Iron law of wages
en.wikipedia.org
en.wikipedia.org
Companies don't pay your equal to the value you provide, they pay you as little as possible.
Amazon, for instance, ran at a net loss for much of its history. I don't know how a workers cooperative would manage this.
Secondly, in capitalism, capital is concentrated among a small number of people, who are often friends. Shareholders therefore often help with raising further capital, since they are always from the capitalist class. So a worker's cooperative won't be as good at raising funds.
this should be rather obvious, extraction of wealth through employment are one of the basics concepts in capitalism.
To engineers, of course, this all has a naked emperor vibe, but on the business side our industry is largely about fake it till you make it. And being able to afford engineering offices and staff in SFO signals "we've made it", independently of whether that's true.
I think it's a little more subtle than this. The wages are higher because there's more opportunity for employees, who are being poached constantly, and often by companies with essentially limitless budgets. If you hope to retain engineers, you need to pony up in SFO, but less so in Omaha, where there are fewer people competing for talent. Companies say they pay for cost of living, but in reality, there are plenty of expensive cities where salaries are relatively low (e.g. much of Europe) and cheap cities where salaries are relatively high (e.g. Houston, though not necessarily for engineers).
Price has nothing to do with a vague concept of 'value'.
American middle and low wage workers have seen their wages stagnate or decrease, despite being more productive than ever: https://www.epi.org/publication/charting-wage-stagnation/
In fact, laborers have strong incentives to want more than a subsistence wage. So many laborers are going to take actions to counteract this, such as by learning skills and gaining education to differentiate themselves. Then they are in demand with a smaller supply.
There are lots of people who are making more than minimum wage as required by the laws in their country. So this is obviously untrue.
In the last few years, this has been happening due to increasing wealth inequality. The actions you cite (getting skills and education) have been seeing severely diminished returns, to the point that college makes little financial sense for a large portion of people.
A "law" in Economics is supposed to work over infinite amount of time, over infinite amount of participants and so on. Technically they are not laws, but idealised long time trends.
Obviously they do not work exactly in real world, but that doesn't mean one should dismiss them entirely.
Employers hold all the cards. They know it. They probably lobbied the government to gain this advantage. Workers are powerless against their bosses, but at least we can vote in more sympathetic government representatives.
You're doing a huge sleight of hand here that's clouding your judgement, and it's that you're confining the sample size to a single country. We live in a global economy, thus the cost of reproduction of labor is determined globally. If you have companies A and B living in the same city in California doing roughly the same job, but moving their business to Thailand would increase their profit sufficiently, then one of the companies would relocate, make more profit/beat their competition. In doing this, they have decreased the cost of wages.
You're doing the sleight of hand, but on an even more localized level: a single company hiring a single person.
We're talking about aggregates here
.. today. Tomorrow, it will be. We've already seen it happening several times since the first industrial revolution. 100 years ago, global supply chains on the scale we are currently witnessing were simply unthinkable. Any sector not currently enjoying pressure to move to the cheapest reliable location is only under a temporary hold.
In the long run, capital treats workers like any other resource: something whose cost should be continuously minimized, for "efficiency" in relation to profit.
This is a non sequitur since it really doesn't address the facets of the law itself. It is interesting you bring up minimum wage though, because the Federal minimum wage in the US is not even a living wage [0].
0 - https://www.investopedia.com/articles/personal-finance/02261...
I think there could be some truth in this though. I wouldn't be surprised if wages do trend towards the average productivity of labours, but again, that would be far higher than barely surviving -- at least today in countries with access to productivity boosting technology.
The cost of reproduction of labor is more than base subsistence, it's things like base subsistence, cleaning your house, child rearing, and so on.
> at least today in countries with access to productivity boosting technology.
Wages, in the US, largely don't track to productivity gains. For other countries, I wouldn't be too surprised to see similar statistics, but modified according to labor rights, culture around unions, etc etc.
> So as long as that's true, people on average won't accept being paid the equivalent of a bag of rice a day if you could always go out and produce several on your own.
You have to have land to grow rice. This, like yours, is a simplification, but it largely abstracts to the present situation. You can always drive for Uber, but you need a car to drive.
That doesn't disprove it, it disproves that mean income (capital returns + wages) falls to subsistence, not that wages fall to subsistence.
To disprove it from that starting point, you need to also prove that capital does not tend over time to capture all value beyond the subsistence of labor.
> So as long as that's true, people on average won't accept being paid the equivalent of a bag of rice a day if you could always go out and produce several on your own.
But laborers cannot produce at their full capacity without access to capital. It's perfectly consistent for wages to tend to subsistence and capital rents to tend to marginal product of the labor applied to capital minus labor subsistence.
That said, making everyone the same isn't a better solution, just a different one and in many ways much worse.
If it were a true law then everyone would be on literal subsistence wages - they aren't. The illusion of this law is that people spend all their money, so their lifestyle costs (typically) exactly match their wage. This is independent of the wage.
No, it's proposed as a law of movement: the direction wages move toward over time, all other things being equal.