Re: How does productivity turn into higher wages?

royls_at_telus.net
Date: 01/18/05 

Date: Tue, 18 Jan 2005 23:10:22 GMT

On 17 Jan 2005 12:38:18 -0800, zerge@hotmail.com wrote:

>r...@telus.net wrote:
>> On 17 Jan 2005 08:21:29 -0800, zerge@hotmail.com wrote:
>>
>> >As productivity increases in an industry or in a country, salaries
>tend
>> >to rise.
>> >Can anyone explain the cause-and-effect that leads to this dynamic?
>And
>> >I mean at the decision maker level: what happens in the minds of the
>> >employers and employees?
>>
>> It's just that the increased production has to go _somewhere_.
>
>Yes, I understand it at THAT level.

There is nothing else to understand. It's like conservation of
angular momentum in a car crash: whatever the details, you know all
the pieces are going to end up at rest.

>Supply is demand etc.
>I just don't understand the thought processes of the employers and
>employees, see? What specific market pressure makes the employers
>decide to pay more and/or employees ask for more?

Competition.

-- Roy L

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