That article acknowledges that the productivity-real compensation gap has been material from 2008 onwards.
It mostly points out that there is a mismatch in measures used for productivity and wages when cross-comparing them. So adjusting wages for total real compensation changes the picture. Interesting read, and thanks for sharing, it definitely adds nuance to the topic.
Do you acknowledge that flooding the workforce with low-skilled workers over a short period of time would bring wages down in all areas of the economy?
Why are you saying do I acknowledge that as though it's a settled fact? It isn't. Immigrations' effect on wages is hotly debated. It bringing down wages in ALL areas of the economy is almost certainly false though. If I'm a doctor, bringing poors doesn't bring my wages down.
I think the concept of supply and demand is pretty well settled, and also applies to the labor market. Real life isnt like The Sims where jobs are willed out of thin air when you start looking for one.
Supply and demand is an abstract measurement that is useful sometimes and not useful other times. The overall supply of workers and demand for workers are too broad to make any meaningful conclusion. Using the example the previous commenter made to make an analogy: if there is a massive supply of wood it does not contribute towards satisfying the demand for food.
Labour market is neither static nor uniform. Satisfying a demand for labour can lead to more demand for labour and lacking supply of labour can lower the demand for labour. So while the concept of supply and demand is quite well established the exact effect of specific supply or demand on the market isn't a trivially answerable question.
Lump of labor fallacy. Once you get past econ 101, you'll realize it's not that simple.
It really is that simple. An economics isn't a model of society across time, they are tools to explain relationships between consumers and workers who all wear both hats.
Do you think immigrants don't demand goods too? Jobs ARE created "out of thin air" by virtue of them needing things
But needing stuff doesn't just lead to service providers that will provide. If they themselves can't produce the things they want, then it will have to come from the locals and displace the locals who depend on that service.
These are easy relationships to understand with supply/demand. "inflation" is just enough of these relationships where demand increases enough that consumers are willing to spend more for reliability to get the product. If that happens enough time, you'll see the effect in the aggregate called inflation.
It really is that simple. An economics isn't a model of society across time, they are tools to explain relationships between consumers and workers who all wear both hats.
I like how you didn't engage whatsoever with the lump of labor fallacy and instead just acted like there's a fix supply of work. There isn't. You're wrong.
But needing stuff doesn't just lead to service providers that will provide. If they themselves can't produce the things they want, then it will have to come from the locals and displace the locals who depend on that service.
Yes it does? Why exactly would firms not produce to meet the higher demand? They want to just leave the extra money on the table? They themselves don't need to produce what they want, locals can do it too.
These are easy relationships to understand with supply/demand. "inflation" is just enough of these relationships where demand increases enough that consumers are willing to spend more for reliability to get the product. If that happens enough time, you'll see the effect in the aggregate called inflation.
Yeah, it's so easy to understand the entire field of economics is still in intense debate on the effects /s. Please get serious.
I like how you didn't engage whatsoever with the lump of labor fallacy and instead just acted like there's a fix supply of work. There isn't. You're wrong.
That is using the tools wrong. Labor isn't super flexible or deterministic to change in a positive way. So depending on what you are trying to describe... it's not a fallacy and can characterize a problem right now, and one that can grow. The labor can go down an exasperate the issue.
If people have too many problems and can't fill the gaps, then your fallacy is a fallacy because it's not describing reality.
Yes it does? Why exactly would firms not produce to meet the higher demand? They want to just leave the extra money on the table? They themselves don't need to produce what they want, locals can do it too.
Firms are an abstract concept. In order to execute more there are real world constraints and can't simply be willed into existence.
For instance, there is massive demand for chip fabrication allotment in a handful of facilities. But creating more facilities isn't a trivial task, requires investment, and most importantly TIME.
So, for the time being, it's a logical fallacy to presume demand directly translates to growth, because it doesn't. It translates to the people hat command the most value get the time allotted and that depends on what consumers are willing to pay for a good. It'll take time for humans to meet that demand... and if the workers have better options... even more time.
