Wages vs Productivity: A thread

[Friend of Mara]

I like the 1990 to 2019 test quite a bit.
Median household income in 1990 in the US was 54,621. In 2019 (b/c 2020 numbers are morphed due to the pandemic) was 68,703 which is nearly a 21% increase. GDP in 1990 was 5.963 trillion. GDP in 2020 was 21.43 trillion a 360% increase .

And our population jumped from 248,709,873 to 331,449,281 (a 33% increase). So if adjusted by increase in population our gdp should go up by 33%. However we saw it more than triple (10x the productive increase). So our new average (if kept up by productivity) should be a total increase of about 270% which would be 154.9k household average income. Which is less than half of what we currently earn.

Another fun fact is if we divined every dollar made in the us by the total number of working adults we also get a pretty cool picture. In 1990 we had 5.963 trillion made and 125.84 million workers. In 2020 we had 21.43 trillion dollars and 160.74 million workers. For 1990 each person would average out to an income of 47,385 a year (this is every working adult and the 54k was for households) and in 2020 it should be 133,320 (this is PER PERSON VS a household MEDIAN of 68k).

The last bit of information isn't a call to split everyone's check evenly but it is a finger on the pulse of our income inequality and specifically the change thereof. The inflation is another useful metric. From 1990 to 2020 the value of a dollar has nearly been cut in half. So overall our GDP has outpaced inflation but our wages sadly have not.

This can't continue. I am happy to see the worker shortage pushing wages up but our lawmakers are already attempting to stop this.

Thoughts?

 

[Kooky]

To be fair, a substantial portion of that GDP growth is likely the result of capital gains rather than value produced by domestic labor (think multinational corporations drawing profit from abroad, or gains made on capital that is being invested internationally) which was never going to reach the ordinary population in a capitalist system.

But it's still interesting to think about how few people have been seeing proportional gains from this massive growth in economic value - with a substantial amount likely even losing out through the mortgage crisis that occurred smack dab in between those mind boggling economic growth spurts.

 

[Friend of Mara]

To be fair, a substantial portion of that GDP growth is likely the result of capital gains rather than value produced by domestic labor (think multinational corporations drawing profit from abroad, or gains made on capital that is being invested internationally) which was never going to reach the ordinary population in a capitalist system.

But it's still interesting to think about how few people have been seeing proportional gains from this massive growth in economic value - with a substantial amount likely even losing out through the mortgage crisis that occurred smack dab in between those mind boggling economic growth spurts.

Indeed. I at one time used to rail against the changes in CEO pay vs average worker pay. However the size of the multinational corporations almost necessitate a significant difference.

I don't want to put words into your mouth but are you within a stone's throw of insinuating that the GDP of the US is not indicative of the actual wealth? Or are you simply saying that the wealth is not derived from homegrown sources?

 

[Shadow Wolf]

Indeed. I at one time used to rail against the changes in CEO pay vs average worker pay. However the size of the multinational corporations almost necessitate a significant difference.

What are we tormented and haunted by? "There's someone willing to do it for less." They don't need it. And for all the privileges they get, hell yes there are people who would do it for less and probably have a better idea at how to make things more equitable, functioning, and pragmatic for all involved (except investors).

 

[Friend of Mara]

What are we tormented and haunted by? "There's someone willing to do it for less." They don't need it. And for all the privileges they get, hell yes there are people who would do it for less and probably have a better idea at how to make things more equitable, functioning, and pragmatic for all involved (except investors).

Well there is a long and complicated answer that goes over a number of angles comprehensively. But since I don't want to post a dissertation length answer that would require a lot of document citing I'll put it simply.

Unions destroyed. Automation reduced labor needs. Corporations are able to exploit workers in other countries that live in poverty and will work for dollars a week. The government abhors helping the poor.

 

[Shadow Wolf]

Well there is a long and complicated answer that goes over a number of angles comprehensively. But since I don't want to post a dissertation length answer that would require a lot of document citing I'll put it simply.

Unions destroyed. Automation reduced labor needs. Corporations are able to exploit workers in other countries that live in poverty and will work for dollars a week. The government abhors helping the poor.

Still doesn't explain why we must tolerate CEOs and investors accumulating more wealth than many nations combined. The workers make that wealth appear. They make it happen. CEOs and investors take a massive slice for themselves and leave little for everybody else. Subway, for example, is in the news for some pretty crappy new contracts they are giving frachisees. Such as, over the course of these 20-year contracts if the stores closes without authorization from main headquarters more than once a year the main headquarters takes over ownership. Authorized events are is the legal blasphemy called "an act of god." It also clamps down of franchisees being able to set rules and prices. It also takes possession of anything the franchisee bought that bears the Subway name or logo (something commonly seen in electronic device and software terms). They also can't criticize Subway over any forum (a lot of them complained about the melts and refused to carry them due to alleged burn risks).
This is all despite the fact the frachisees and their employees are generating the wealth. They have a name backing them, and you mostly know what Subway will have anywhere you go, but beyond that without the frachisees entering those contracts Subway has nothing.
Taking from those generating the wealth is a common theme and trend in America. The growth does generally go to the top, with a load of a excuses to support it. It doesn't have to happen. If I watched blue collar take a 20-or-more dollar an hour cut during the Recession, the executives and investors can stand to take less. And some are. Their companies and employees are far better off for it.

