If the liberal myth that employer profits increase when labor is cheap were true...

[Axulus]

Then there would be evidence that companies that have to hire (primarily) more expensive labor (professionals, college educated workers, etc.) would have lower profit margins. Is there any evidence of this whatsoever?

 

[Nice Squirrel]

Then there would be evidence that companies that have to hire (primarily) more expensive labor (professionals, college educated workers, etc.) would have lower profit margins.

Logic fail.

 

[bilby]

Then there would be evidence that companies that have to hire (primarily) more expensive labor (professionals, college educated workers, etc.) would have lower profit margins. Is there any evidence of this whatsoever?

Oh come on.

Surely even you can see that you have used two completely different meanings of 'more expensive' here.

If a company 'has to' hire professionals, then those that hire more expensive professionals will have lower profit margins than those that hire less expensive professionals, with equal abilities.

A less qualified employee may be less expensive as well as less able, but it isn't his wage rate that is the only important difference, is it?

 

[Axulus]

Then there would be evidence that companies that have to hire (primarily) more expensive labor (professionals, college educated workers, etc.) would have lower profit margins. Is there any evidence of this whatsoever?

Oh come on.

Surely even you can see that you have used two completely different meanings of 'more expensive' here.

If a company 'has to' hire professionals, then those that hire more expensive professionals will have lower profit margins than those that hire less expensive professionals, with equal abilities.

A less qualified employee may be less expensive as well as less able, but it isn't his wage rate that is the only important difference, is it?

No, you need to explain it to me. The real wage rates of high end, experienced professionals, such as engineers, has sky rocketed over the last 50 years. Are the companies that hire them bleeding profits? Was 50 or 60 years ago the golden era for profits for companies that hired such engineers?

Additionally, if abilities matter, then what are the abilities of a low-skilled/unskilled laborer? At what point does the wage exceed their abilities?

 

[Nice Squirrel]

I take it all companies are in the exact same business in this universe?

 

[Axulus]

I take it all companies are in the exact same business in this universe?

I'm asking for evidence, using whatever apples to apples criteria you want to use, that lower wages leads to higher profit margins. Do companies in the south with their lower wages have higher profit margins than companies in the north east with their comparatively higher wages, in the same industry? Do profit margins increase when unemployment is high and the price of labor drops as a result (a common liberal myth that businesses want a large pool of unemployed people they can utilize as cheap labor, because higher profits). Are Chinese companies raking in the dough with their much cheaper labor, and thus have much higher profit margins than US companies? Evidence please.

 

[J842P]

I take it all companies are in the exact same business in this universe?

I'm asking for evidence, using whatever apples to apples criteria you want to use, that lower wages leads to higher profit margins. Do companies in the south with their lower wages have higher profit margins than companies in the north east with their comparatively higher wages, in the same industry? Evidence please.

Um, I think the claim is that, ceteris paribus, lower wages will increase profits, and that seems to be a straightforward implication.

The problem is, you haven't really cited any liberal sources, so I don't really have any idea what you are talking about.

 

[Axulus]

I'm asking for evidence, using whatever apples to apples criteria you want to use, that lower wages leads to higher profit margins. Do companies in the south with their lower wages have higher profit margins than companies in the north east with their comparatively higher wages, in the same industry? Evidence please.

Um, I think the claim is that, ceteris paribus, lower wages will increase profits, and that seems to be a straightforward implication.

The problem is, you haven't really cited any liberal sources, so I don't really have any idea what you are talking about.

I'm citing the common liberal platitudes expressed constantly on this board.

Also, why would anyone assume ceteris paribus (which would mean prices of products don't change when underlying costs change) in a dynamic and competitive economy?

 

[Axulus]

The Reagan era, deregulate, lower taxes, and cheap wages, supposedly the golden era for businesses to get rich, seems to have been a pretty horrible time for corporate profitability. The high tax 60's, the era of the American worker where supposedly one blue collar worker could support the family with a stay at home mom, was a great era for corporate profitability. Hmmm, the things liberals keep telling me just aren't adding up.

