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

[jonatha]

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

I'm a high end, experienced professional software engineer.

$30K in 1985 deflator 57.74 normalized $52K

$130K (annualized) when I volunteered to be fired in 2011 deflator 103.92 normalized $126K

2.42x increase in 26 years is 3.5% per year.

For comparision, average CEO pay (in constant 2007 dollars) went from $2.2M in 1989 to 12.8M in 2008, a 5.82x increase in 19 years, or 9,7% per year.

For the "real wages of high end, experienced professionals, such as engineers" to have "sky rocketed" at the same rate, I would have needed to have been making $333K when I left.

Perhaps you should change your verb to "paper airplaned" or something....

 

[untermensche]

I don't think this is what anybody is saying. A huge strawman thread.

People are saying that corporations are making record profits but only some workers in those corporations are sharing in those profits.

The profits are because of the work of everybody in the corporation, not just the few with power taking every gain in profits for themselves.

 

[Jimmy Higgins]

There is a minor issue here. We aren't just talking wages, but size of staff too. You may be paying people $100k a piece, but if you are bleeding your staff to commit to 150 to 200% production, you are effectively paying them less. This is currently what we are seeing in the US today. Many fewer people are producing a boatload more work.

 

[Nice Squirrel]

There is a minor issue here. We aren't just talking wages, but size of staff too. You may be paying people $100k a piece, but if you are bleeding your staff to commit to 150 to 200% production, you are effectively paying them less. This is currently what we are seeing in the US today. Many fewer people are producing a boatload more work.

And you also have what we have going on here: the push to eliminate essential low level employees while hiring and increasing the pay of top level administrators whose function is questionable. The Wall Street Journal ask our organization what is a "Vice President of to be Named Later:?

 

[Jimmy Higgins]

It should be noted that this applies to both salary and hourly workers who are exempt from time and a half overtime. When a salary person works 150 to 200%, they don't get squat, so that is uber bonus for management. When an hourly worker works overtime, while the worker gets paid their hourly wage, the company is no longer trying to pay for the worker's overhead (health care, benefits, etc...). So that is beaucoup dollars as well.

 

[Nice Squirrel]

It should be noted that this applies to both salary and hourly workers who are exempt from time and a half overtime. When a salary person works 150 to 200%, they don't get squat, so that is uber bonus for management. When an hourly worker works overtime, while the worker gets paid their hourly wage, the company is no longer trying to pay for the worker's overhead (health care, benefits, etc...). So that is beaucoup dollars as well.

I had a college job where I figured out that the salaried managers were actually making less per hour than the grunts.

 

[Jimmy Higgins]

It should be noted that this applies to both salary and hourly workers who are exempt from time and a half overtime. When a salary person works 150 to 200%, they don't get squat, so that is uber bonus for management. When an hourly worker works overtime, while the worker gets paid their hourly wage, the company is no longer trying to pay for the worker's overhead (health care, benefits, etc...). So that is beaucoup dollars as well.

I had a college job where I figured out that the salaried managers were actually making less per hour than the grunts.

To keep in mind, the management generally doesn't generate revenue. Their benefit to the company is to ensure competitiveness and consistency in production and to make clients happy. So they can positively or negatively affect the bottom line, but in general, their salaries are paid by the work of the grunts. So they should be grateful.

 

[untermensche]

There is a minor issue here. We aren't just talking wages, but size of staff too. You may be paying people $100k a piece, but if you are bleeding your staff to commit to 150 to 200% production, you are effectively paying them less. This is currently what we are seeing in the US today. Many fewer people are producing a boatload more work.

These people are given freedom because other people are doing other things within the organization that need doing. Moving things, fixing things, building things, cleaning things, etc.

The people providing the freedom so that some can exclusively do a certain task are worth more, that freedom is worth more, if it allows for greater productivity.

The question remains; Why are some giving all to a small part of the workforce and giving the majority of the workforce nothing when profits rise?

 

[Nice Squirrel]

 

[doubtingt]

So let me get this straight. The OP is denying the fact mathematical fact that our costs are lower relative to the price you charge for goods, the more profit you'll make?

I assume the also denies that (10 - 5) > (10 - 7).


