliably lead to disaster can be used a defence of communism. Can you explain that line of reasoning? It seems to me that's saying nothing more than "The utopia that I imagine is fantastic!". The main contention is not the qualities of the imagination, but the clash between the imagination and reality.

Simply put, it can never be implemented because perfect Communism would mean absolute genocide for the nation that manages to pull it off. All variations of Socialism function by extreme, persistent violence, to enforce the state's control over most aspects of a person's life including particularly economically (and everything else as a consequence).

The closer you get to implementing this fantasy Communism, the closer you get to death. That's why nobody can do it, it's why nobody ever has, it's why nobody ever will. It requires a staggering amount of aggression and violence to even attempt Communism, much less these idealized versions (which require 24/7 perfect violence to be applied to disallow even the slightest step outside the framework by the population).

This is classic no true Scotsman.

Well, from a long term scale, it was inefficient because workers were not incentivized to work. I would imagine stagnant wages have the same affect long term. They also spent way to much on their military. Perhaps the West is due for a collapse too.

They pretend to pay us and we pretend to work.

The Soviet system is not working because the workers are not working.

http://www.sjsu.edu/faculty/watkins/sovietcollapse.htm

Communist countries often couldn't even produce food. Even during the Cold War the USSR had to import grain from the USA. Millions starved to death in China.

Single salary households existed because women were out of the labor force. Those slowly disappeared as the internal labor market grew, as you could get away with paying women less

While the sequence of events sounds like a valid sequence of events, it does not seem to be linked to the original thesis -

Ie: because people aren't worth more

Which is odd, because something obviously is worth more. The world economy has significantly grown, and keeps growing.

The capital owning section of the population are able to use that to invest or own some sort of value increasing asset.

IT seems more likely that there is more economic value being created - but the competitive strengths of a higher position in the decisions making hierarchy provides assymetric power.

Meaning that the higher you go in terms of ownership of an organization, the more you can bring people at lower levels into conflict and drive prices down.

I joined a company that was unionized, 30% wage increase. For software engineering work.

Is it a software company? I've never heard of such a thing as a unionized software company.

To hazard a guess, maybe a Telco?

When I was a coop in college, everyone at Boeing was in a union, this included the student cooping at Boeing and the full time engineers.

This is not at all uncommon in Germany - I make more as an in-tariff mid-level IT staffer, recently transferred to a dev team from Windows ops, than many people I know here in software or IT consulting shops. I also work very stable hours. Independent consultants make more than me, but they also tend to have more experience and have to take the risks of self-employed independent consultants.

I am theoretically represented by the Metalworkers Union (IG Metall), despite never having machined any metal in my life. When I first started this job, I balked at the "restrictions" (strict 10 hr/day limit, 40 hr/wk contract, no Sunday work without permission from the main Works Council for the company), but after a few years, I cannot imagine going back to life without them. The six full weeks of vacation is pretty ace, too. Germany requires employers to give 24 days; the Metalworkers Union negotiated and maintains 30.

I should probably join them, or at least send them a nice gift basket. They've helped make my life here pretty comfy.

Did individual businesses really pay their workers more because they thought it would prevent the country from becoming communist? Do you have evidence for that claim? I find it hard to believe, because even if it is true that this would prevent countries from becoming communist, it is a free-rider situation. It would be rational for any individual business to keep paying low salaries because any individual business policy is unlikely to be the difference between becoming communist and staying capitalist.

A more logical avenue of analysis seems to me to consider basic economic principles. Price is determined by supply and demand. Did we see increases in labour supply that were not offset by corresponding increases in demand? Yes:

1. Women's participation in the labour market didn't quite double the supply of labour, but it greatly increased it.

2. Companies offshoring their production to developing nations also greatly increased the supply of labour.

> Did individual businesses really pay their workers more because they thought it would prevent the country from becoming communist?

No, that didn't happen. Wages climbed rapidly over a century due to extraordinary productivity gains. Each worker could produce far more real dollar value output and their worth climbed accordingly.

The reason Henry Ford could pay his workers $5 per day, was thanks to the very aggressive, spectacular productivity gains that his company's automation efforts delivered. The Ford Motor Company could produce more and more vehicles per worker, drive the price per Model-T down dramatically, and ramp the production scale into the millions, while yielding stellar profits thanks to the output gains and efficiency. Without the productivity gains in question, that wage jump (and it was quite the jump at the time) would have been impossible. Fear of Communism taking over had nothing to do with it. Ford's reasoning for going along with the big pay hike (it wasn't his idea) is public knowledge, you can read his thoughts on the matter, none of it had to do with Communism.

