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Comment by BenFranklin100 | Hacker News Reader

This story neglects to mention one of the biggest factors likely driving productivity: remote work expands the labor pool available to employers, thus making it easier for employers to find the right match for the job at the right price.

Before the pandemic, employers were mainly limited to employing workers within approximately an hour commute. With this restriction loosened, they can now more easily found workers better suited (i.e more productive) for a role than the previously available local options.

Over time, this will work to increase aggregate wages, as productivity increases are the main driver of wages.

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Taken to its logical conclusion, companies offering WFH would then be morally justified in replacing US workers with cheaper third world options. UK salaries in tech for example are about 1/4-1/3 of US levels.

At some point time difference kills any productivity gain. West Coast to West Europe is barely workable even if everyone in the "secondary" zone is self-sufficient.

However, hiring engineers from Latam could indeed be an option to replace US workers if they can't offer an edge. The issue here is the language barrier.

Productivity and the link to wages has diverged lots since the 1970s in the US. In a vacuum it certainly follows that productivity should enable wage growth, this hasn’t played out as much in the real world. Once you factor in inflation, wages have hardly risen in comparison to productivity.

The reality is that the wage level is the intersection what an employee thinks they can get and what the employer thinks they can get away with, and usually the employer has the upper hand.

There is healthy debate about the ‘great uncoupling’ in the US between 1970 and 2010. There is no debate however that historically productivity increases have been a necessary precondition for sustained wage growth.

Moreover, the present discussion is about whether WFH may or may not be affecting productivity, not my tangential side comment about the link between productivity and wages.

Remote work expanding the pool of worker supply will cause wages to go down. If there are 100 people competing for a position, there is much less upward wage pressure than if there are only 10 people. Conversely, there are now more jobs for remote workers to apply to, so they also have a larger supply of jobs to choose from, pushing wages up, theoretically. At the end of the day it’s probably closer to a wash than anything else.

> Once you factor in inflation, wages have hardly risen in comparison to productivity.

Which stands to reason. We have continually increased overall productivity by adding more workers (notably robots), not by individually becoming more productive. If you double productivity by doubling the workforce, when you divide up the fruits each worker still ends up with the same amount.

We saw wage growth during the transition away from our primarily agrarian economy, but that's because wages were largely not a thing in said agrarian economy. People sold things (crops, livestock, etc.), not their time. As people started to leave the farm to work in the factory, wages, which were previously zero, had nowhere else to go but up.

But now that most everyone sells their time, we've achieve peak wage. As you point out, any apparent wage growth going forward will simply be in alignment with inflation.

> The reality is that the wage level is the intersection what an employee thinks they can get and what the employer thinks they can get away with

While that is definitely true, given enough time and negotiation (of which we have had plenty for most jobs) wages will converge on the productivity the worker is providing. So while you can most definitely cherry-pick individuals who have wages below their productivity and individuals who have wages above their productivity, the overall market ultimately settles where wages and productivity meet.

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