> That means wages haven’t kept pace with gains in productivity, as economics says they should,
This is a misreading of economics. Total cost to hire for a job should match the productivity of that job.
Long ago when I worked for Boeing, the benefits package cost the company an additional 40% over one's pay. Add into that the cost of the so-called "employer's contribution" to social security, etc. I recently read that the benefits package these days can approach 100% of the salary. This likely reflects increasing health care costs, increased maternity leave, and all sorts of new benefits mandated by law, and the cost of the HR department needed to monitor compliance with the ever-changing employment laws.
Economically, these all ultimately come out of the workers' paychecks, one way or another. There isn't any free lunch (and if the company does offer a free lunch, it's accounted for as part of your compensation package and ultimately is reflected in a lower paycheck).
OK, fair enough. But, how are corporate earnings during this time?
https://www.nytimes.com/2014/04/05/business/economy/corporat... "CORPORATE profits are at their highest level in at least 85 years. Employee compensation is at the lowest level in 65 years."
Maybe via taxes USA should provide an incentive to invest or to pay employees more. There is $250b in Apple's bank accounts, $100B in Google's coffers, $100+ in MSFT's...maybe they should pay more in salaries, invest it or whatever.
The significant majority of jobs are not those with considerable non cash benefits, so I don’t think it’s worthy of much discussions. It’s well known there is an increasing income and wealth gap, and it’s the increasing portion of those with non benefit jobs that is problematic.
A properly done article would account for this. It's like doing a medical study and failing to account for the sex/age/etc characteristics of the people being studied. I.e. it's sloppy and can't be taken seriously. Even worse, such omissions may be intentional on the part of the author, and then the article tips into being propaganda.
I have seen articles (in the WSJ) that used total compensation. Meaning it is possible to do.
>Total cost to hire for a job should match the productivity of that job.
Total cost is determined by supply and demand. Productivity simply puts a ceiling on wages.
Austerian measures in particular are one way whereby demand for labour can be pushed down (by cutting public sector jobs & compensation) and demand for jobs/desperation can be pushed up (by cutting benefits people rely upon). None of this has anything to do with productivity.
>There isn't any free lunch
In healthcare the free lunch are the profits being skimmed by the HMOs, reflected by their greater share of those increasing health care costs driven by their relative market power.
On the other hand, everyone would love to hire someone who produced 10x their compensation, meaning they'd bid up the compensation to their productivity minus the opportunity cost.
That only seems to work if there is infinite demand.
If workers at company A are producing 10x their cost, then company B could hire them at twice that and still make 5x returns.
But what if there is only enough demand for 20 output units (2 workers) and there are 2 workers in the pool, why would company B ever pay more than company A?
B can offer a lower price than A and take their business away. High margin businesses (like A) attract competitors. Everybody wants to be in a high margin business.
Company A employs people and gets 10x on their work with high prices, they have a margin of 9x. B entices them away by offering them 2x their pay, and cuts prices 1x. B now has a margin of 7x, and all the business.
>On the other hand, everyone would love to hire someone who produced 10x their compensation
If there was somebody out there who was half the price and produced 20x their compensation they would be less impressed and would probably credit themselves for producing most of that value.
This is a misreading of economics. Total cost to hire for a job should match the productivity of that job.
Long ago when I worked for Boeing, the benefits package cost the company an additional 40% over one's pay. Add into that the cost of the so-called "employer's contribution" to social security, etc. I recently read that the benefits package these days can approach 100% of the salary. This likely reflects increasing health care costs, increased maternity leave, and all sorts of new benefits mandated by law, and the cost of the HR department needed to monitor compliance with the ever-changing employment laws.
Economically, these all ultimately come out of the workers' paychecks, one way or another. There isn't any free lunch (and if the company does offer a free lunch, it's accounted for as part of your compensation package and ultimately is reflected in a lower paycheck).