 

[Stevicus]

The last bit of information isn't a call to split everyone's check evenly but it is a finger on the pulse of our income inequality and specifically the change thereof. The inflation is another useful metric. From 1990 to 2020 the value of a dollar has nearly been cut in half. So overall our GDP has outpaced inflation but our wages sadly have not.

This can't continue. I am happy to see the worker shortage pushing wages up but our lawmakers are already attempting to stop this.

Thoughts?

This is a good summary of what part of the problem has been. Another key indicator is to look at real wages, which have essentially stagnated since the 1970s.

The history of labor is rather interesting, especially considering the vast periods of human history where workers were hard to come by and it necessitated either tying them to the land (serfdom) or going to different lands to physically capture people and force them to work (slavery). Even as societies became more industrialized and cities became larger, working conditions were still horrific, with child labor, sweatshops, beatings.

Under the class system, those who were born into wealthy and privileged families felt they were special - superior to all those lowly peasants who were considered to be no better than dogs or cattle. The same basic idea still exists today, although dressed up in politically more sophisticated ways.

I firmly believe that, in the minds of the ruling class, the reason why the 1% gets so much while the 99% get so little is "that's how it's supposed to be." Even though the numbers clearly show they can well afford to pay people better, along with lowering prices - they just can't do it because it philosophically offends them somehow. Dogs aren't allowed to eat at the same table with rich people. This is the mentality of the people who rule over this country and allow these disparities and other forms of corruption to remain unchecked. There's no rhyme or reason to it, other than pure unadulterated greed and a strange outmoded attitude which should have gone the way of the Roman Empire, but only became worse.

The worse part of it is, unlike previous generations who ruled America, the current crop seems to be so myopically incompetent that they're looting the nation and bringing ruination on the country. Now, we have to worry about a resurgent Russia and an increasingly belligerent China, while our leaders are unprepared, dumbfounded, and don't have a clue as to what to do next.

 

[Friend of Mara]

Still doesn't explain why we must tolerate CEOs and investors accumulating more wealth than many nations combined. The workers make that wealth appear. They make it happen. CEOs and investors take a massive slice for themselves and leave little for everybody else. Subway, for example, is in the news for some pretty crappy new contracts they are giving frachisees. Such as, over the course of these 20-year contracts if the stores closes without authorization from main headquarters more than once a year the main headquarters takes over ownership. Authorized events are is the legal blasphemy called "an act of god." It also clamps down of franchisees being able to set rules and prices. It also takes possession of anything the franchisee bought that bears the Subway name or logo (something commonly seen in electronic device and software terms). They also can't criticize Subway over any forum (a lot of them complained about the melts and refused to carry them due to alleged burn risks).
This is all despite the fact the frachisees and their employees are generating the wealth. They have a name backing them, and you mostly know what Subway will have anywhere you go, but beyond that without the frachisees entering those contracts Subway has nothing.
Taking from those generating the wealth is a common theme and trend in America. The growth does generally go to the top, with a load of a excuses to support it. It doesn't have to happen. If I watched blue collar take a 20-or-more dollar an hour cut during the Recession, the executives and investors can stand to take less. And some are. Their companies and employees are far better off for it.

Indeed.

I am a leftist so my actual dream situation is far and beyond what is really probable to happen. But some steps that could be taken is making the effective tax rate higher for corporations and having a massive increase in the sliding scale of taxes. I wouldn't even be totally opposed to a 99% tax rate on every dollar past a billion a person makes. End billionaires and funnel that money down. Also making a national union would go a long long way to giving workers a better say. I don't actually like the minimum wage because its affects will always be too little too late. That and pushing up from the bottom rather than real wealth redistribution is a cop out.

In a capitalist society (as the whole world is) value is based on demand. If all you have to sell is your labor and you are competing for the lowest bid your wages will go down or stay the same. It isn't until the market has to bid up for labor that wages go up. Right now we have an incredible opportunity to push for this as the unemployment benefits have artificially warped the landscape. They are currently acting to end this most likely at the behest of the ones at the top who don't want to fork out more money. A permanent benefits net of this level (funded by Jeff Bezos himself if need be) would be the quickest way to maintain the wage growth we have seen these last few months.

