Re: Wage Trends


"The Trucker" <mikcob@xxxxxxxxxxx> wrote in message
news:d693o00q2o@xxxxxxxxxxxxxxxxxxxx
>
> <jeblair@xxxxxxxx> wrote in message
> news:1116178246.916542.110480@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
> >
> > Dear reader, Mr. Blair is insulting your intelligence. His post only
> >>has whatever minute particle of sense it has if you don't click
> >>through and read that article.
> >
> >> "For the past 30 years productivity has grown well ahead of
> >> compensation. This is so for both average and median pay levels.
> >> Since 1973, productivity has grown by over 70 percent. Median and
> >> average pay have grown by, respectively, 13 and 38 percent."
> >> -- Max Sawicky
> >
> > Hi,
> >
> > I am not questioning the fact that wages/compensation has increased at
> > a slower rate than productivity.
>
> I don't think you understand the point being made, Blair. More
> likely you do understand it but insist on blowing a bunch of smoke
> up everybody's skirts. The point is not a shift from wages to
> _real_ interest.

Hi,

The article says nothing about _real_interest, but does discuss the shift of
GDP from "wages" to "profits".

Note

"Not surprisingly, less wage growth has been
accompanied by more profit growth."

Also note

"We are talking long-term trends here that do
not depend on recent history or the current regime,
so much as the chronic disadvantage workers have
had vis-à-vis employers"


>.....That is certainly to be expected when _real_
> capital development takes place.

Er, yes, that was my point. And to apply your logic, doesn't the fact that
productivity has continued to increase indicate that what you call
"_real_capital development" HAS been taking place during the last 30 years?


>.....The issue being discussed is
> the distribution of this interest and, more importantly the drag
> of economic rent being collected by the upper income segment
> of the economy.


I say two issues were raised: the shift of GPD from return to labor (wages)
to return to capital (profits). AND the increased spread in wages. I did
not address that aspect of the article.

>
> > I am offering an explanation of why
> > that would be expected to happen. More people today derive relatively
> > more of their income from investments (interest, dividends, pensions,
> > IRA's, 401K's etc.) than in the past when there were fewer retired
> > relative to active workers.
>
> First we have a small grain of truth among the overall distortion.

Distortion?
>
> > Another way to view this--or perhaps another explanation-- is that
> > today there is more capital invested per job than in the past.
> > For example when earth moving was done by shovel and wheelbarrows, the
> > capital per worker was maybe a few hundred dollars. But when giant back
> > hoes, trucks and catapillers are used, the capital invested is tens of
> > thousands of dollars per worker. The more capital used, the higher the
> > fraction of the total income derived from the effort goes to pay for
> > the capital, and the less for wages.

Trucker:
>
> But while that is the case you seem unable to see that true _interest_
> (the return to capital) is actually shared between the creator of
> the capital and the user of the capital.

??? The "return to the user of the capital (tools)" is called "wages". The
"return to the creater of the capital" is called variously "interest",
dividends", or sometimes "profits", but that last is misleading in my
opinion.


>....The return to labor is wages
> by definition and thus the _real_ interest awarded the worker
> SHOULD show up as wages in the way that YOU and other
> economists want to measure everything.

??? The only way that a "worker" would collect interest (_real_interest?)
is if the "worker" were also an owner of capital. Which many are today.

>....But wages are per hour
> and not per unit output.

Yes.

>....With all that capital in the mix the work
> week should have shrunk to 3 days with the middle
> class doing quite well thank you very much.

The work week could have (I don't say SHOULD have) shrunk IF workers were
satisfied to see the rewards from increased productivity result in less time
spend working instead of increased total wages. I add that this was the
case for ME. MY "work week" (annual hours spent working) did decrease
because I quit (and avoided taking ) higher paying jobs, and instead took
lower pay in exchange for more leisure time.

>
> > Of course the increased
> > productivity cited in the article is BECAUSE of the greater investment
> > in capital, and while the wages are lower relative to payments to
> > capital, they are higher in absolute terms --ie. in inflation corrected
> > "constant dollars".
>
> And again, that is not the point being presented. This is not a
> discussion about aggregate wages.

??? It isn't? See the graph.

>.... It is a discussion about
> average wages and mean wages and about how all the increase
> (and the interest) have been taken by the top 5% and the middle
> class is sucking wind.
>
> And "capital" is not paid. Only people are paid.

??? But people who buy bonds are paid interest, and people who buy stocks
are paid dividends.

> When we speak of wages there is absolutely no confusion in
> that the supplier is a person. Your use of the word
> "capital" implies that something other than labor is the source
> of all the "equipment" you want to use as an example.

??? The people who built the tools were paid wages.
>
> And as usual you are full of Republican crap.
>
> http://GreaterVoice.org/econ/credit.php
>
> This payment to "capital" is rightfully a payment to the
> labor that builds the capital.

???

>...We simplhy have people
> building backhoes instead of shovels and the people
> using the backhoes should be spending a lot more
> time in a boat on the lake.

??? Which is what I plan to be doing as soon as the weather here warms up
;-)
>
> There is another area of "capital" which has to do with
> new technology and risk. But that is again not germane.
>
>


,,,,,,,
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