Re: How does productivity turn into higher wages?

From: Bill (xxx_at_yy.zz)
Date: 01/19/05 

Date: Wed, 19 Jan 2005 00:03:30 GMT

<zerge@hotmail.com> wrote in message
news:1106077002.589121.211450@f14g2000cwb.googlegroups.com...
>
> Bill wrote:
>> "Igor" <jjweatherby@houston.rr.com> wrote in message
>> news:dS_Gd.26183$Ta2.13935@fe2.texas.rr.com...
>> > wilfred wrote:
>> >> <zerge@hotmail.com> wrote in message
>> >> news:1105994298.131535.139850@z14g2000cwz.googlegroups.com...
>> >>
>> >>>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?
>> >>>
>> >
>> > It is very simple. As productivity rises firms wish to hire more
> workers.
>>
>> That may not be true. For example, if you fully automate a factory
> you may
>> need less people.
>>
>> Bill
>>
>>
>
> Less people per unit produced, sure. But not necessarily less people in
> absolute terms. Productivity and number of workers in absolute terms
> are independent variables.
>

Could be less and could be more. They are not quite independent. If you do
nothing nothing you need the same number of people per unit of volume. If you
do a massive automation it is possible that you may be able to increase your
production to something far beyond what you could sell with far fewer people.

Bill

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