 

[Horatio Parker]

The central finding of this report is that the majority of America’s lowest-paid workers are employed by large corporations, not small businesses, and that most of the largest low-wage employers have recovered from the recession and are in a strong financial position.

The majority (66 percent) of low-wage workers are not employed by small businesses, but rather by large corporations with over 100 employees;

The 50 largest employers of low-wage workers have largely recovered from the recession and most are in strong financial positions: 92 percent were profitable last year; 78 percent have been profitable for the last three years; 75 percent have higher revenues now than before the recession; 73 percent have higher cash holdings; and 63 percent have higher operating margins (a measure of profitability).

Top executive compensation averaged $9.4 million last year at these firms, and they have returned $174.8 billion to shareholders in dividends or share buybacks over the past five years.

 

[Axulus]

The central finding of this report is that the majority of America’s lowest-paid workers are employed by large corporations, not small businesses, and that most of the largest low-wage employers have recovered from the recession and are in a strong financial position.

The majority (66 percent) of low-wage workers are not employed by small businesses, but rather by large corporations with over 100 employees;

The 50 largest employers of low-wage workers have largely recovered from the recession and most are in strong financial positions: 92 percent were profitable last year; 78 percent have been profitable for the last three years; 75 percent have higher revenues now than before the recession; 73 percent have higher cash holdings; and 63 percent have higher operating margins (a measure of profitability).

Top executive compensation averaged $9.4 million last year at these firms, and they have returned $174.8 billion to shareholders in dividends or share buybacks over the past five years.

How do these numbers compare to when wages are higher vs. lower? Are the low wages areas in the south in stronger financial positions compared to the higher wage northeast for companies in the same industries? How has the financial position of companies compared over time with changes in real wages for their industry?

 

[bilby]

Oh come on.

Surely even you can see that you have used two completely different meanings of 'more expensive' here.

If a company 'has to' hire professionals, then those that hire more expensive professionals will have lower profit margins than those that hire less expensive professionals, with equal abilities.

A less qualified employee may be less expensive as well as less able, but it isn't his wage rate that is the only important difference, is it?

No, you need to explain it to me.

I just did.

The real wage rates of high end, experienced professionals, such as engineers, has sky rocketed over the last 50 years.

If you say so. Unless that is the ONLY thing that has changed in the last 50 years, that is a meaningless factoid though.

Are the companies that hire them bleeding profits? Was 50 or 60 years ago the golden era for profits for companies that hired such engineers?

I don't see any reason to imagine so.

Additionally, if abilities matter, then what are the abilities of a low-skilled/unskilled laborer? At what point does the wage exceed their abilities?

If a company 'has to' hire professionals, then those that hire more expensive professionals will have lower profit margins than those that hire less expensive professionals, with equal abilities.

As soon as abilities vary, the correlation is no longer to be expected - if a bunch of other stuff changes, there is no reason to expect the effect of wages on profits to swamp all other influences.

If someone is genuinely unable to do work that generates enough to pay his wages, then he is unemployable. Societies always contain unemployable people - children, the sick, the infirm, the elderly, and the stupid. In a compassionate and wealthy society, we look after those people, without expecting them to work.

I seriously doubt that the majority of the unemployed are unemployable; but if they are, then it would be callous and unfair to expect them to work.

Of course, it is also callous and unfair to structure the economy to provide higher profits for the wealthy, rather than providing higher wages for the poor, and reasonably paid work for all who are able to do it.

 

[J842P]

Um, I think the claim is that, ceteris paribus, lower wages will increase profits, and that seems to be a straightforward implication.

The problem is, you haven't really cited any liberal sources, so I don't really have any idea what you are talking about.

I'm citing the common liberal platitudes expressed constantly on this board.

Also, why would anyone assume ceteris paribus (which would mean prices of products don't change when underlying costs change) in a dynamic and competitive economy?

I don't know. Like I said, I am not familiar with this platitude in particular, at least not in the form you are describing it. I was just trying to give a generous explanation for what these hypothetical liberals are saying (since again, I'm not quite sure of what you are talking about).