 

[Friend of Mara]

This is a good summary of what part of the problem has been. Another key indicator is to look at real wages, which have essentially stagnated since the 1970s.

The history of labor is rather interesting, especially considering the vast periods of human history where workers were hard to come by and it necessitated either tying them to the land (serfdom) or going to different lands to physically capture people and force them to work (slavery). Even as societies became more industrialized and cities became larger, working conditions were still horrific, with child labor, sweatshops, beatings.

Under the class system, those who were born into wealthy and privileged families felt they were special - superior to all those lowly peasants who were considered to be no better than dogs or cattle. The same basic idea still exists today, although dressed up in politically more sophisticated ways.

I firmly believe that, in the minds of the ruling class, the reason why the 1% gets so much while the 99% get so little is "that's how it's supposed to be." Even though the numbers clearly show they can well afford to pay people better, along with lowering prices - they just can't do it because it philosophically offends them somehow. Dogs aren't allowed to eat at the same table with rich people. This is the mentality of the people who rule over this country and allow these disparities and other forms of corruption to remain unchecked. There's no rhyme or reason to it, other than pure unadulterated greed and a strange outmoded attitude which should have gone the way of the Roman Empire, but only became worse.

The worse part of it is, unlike previous generations who ruled America, the current crop seems to be so myopically incompetent that they're looting the nation and bringing ruination on the country. Now, we have to worry about a resurgent Russia and an increasingly belligerent China, while our leaders are unprepared, dumbfounded, and don't have a clue as to what to do next.

America is ****ed six ways to Sunday. As the years roll by I am less and less confident that we can pull ourselves out of it. The younger you are the poorer your prospects look. We have absolutely **** infrastructure. We are abused by health insurance industry, wage cuts and a government run by the highest bidder.

I love America. I want America to succeed but there seems to be very little will to do so.

 

[Shadow Wolf]

In a capitalist society (as the whole world is) value is based on demand.

This part I disagree with because there are so many exceptions I don't know how the myth still exists. Disney, for example, is horrible about artificially manipulating demand to charge higher prices. A lot of cars aren't valued by demand, but by what they can charge for them.

 

[Friend of Mara]

This part I disagree with because there are so many exceptions I don't know how the myth still exists. Disney, for example, is horrible about artificially manipulating demand to charge higher prices. A lot of cars aren't valued by demand, but by what they can charge for them.

While there are exceptions if there was a Disney 2 that competed with Disney they would have to lower their prices or loose to Disney 2. The problem is that they aren't having to compete in a meaningful way.

The point about wages is this. If I have 10 jobs and 100 people those 10 jobs will go to the lowest wage accepted. Why would they pay 10 dollars an hour if someone is willing to work for 8? But if you have 100 jobs and even as low as 99 people you see a trickle upwards as that one job is always needed to be filled and someone will have to be coerced to leave their current position to fill that one. That is currently what we are seeing with this labor shortage in the US. Though this is only possible right now because of the strong safety net made for the covid disaster. Once that net is gone and we see wages trickle back down to the lowest common denominator.

 

[Shadow Wolf]

The point about wages is this. If I have 10 jobs and 100 people those 10 jobs will go to the lowest wage accepted. Why would they pay 10 dollars an hour if someone is willing to work for 8?

They want a better quality work. And companies who pay more (even when it comes to how much they actually pay their employees per year) get workers who give better results.
We only have this race to bottom and this perpetual threat of "someone who will do it for less" so the top can take more from the bottom. And they find people to do it. Forcing everyone else to take less. Turning them into unhappy workers who work more but are less productive.

While there are exceptions if there was a Disney 2 that competed with Disney they would have to lower their prices or loose to Disney 2. The problem is that they aren't having to compete in a meaningful way.

One of the practices of Disney is to greatly limit how many copies of a movie they release. This artificially restricts supply while artificially driving demand up. It has nothing to do with real world factors or even conventional market factors. It's not an invisible hand, but corporate executive hands.

 

[Friend of Mara]

They want a better quality work. And companies who pay more (even when it comes to how much they actually pay their employees per year) get workers who give better results.
We only have this race to bottom and this perpetual threat of "someone who will do it for less" so the top can take more from the bottom. And they find people to do it. Forcing everyone else to take less. Turning them into unhappy workers who work more but are less productive.

And yet it is the reality we live in. Now the reason why not every single job is minimum wage has to do with the minimum qualifications and the valued experience of potential hires. Because it is worth it to the business to hire better people. But I assure you that if you made an exact clone of a worker except they were willing to work for less almost every company would hire the clone.
There are exceptions such as making it a marketing tool to state that they will hire at a higher rate or make posturing movies. However this is always calculated to maximize profits in the end. Without a force working against this we will be hard pressed to make them meet the demands of the working class. Its how strikes work as well. Choke the workforce till it becomes more profitable for the company to give into the demands.

