📹 Caller: Min Wage Hasn’t Kept Up with Productivity
Voicemail caller talks about the minimum wage not keeping up with productivity -Become a Member: …
What caused the decline in wages?
The deregulation of the finance industry has led to lower wages in the US, with compensation shifting towards the upper end of the wage spectrum and the financial sector’s political power favoring low inflation over low unemployment. This has prevented policymakers from addressing imbalances like the U. S. trade deficit. The falling top tax rates, preferential tax treatment of stock options and bonuses, failures in corporate governance, and deregulation of finance have increased the incentive and ability of well-placed economic actors to claim larger incomes over the past generation.
Globalization policies, which prioritized corporate interests over worker interests, have also led to a lowering of wages for middle- and lower-income workers in the US. International trade has been a clear factor suppressing wages in the middle of the wage structure while providing a mild boost to the top, particularly since 1995.
What is the relationship between wages and marginal productivity?
The theory posits that the wage is equal to the value of marginal product. If the marginal product exceeds the wage, it is economically advantageous to employ additional laborers, as the total revenue generated from these additional workers exceeds the total cost of engaging them.
Where does productive wages go?
A trading account is the repository for all productive wages, which are subsequently recorded in the final account.
Why is UK productivity stagnant?
UK economic growth has been slow since the 2007-2009 financial crisis due to factors like low investment levels and policy uncertainty. This has led to modest increases in living standards. The UK economy has faced significant shocks since 2019, including the Covid-19 pandemic and Russia’s invasion of Ukraine in 2022. Inflation has reached its highest rate since the early 1980s, with UK price levels in April 2024 being 22 higher than at the beginning of 2021, according to the Office for National Statistics.
Why can’t income rise faster than productivity?
Incomes rising faster than productivity gains could create an unsustainable bubble and diminish resources for other sectors. Nearly 60 tech companies have delayed hiring due to inflated salary expectations around software roles. The tech industry should critically examine if rising incomes align with real productivity growth. As an experienced engineer, it is crucial that compensation stays tied to actual productivity gains.
Strategies for sustainable growth include investing in continuous learning, staying updated on the latest technologies, frameworks, and methodologies, and ensuring that talent and ideas are rewarded in a sustainable way for society long-term.
Do wages rise with productivity?
The Brookings study highlights the importance of productivity in real wages, stating that a 2 productivity growth can lead to a 4 increase in real wage growth. However, the pandemic has caused price shocks at various points of a product, potentially impacting productivity growth. If the pandemic pricing recedes, such as shrinkflation, the research suggests that recent productivity gains could lead to real wage increases.
What is the relationship between real wages and labour productivity?
Productivity growth serves as the primary driver of real wage growth, with long-term growth in real wages largely attributable to labor productivity growth.
What are stagnant wages?
Stagnation is a state where total output is declining, flat, or growing slowly. It can occur during periods of recession, growth, or both. Cyclical stagnation occurs when a recession ends and recovery begins, requiring monetary and fiscal policies to prevent prolonged stagnation. Economic shocks can also induce periods of stagnation, which can be short-lived or lasting depending on the specific events and the economy’s resilience. During these periods, monetary and fiscal policies may be implemented to prevent prolonged stagnation.
What is the real wage productivity?
The graph of labor productivity and real wages in the US shows that US workers only partially benefitted from productivity increases since the 1970s. This decoupling is not unique to the US, but may hide much of the wage distribution across the sectoral composition of the economy. High productivity growth in sectors like finance and information has not been matched by labor compensation, despite substantial increases. In other industries, there was no decoupling at all.
This decoupling is not unique to the US, but may be more prevalent in other countries. Therefore, it is crucial to examine the data to better understand the impact of wage distribution on productivity and labor compensation.
What is the relationship between labor productivity and wage rates?
Productivity is closely linked to wage, as it directly impacts the wage rate a worker can command. This is because productivity is directly linked to the generation of profits for a company. When a worker is more productive, they generate more profits for their employer, which in turn, encourages them to pay higher wages. However, this relationship is only valid in a competitive labor market where workers are paid for their productivity. Other factors such as education level, work location, and market demand and supply also play a role.
📹 If Wages Grew With Productivity
Thom Hartmann asks what America would be like if wages had kept check with productivity? If you liked this clip of The Thom …
Anyone who suggests minimum wage is enough or is too high should be stripped of their money(they are most likely rich) and then made to live off of the bare minimum for let’s say a lifetime and see how they feel about it after. I’m guessing just a few days in they would be like this is ridiculous I can’t afford anything.
People don’t want a increase in minimum wage because they feel comfortable making more than those who are not making a livable wage. The thing is if minimum wage raised then jobs that are salaried over the minimum wage will increase as well to maintain healthy job competition for talent. I make well above minimum wage but those who are only making so little do deserve at least 15-20 minimum.
Complicated subject. It really comes down to understanding what’s the point of MW. It’s meant to serve as a base payment level for a single individual performing entry-level tasks. Where it gets muddied is where you hear complaints about “I can’t support my family”, and to that I say “you’re right”. It’s not supposed to be the type of job and type of pay to support a family. I know that sounds cold and heartless, but that’s the economic reality. We’re better off simply looking at what’s appropriate for a single individual performing entry-level tasks and go from there. Considering most entry-level jobs don’t provide benefits, maybe focus more energies towards providing greater tax breaks at that level so the employee can keep more of what they make for greater spending power.
Anyone who works 40 hours a week doing anything productive (not criminal) should be able to afford a decent apartment, food, clothing, medical care, access to education and recreation, and, in general, have a satisfactory life. There’s no reason why some people make one thousand times more than anyone else, no matter what people do.
You can tell what the minimum wage should be by looking at teenage unemployment rates. Minimum wages are too high when kids who want to work don’t get hired because their skill level and thereby productivity is below the value the employer can get when paying minimum wage. Teen unemployment has skyrocketed with the advent of minimum wage being targeted to a “living wage” for an adult.
A $15 minimum wage is something that I’ve always been debating about with myself. I see the argument on both sides, there are people who struggle and need that minimum in order to live, because they’re working full time and still not making enough. Then, there’s the argument that a $15 minimum wage is unsustainable, and while that isn’t true for big corporations, smaller businesses wouldn’t be able to compete. Plus, we saw what happened to GM, they ditched their employees to further their profits, so this may give companies a reason to lay more people off. I’m in favor of a higher minimum wage, but I can’t help but fear the unintended consequences.
Indexing the minimum wage to productivity doesn’t make much sense. There is no reason to think that productivity will increase for low-wage workers at the same rate that in increases for high-wage workers. Cost of living varies a lot from place to place. But assuming that we are only worried about changes in cost of living over time, indexing the minimum wage to inflation, especially the consumer price index, should work fine. Because that is supposed to measure what consumers actually buy.
Oh god this point again. People realise that productivity is up because of technology/innovation not because minimum wage workers are fundamentally more productive right? The concept that all that wage would go to the worker is stupid. What incentive would companies have to buy technologies and have executive that bring efficiency into business if all the money went to the worker?