Roosevelt's reforms had a very clear undercurrent of 'its either this or a socialist revolution'

I get tons of recruiters contacting me on linkedin, but they always want to give me crap wages.

When I was trying to hire people a few months back, we got a whopping two applicants, one wasn't good. The other wanted to go freelance for a few months only.

We ended up getting friends recommendation - at way more than what the initial offers were.

> For wages to grow, people have to be paid more than they're worth as an economic unit.

Or for their worth to rise. One of the ways this can happen is through Labour scarcity, particularly if their economic output is above their cost, but employers are able to lower wages due to competition for jobs.

It's an fun point that Capitalism, the system that internally requires competition to work, also externally requires competition to work.

Yes. That's my point. Somebody got it.

a short 8-minute rundown of economics and wages since WWII era

Professor Mark Blyth on Post-WW2 Economics and Neoliberalism https://www.youtube.com/watch?v=8rxrjhWTdv8

That was very informative thanks. I think the biggest problem with allowing the 2008 crisis to run it's course is the same problem with the 1920s. It would create a Great Depression that, for the longest time, we didn't think we could even get out of. Of course with the 2008 bailout, the banks got bailed out but the citizenry did not.

Having said that, I'm not sure it was the right decision.

I not sure he exactly said that the 2008 crisis _should've_ been allowed to fail; but just that since it _wasn't_ allowed to fail, it has these consequences, compared to what happened in the 70's with the 'reboot'.

I agree. I was just pontificating on the pluses and minuses of each direction. What would it have looked like if our banking system was allowed to collapse, short term and long term?

> For wages to grow, people have to be paid more than they're worth as an economic unit.

That's incorrect, very obviously so with even a moment of inspection. Real wages grew dramatically between 1870 and 1970. That didn't happen because employers had to pay workers 20 times more than what they were worth as a static number derived from 1870. That happened because vast productivity gains made it possible for each employees to worth a lot more and thus be paid a lot more. Simply put, the workers became far more valuable because their output soared.

People are worth more. Look the amount of profits/employee that Google, Apple or Facebook have. GM, Kodak or any other "old" company needed an order of magnitude more employees.

Sure, with the demise of Communism, the capitalists appropriate this increase in productivity.

Can anyone here make the following calculation? How much would be the wage of a Google engineer proportionally to the profit generated by a GM engineer in the 50's.

Here is my imprecise calculations from some quick searchs:

Profit GM em 1955: 1 billion http://content.time.com/time/magazine/article/0,9171,807967,...

1955 today: $9,042,397.00 https://www.dollartimes.com/inflation/inflation.php?amount=1...

GM Employees in 1955: 576,667 http://247wallst.com/investing/2010/09/21/americas-biggest-c...

Google employees in 2015: 57,100 https://www.google.com.br/search?q=number+google+employees&i...

Google operating income in 2015: $23 billion http://www.businessinsider.com/alphabet-google-q4-2015-earni...

GM profit/employee: 9 Google profit/employee: 403,000

So a Google employee would have a wage 45,000 times that of a 1955 GM engineer.

I couldn’t find an amount for the wage of an engineer in 1955 to get a final result.

It is an unfair calculation. Google workforce proportionally has a lot more engineers than GM in the 50’s. Their wages would be way bigger than this.

You are correct about the last year or so where productivity growth was actually net negative. However for the time period you suggest where this was "well understood" productivity growth was rising rapidly. In that scenario people really were "worth more" in concrete terms year over year.

What about old-age entitlements? I see loads of cash go out for FICA-match / self-employment tax (along with a jumbo portion of debt) to top-up the underfunded entitlements of previous generations.

I doubt the younger people working today are going to get back, in real terms, anywhere near the amounts they put in.

Similarly, families who pay for their aged parents and grandparents to live in assisted or medical facilities, or their own apartments, don't get back anywhere near the amounts that they put in.

Not the same thing. Minor nitpick is that senescence care is not the same thing as free healthcare and side income from 65 and up when the life expectancy is nearly 80 years.

Major nitpic would be that Westernized peoples are barely replacing themselves, we're around 2.9 workers per retiree and falling, and it takes around a third of the annual federal budget--which roughly corresponds to the amount of debt we take on each year--to cover it.

When you set up a system to transfer wealth from young to old, it stops working so well when people stop having kids. Japan is already being crushed by this. They will not be the last.

> Part of what killed wage growth was the demise of Communism.