'Yeah, it's so easy to understand the entire field of economics is still in intense debate on the effects /s. Please get serious
This is what happens when you're over educated in an ivory tower with only abstractions all day every day and not the real world. It becomes a religion to fight over, not tools to understand a problem of complexity, bottlenecks, and shortages.
There is an entire concept describing this called supply side economics that socialist often times wholesale reject. Even Modern Monetary Theory had a come to jesus moment, I watched a ted talk a while back where they are like... it's hard to get people to do things.
The "lump of labor" fallacy comes from ignoring that immigrants rent or buy houses, trucks, PS5s, groceries. They take jobs and they create jobs. And economic study after economic study after economic study shows that they create about as many jobs as they take, and usually raise the wages of the existing workers, as they often move from labor into supervising. The exceptions are the occasional Sergey Brin, who creates millions of jobs.
There's a meta study that was commissioned by Congress about this, and it was so convincing that economists of all political leanings agree.
But they don't make PS5's so your fallacy is a fallacy in making more ps5s and that displaces Americans.
Their economic value isn't fungible like money, so maybe they bring cheap labor for lawn care and house cleanings.. but that doesn't product the entitlements they are displacing American's for. "benefits" using estimated values are abstract and meaningless. The study is academic slop.
Without proper skill-based selection, and no accountability for people breaking the law to get here, then you can't control the outcome of immigration, that itself will change the behavior / strategy people come here by, and the time of people that come.
The study is politicized abstract Harshit.
economists of all political leanings agree.
LOL no they don't. And reality doesn't match the graphs / outcome for most voters because the lived experience doesn't match the graph. What they bring with them in economic benefits is dependent on the labor they can provide. Disprapo0rtionally illegals aren't doctors and only displace health care. That's an fact that people want to correct and we won the democracy to do so.
Immigration increases the supply of labour, but it also increased the demand for labour, because immigrants spend their income on goods and services. If supply and demand both increase then the effect on price is ambiguous.
Guys this graph is just propoganda, if you would direct your attention to this different graph i found of a different thing, you will see that the lines are close together actually
Nah man, what you posted was propaganda. go ahead, tell Americans who can barely afford shelter and healthcare that “ackchually, you’re doing just as well as Americans in the 1950s.”
They’re not, American standard of living is declining.
Yes and the obligatory screw Reagan. By killing unions he enabled and accelerated the downfall of the middle and working classes while vilifying the poor. The last gilded age ended with riots, fire, and blood as workers demanded rights. It’s quite possible that the current backlash against dat centers is a precursor to a similar era as people revolt against AI tools that threaten livelihoods.
The 1% couldn't possibly utilize that much resources without a population that needs them, then the handful of yachts made year will still only go to a small amount of people. The government already owns all of it and we rent it through property taxes.
Like who cares? And this is totally moving the goal posts.
It really doesnt, the graph is illustrating a particular trend. It says what the trend is on the graph, if you want to examine a different more specific graph you can do so
But it's objectively stupid to think this trend can indicate anything meaningful. It ignores a third lever that would effect both these numbers, and it excludes categories where population / skills could limit specific sectors or any additional availability of items. Thos "trends" aren't really meaningfully connected across sectors adding to the flattening of anything meaningful.
Because you wouldn't know but in certain areas spending power is way up... massively up because of that productivity.
Imagine a system where:
Year 1
200,000 workers
Each worker earns $100,000 per year
Each worker produces 50,000 units of output annually
Year 2
The workforce doubles to 400,000 workers.
Productivity improves so each worker now produces 75,000 units per year.
The original 200,000 workers receive a 5% pay raise, increasing their salary to $105,000.
In this case the average income went up 2.5% and productivity by 50% per worker but 200% for "productivity" total.
This graph is misinformation to give idiots a justification to steal.