The fact that owners can and often do make higher profits by keeping salaries low does not mean that it isn't possible to make profits with higher salaries. The latter just often requires a different kind of business model. What the example companies that the OP presents actually show is the falseness of the conservative/"libertarian" myth that mandatory wage hikes will destroy the economy. Yes, such business models often require higher consumer prices for the goods, but the evidence shows that this inflation is a fraction of the increase in wages, such that net wages are still much higher for the low end and about the same for the mid-range.

 

[HaRaAYaH]

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?

This may be the dumbest statement I have ever seen on line. You are clueless about business. There are many factors that determine what profit a business makes. Let's take three large companies:

Apple Computer: Gross Sales 170 billion - Cost of Goods Sold 106 billion = Gross Profit 64 billion (38%)

Microsoft: Gross Sales Gross Sales 86 billion - Cost of Goods Sold 27 billion = Gross Profit 59 billion (69%)

CVS Caremark: Gross Sales 126 billion - Cost of Goods Sold 102 billion = Gross Profit 24 billion (19%)

Aside from high paid executives, CVS pays more money for Pharmacists (all over 100K) than MS or Apple pay for programmers and engineers. The tech companies can afford to pay more as they have more profit to work with. So as you see gross margin is really more important.

Now as to your direct statement. I have two words, BS. If you have to companies that make widgets and all things being equal, the one with the lower labor costs (assuming the lower costs do not impact the quality of the widgets which would effect sales) would make more net income.

 

[DBT]

Why would a business move production to a developing country, where labour is cheap, if not to take advantage of the lower cost of production provided by cheap and plentiful labour?

 

[RavenSky]

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.

You haven't actually "cited" anything whatsoever. Please cite and link the source so that we may read it in its original.

 

[Toni]

Why would a business move production to a developing country, where labour is cheap, if not to take advantage of the lower cost of production provided by cheap and plentiful labour?

Don't forget more lax worker protection and more lax emvironmental protection on developing countries.

 

[Deepak]

If you take a company that's profitable and change all of its employees wages to $1 trillion an hour would that company still be profitable?

Ipso fatso this thread is terrible and the point it attempts to make inscrutable.

 

[untermensche]

If you take a company that's profitable and change all of its employees wages to $1 trillion an hour would that company still be profitable?

Ipso fatso this thread is terrible and the point it attempts to make inscrutable.

Actually there are some who will soon tell us some people are worth a trillion dollars an hour.

 

[Deepak]

If you take a company that's profitable and change all of its employees wages to $1 trillion an hour would that company still be profitable?

Ipso fatso this thread is terrible and the point it attempts to make inscrutable.

Actually there are some who will soon tell us some people are worth a trillion dollars an hour.

 

[Loren Pechtel]

Why would a business move production to a developing country, where labour is cheap, if not to take advantage of the lower cost of production provided by cheap and plentiful labour?

My former employer was looking at moving production to Mexico. Not for wage reasons but because of EPA bullshit. They were making life miserable for us because we had done too good a job of reducing emissions and thus couldn't continue to improve. They kept holding up as an example a competitor that was actually just faking the reports. We told them so, it didn't matter. (It took about a decade for the EPA to finally figure out the reports were faked.)

 

[DBT]

Why would a business move production to a developing country, where labour is cheap, if not to take advantage of the lower cost of production provided by cheap and plentiful labour?

My former employer was looking at moving production to Mexico. Not for wage reasons but because of EPA bullshit. They were making life miserable for us because we had done too good a job of reducing emissions and thus couldn't continue to improve. They kept holding up as an example a competitor that was actually just faking the reports. We told them so, it didn't matter. (It took about a decade for the EPA to finally figure out the reports were faked.)

That's unfortunate. Maybe not your company, but there probably are firms that take advantage of substandard EPA regulations in developing nations in order to set up cheap and dirty production lines, including the use of cheap labour.

 

[Loren Pechtel]

My former employer was looking at moving production to Mexico. Not for wage reasons but because of EPA bullshit. They were making life miserable for us because we had done too good a job of reducing emissions and thus couldn't continue to improve. They kept holding up as an example a competitor that was actually just faking the reports. We told them so, it didn't matter. (It took about a decade for the EPA to finally figure out the reports were faked.)

That's unfortunate. Maybe not your company, but there probably are firms that take advantage of substandard EPA regulations in developing nations in order to set up cheap and dirty production lines, including the use of cheap labour.

We never moved, the logistical problems would have been too great.

(And note that the faker probably fared better than we did--it certainly looks like the fines they got, while hefty, were less than our compliance costs.)