I've heard American liberals say that employers will do everything they can to get away with paying their employees as little as possible.

Additionally, it is part of the American Liberal/Progressive narrative to emphasize the disparity of relative income. Recently, the American left has also begun emphasizing the amount of net income that American businesses owners can make, particularly large corporations.

I do not believe that either of those two platitudes are exactly what you are describing.

 

[Axulus]

Of course, it is also callous and unfair to structure the economy to provide higher profits for the wealthy, rather than providing higher wages for the poor, and reasonably paid work for all who are able to do it.

This is what I am asking you to demonstrate. Please show any evidence whatsoever that the profits of the wealthy will be impacted (with more than a temporary blip) when "higher wages for the poor" are provided. This is really a statement that profit margins will permanently decline when wages increase (as opposed to what economic theory predicts - profits will decline temporarily but revert back to the mean as adjustments are made to the new cost reality). This is the liberal myth I am challenging when I started this thread.

 

[bilby]

Of course, it is also callous and unfair to structure the economy to provide higher profits for the wealthy, rather than providing higher wages for the poor, and reasonably paid work for all who are able to do it.

This is what I am asking you to demonstrate. Please show any evidence whatsoever that the profits of the wealthy will be impacted (with more than a temporary blip) when "higher wages for the poor" are provided. This is really a statement that profit margins will permanently decline when wages increase (as opposed to what economic theory predicts - profits will decline temporarily but revert back to the mean as adjustments are made to the new cost reality). This is the liberal myth I am challenging when I started this thread.

Well if that is what you are challenging, go ahead; but I am not aware of anyone making the argument you describe, so it seems a bit pointless.

You might as well challenge the liberal myth that the Earth is flat. I am sure that there is a liberal somewhere who thinks it is flat; but that is not a mainstream position as far as I am aware, so perhaps some evidence that there are liberals who believe it would be a good starting point. Debunking a myth that almost no one subscribes to seems like a waste of time to me.

It is obvious that there is an immediate term impact; as far as I know, nobody is suggesting that there is a long term one.

 

[Duke Leto]

The Reagan Era also had double digit nominal and real interest rates. That's a minor detail you're glossing over.

That corporate profits would be at a nadir when the cost of capital was exorbitant ain't all that surprising.

As to your "Liberal Myth", it looks more to me like a "Liberal Strawman" of your own imagining. I'm pretty clearly a Liberal and I'm a believer in "Bubble-Up econ" where rising real wages for the working class don't negatively impact corporate profits because it expands the number and financial resources of their customers.

It may result in or result from lower real interest rates powered by "financial repression", government deficits closed up by redistributive taxes on high incomes and capital, but that's another can of worms.

 

[Toni]

Then there would be evidence that companies that have to hire (primarily) more expensive labor (professionals, college educated workers, etc.) would have lower profit margins. Is there any evidence of this whatsoever?

I thought this was a conservative myth/policy, given all the moaning and groaning about raising the minimum wage.

 

[AthenaAwakened]

Well you know, if one cardiologist makes $500,000 a year, that disproves there is any problem with CNAs making 7.25 an hour and only 28 hours a week.

 

[Nice Squirrel]

I take it all companies are in the exact same business in this universe?

I'm asking for evidence, using whatever apples to apples criteria you want to use, that lower wages leads to higher profit margins.

Great, then I can cherry pick my data and extrapolate it to fit the entire market. This is going to be such a useful discussion. Let's look at tachonite production.

Do companies in the south with their lower wages have higher profit margins than companies in the north east with their comparatively higher wages, in the same industry?....Are Chinese companies raking in the dough with their much cheaper labor, and thus have much higher profit margins than US companies? Evidence please.

Very good. Because access to markets, supply chains and brand recognition play no role in profitability.

 

[laughing dog]

Then there would be evidence that companies that have to hire (primarily) more expensive labor (professionals, college educated workers, etc.) would have lower profit margins. Is there any evidence of this whatsoever?

Are you asking is there any evidence that firms in the same industry with a higher share of more expensive labor than firms in the industry with a lower share have lower profit margins?