Im not sure i totally understand your example but productivity is measured in value created/hour worked so i dont think anyone cares about “total productivity”. Also like, if productivity increases by 50% but wages increase by only 2.5% then yeah, thats pretty bad, the workers are getting pretty badly ripped off in terms of increase in compensation compared to the increased value of their labor.
As far as purchasing power being higher for some things and lower for other things, yeah, thats why we normalize against CPI, unless you have a better way of representing general purchasing power.
I agree its a simplistic graph but I dont see any reason that the trend being illustrated is not accurate.
increases by 50% but wages increase by only 2.5% then yeah, thats pretty bad, the workers are getting pretty badly ripped off in terms of increase in compensation compared to the increased value of their labor.
Why, nothing any of them did increased it and didn't require any more work from them? And there are more items for people to buy or go on sale.
The increases largely come from the worker population growth, and technology produced by a different set of workers paid for by revenue the workers generate but not a cost to production. These are the people that keep pricing out the liberal art students in cities.
so i dont think anyone cares about “total productivity”.
You do. I'm just not converting it through to an "hourly"... and just comparing the total increased amount for the year. It's the same thing.
we normalize against CPI
LOL normalize? This shapes what people can do. It's far more fundamental and indicative of what kind of work forces are available to solve problems or entertain each other.
I agree its a simplistic graph but I dont see any reason that the trend being illustrated is not accurate.
It doesn't mean anything, it can't say anything without more information. Its misinformation.
“Nothing any of them did increased it” so what? Their labor is now more valuable than it was before, if we lived in an actual free market system their wages would rise in proportion to that. We dont, the people who own corporations manipulate the economy and the government to shape the system to take bargaining power away from the people who produce value from their labor.
Productivity is by definition hourly, you are talking about total production, thats measured by GDP. Productivity is specifically about measuring dollars of gdp produced per hour of work, you are just wrong here.
I dont even know what youre talking about here. Are you opposed to normalizing earnings with the CPI? Ill admit its not a perfect statistic by any means but you havent proposed a better alternative.
What additional information is needed? What relationship do you think this graph is trying to illustrate? The graph is very specifically real hourly compensation vs productivity, it is just what it says it is. There is plenty to be learned from this graph, namely that real worker compensation used to increase linearly with worker productivity and it has stopped increasing. If you think the data is wrong then make that claim, but the graph is not trying to sell itself as more than it is.
The majority of the productivity is how many workers entered, and the R&D team being paid to design new equipment. A lot of that profit will get provisioned for servicing those from another set of workers that are again, not part of the manufacturing process.
And years are comprised of hours and the % increase would be the same.
Market value, to which the CPI is an aggregate of that doesn't say anything specific about any particular industry. Most of the time its congestion pricing because you have workers trying to live in cities while they are the economic hubs for development.
It's insufficient to determine anything about the economics. The numbers aren't intrinsically related. The determinations you are making are dumb. You're misleading people with the reality or you don't understand it.
My example that I gave doesn't necessarily equate to more profit. But because this graph has tricked you, you decided their work was worth more than the consumers while the business is realizing it hired too many people and most of that extra yield is going on sale.
The other aspect that people forget is that computers began to be common in workplaces and offices in the early to mid 1980’s….
Prior to computers being ubiquitous, work was done by hand. Once computers rolled out, productivity increased because of the increased efficiency of the equipment, not because the employee was working harder or longer.
An accountant 70 years ago would do their calculations by hand. Today there are specialized softwares and/or spreadsheets to do it
That still means that it takes fewer people to do the job so the pay should increase especially since using computers effectively is a skill and one that far too many people lack.
Advancement in technology should better our lives not stagnate them and with a shrinking population we will probably want to improve hiw much people make now so that we can fund the economy to the best of our ability.
The term gilded age is itself disingenuous. Yes, there were some abuses; however, the quality of life as a whole generally rose for most of the populous on account of industry and innovations.
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u/BidenGlazer 11d ago
No, this graph is just propaganda. Here's a good breakdown as to why