I have been saying this for a long time. The fall of the soviet union meant opening many countries to free markets. It also means capitalism is the only norm... which means it doesn't have any alternative.

Wages aren't growing because people aren't worth more. Most job growth is in low-skill jobs.

I tend to agree with you, given the level of automation. Automation is having 100 engineers in charge of updates, all across the world, instead of mailing floppy disks, fielding calls etc etc.

However the state should tax--one way or another--the "robots." As we know, tax rates have varied throughout the history, and are used to advance society's goals.

>>> For wages to grow, people have to be paid more than they're worth as an economic unit. That's what unions are about.

Did it come to your mind that wages might be also seen as a way to share the value added by a company between the company itself and the workers ?

Don't be condescending. The article is about why that isn't happening on a global scale.

Ah sorry, I'm a bit emotional about this because I see an ideology that says that people are worth less than before because of automation, don't find job because they don't look hard enough, are less paid 'cos they are no risk takers, etc. And often this ideology is (on purpose or not) presented as almost mathematical. It's not the fact that there is an ideology question that hurts me, it's that the language used to talk about it often implies it's almost natural.

To clarify, are you claiming that, e.g., the Ford motor company in the 1950's purposefully overpaid its workers based on the belief that, if they were not overpaid, its workers would foment a communist revolution, which would damage Ford's bottom line?

See Ford strike of 1941, Ford strike of 1945 (which looked somewhat like a revolution), Ford strike of 1961...

Not growing also means not compensating inflation and rising prices. So basically wages are shrinking if corrected for those.

But where is the evidence that wages aren't growing?

Your first 'graph is what I'd been taught in economics, backed by arguments of marginal productivity and marginal costs. I no longer find it credible.

Among other factors, market prices for goods are not fixed, and in many ways, they act somewhat as a "hairpin bend" effect -- there seem to be activities which settle at a given price or ratio regardless of other effects. One of the more notable arguments around this is Baumol's cost disease: there are products (in particular service-heavy ones) for which wages have risen despite no increase in productivity, due to the rationale that the talent for such work would otherwise move elsewhere. A string quartet, regardless of technological improvement, requires four performers. (Though recordings, broadcast, and potentially AI-generated alternatives might be developed.)

There's a certain parallel with Amdahl's Law: limits to which any computing task can be made more efficient through parallelisation, given the non-parallel component of the task. If 1/5 of processing time is non-parallelisable, then the greatest efficiency possible, even with infinite parallel processing, is a reduction in time to 20% of the original.

For a non-technologically-enhanceable task, if labour comprises 20% of the original cost, then it ultimately rises to be all of the expense, and the maximum possible cost reduction is 20%, even with infinite efficiency improvements in all other factors.

More generally, what economics does is shift utilisation amongst inputs based on the apparent cost of those inputs, relative to their minimum required contribution to production.

More: https://redd.it/69txj8

Another line of argument stems from Adam Smith (who, incidentally, fails in the above argument), who describes the factors contributing to high or low wages above the minimum required for survival:

The five following are the principal circumstances which, so far as I have been able to observe, make up for a small pecuniary gain in some employments, and counterbalance a great one in others: first, the agreeableness or disagreeableness of the employments themselves; secondly, the easiness and cheapness, or the difficulty and expense of learning them; thirdly, the constancy or inconstancy of employment in them; fourthly, the small or great trust which must be reposed in those who exercise them; and, fifthly, the probability or improbability of success in them.

Smith omits a sixth factor: labour organisation (though he addresses that elsewhere).

Traditional factory work represents at least several of these factors: it's often disagreable (hot, noisy, dirty, dangerous), requires skill, may be inconstant (factories may start or stop operation based on external factors), and skilled workers may well be in a position of trust as regards capital, material inputs, reliability, and work outputs.

More: https://redd.it/6xnkhj

Smith also, in Book 1, Chapter 8 of Wealth of Nations describes at length the conditions and consequences of falling labour demand. It's a bleak picture. One I would think we'd be well advised to avoid if at all possible.

More: https://redd.it/2311mb

He also makes clear that the bare minimum acceptable wage is one that will provide for a worker and their family, as otherise it's not possible to sustain the next generation of labour. If you cannot operate profitably whilst paying a living wage, then what you are operating is not a business, it is a charity, on behalf of the owner, with contributions withdrawn from the life-force of the employees.

> Most job growth is in low-skill jobs.

That's offensive. Please use the term "service industry jobs".

Samuel Gompers also said: "The worst crime against working people is a company which fails to operate at a profit."

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