One of the practices of Disney is to greatly limit how many copies of a movie they release. This artificially restricts supply while artificially driving demand up. It has nothing to do with real world factors or even conventional market factors. It's not an invisible hand, but corporate executive hands.

I'm not saying that there is an invisible hand of the market. They chose the quantity to release making the demand artificially higher. But the demand is still higher even if it is not an organic process. But again I fall back onto the Disney 2. If there were equally appealing movies that were much cheaper people wouldn't follow Disney prices. But then we get into brand value and customer patronage.

 

[Shadow Wolf]

I'm not saying that there is an invisible hand of the market. They chose the quantity to release making the demand artificially higher. But the demand is still higher even if it is not an organic process. But again I fall back onto the Disney 2. If there were equally appealing movies that were much cheaper people wouldn't follow Disney prices. But then we get into brand value and customer patronage.

I doubt it. Brand loyalty is such a real and powerful thing some companies, like John Deere, sue their customers over total crap term agreement violations. Rolls Royce stepped in to prevent modifications being performed on a Rolls Royce someone legally acquired second-hand without any terms or agreements. Digital formats and even a lot of physical mediums and electronic devices companies don't legally let us own them. Amazon has pulled titles off people's Kindle.
The larger a corporation is, the more abusive it gets towards the consumer. Sony wants to prevent aftermarket face plates on the Playstation 5. That hasn't stopped anyone from buying one, or ceased production of aftermarket pieces (though Sony may have some legal leverage in their favor to put a legal halt to it). And now we see restaurant chains python-squeezing franchisees. The Ford Pinto isn't the only monumental mess up to be released, food lobbyist with publicly known food corporations behind them fight to keep nutritional labels confusing and under informing, Mitch Daniels told the Elli Lily board he would make Prozac "profitable" and the company manufactured research results and publishings that greatly over exaggerated the effectiveness of Prozac.
Disney 2 could be significantly better. The predictions of responsible consumers who will give a crap have failed beyond words.

 

[Friend of Mara]

I doubt it. Brand loyalty is such a real and powerful thing some companies, like John Deere, sue their customers over total crap term agreement violations. Rolls Royce stepped in to prevent modifications being performed on a Rolls Royce someone legally acquired second-hand without any terms or agreements. Digital formats and even a lot of physical mediums and electronic devices companies don't legally let us own them. Amazon has pulled titles off people's Kindle.
The larger a corporation is, the more abusive it gets towards the consumer. Sony wants to prevent aftermarket face plates on the Playstation 5. That hasn't stopped anyone from buying one, or ceased production of aftermarket pieces (though Sony may have some legal leverage in their favor to put a legal halt to it). And now we see restaurant chains python-squeezing franchisees. The Ford Pinto isn't the only monumental mess up to be released, food lobbyist with publicly known food corporations behind them fight to keep nutritional labels confusing and under informing, Mitch Daniels told the Elli Lily board he would make Prozac "profitable" and the company manufactured research results and publishings that greatly over exaggerated the effectiveness of Prozac.
Disney 2 could be significantly better. The predictions of responsible consumers who will give a crap have failed beyond words.

Its why my answer was shortened earlier. The complexity of the market is something else. Game theory is a fun analysis tool we can use to integrate a number of different factors. Brand loyalty, marketing, ease of access, consumer identity association, negative campaigns against other competitors, perceived growth and even governmental factors all play a role.

But I digress. My point before was mainly about labor and the selling thereof. The rule of thumb is that the cheaper the labor the better from the perspective of employers and one of the few ways to increase the value of labor is scarcity.

 

[Heyo]

What are we tormented and haunted by? "There's someone willing to do it for less.

That is a small silver lining. Obviously there are very few people willing to sell themselves to the idea of exploiting workers for the benefits of the shareholders (and are able to do it effectively). The shareholders must pay their CEOs high sums, it seems, because there are no people who do it for less.

 

[Friend of Mara]

That is a small silver lining. Obviously there are very few people willing to sell themselves to the idea of exploiting workers for the benefits of the shareholders (and are able to do it effectively). The shareholders must pay their CEOs high sums, it seems, because there are no people who do it for less.

And CEO's are paid their large sums of money because they are indispensable correct? They are worth every penny and no other forces at hand?

 

[Heyo]

And CEO's are paid their large sums of money because they are indispensable correct? They are worth every penny and no other forces at hand?

Look at the requirements for CEOs: you can't have a life and you can't have a conscious or you won't be able to do it right.

 

[Friend of Mara]

Look at the requirements for CEOs: you can't have a life and you can't have a conscious or you won't be able to do it right.

Nuanced approach I see.

 

[Heyo]

Nuanced approach I see.

Just kidding. But the salaries of CEOs do make me think about "there is someone willing to do it for less".