Why isn't the "Economic Recovery" increasing workers' pay?

[SimpleDon]

Yes, the corporations hold monopsony power over employees.

Should those of us who know what the word "monopsony" means assume you meant to say "the corporation" and forge ahead, or should we assume it's just a bunch of babble from someone who doesn't understand what a monopsony is?

I certainly understand what the word means, it means that there is only one buyer in a market, i.e. in this case of labor. There are many more workers than there are corporations in a labor market.

When you accuse someone of babbling it the accusation shouldn't be babble itself. I meant to say what I said, not substituting "the corporation" for the word "monopsony" or whatever you thought you were saying but didn't.

If I was to try to improve the sentence I would add the qualification that corporations hold monopsony-like power over employees.

In the current economy,

• There can never be a true labor market, where wages increase or decrease based on the supply and demand for the labor.
• To the extent that the supply and demand for labor do set wage rates, albeit imperfectly, it is for new hires, not for the existing workers.
• Businesses hire employees when they have work for the new employees.
• Businesses won't hire more people because wages are lower, they don't fire people when wages go up.
• Labor is not a commodity, it is not consumed.
• Wages are much more critical to the economy than are the prices of consumer goods and services or the availability of financial capital.
• Wages provide the money to purchase needed and wanted goods and services.
• Wages provide the demand for goods and services in the economy.

At least you didn't find anything else to complain about in the rest of my post.

 

[Loren Pechtel]

Payroll means compensation which includes those things.

Payroll does not include worker's comp.

Those are not costs of employees. Duh.

http://web.mit.edu/e-club/hadzima/how-much-does-an-employee-cost.html

I gave you a list of the problems.

No, you gave me a list driven by ignorance and nonsense. You don't even understand the basic terms (like payroll)

Some people apply "payroll" to the employer portion of FICA. I've never heard of it being applied to the others.

You made a vague attempt to address one of them and ignored the rest--so now you call it babbling to avoid addressing the issue.

Naw, that is your MO.

This is simple. The evidence in question is the study of sales lost from the non-replacement of a worker who dies. Unless you are arguing that the employers are killing these workers, these workers would presumably be helping the firm earn a profit (otherwise, they would have been laid off or fired) which means sales exceeded all costs including the opportunity costs (which included a required rate of return). Hence your entire response is based on either pure ignorance or irrelevancies.

The issue was that the research I quoted was using this as an indication of monopsony. However, if it doesn't occur the business is in serious trouble. Thus his indication is utterly useless. I don't care what his reputation is.

 

[laughing dog]

Payroll does not include worker's comp.

Wrong.

http://web.mit.edu/e-club/hadzima/how-much-does-an-employee-cost.html

Sorry, facilities are not a cost of an employee.

Some people apply "payroll" to the employer portion of FICA. I've never heard of it being applied to the others.

Educate yourself.

The issue was that the research I quoted was using this as an indication of monopsony. However, if it doesn't occur the business is in serious trouble. Thus his indication is utterly useless.

No, it is not useless because you don't like it. Whether or not the business is in trouble is irrelevant - either the dead employee was contributing to its profits or he/she was not. And his measure is an indication which is not the same thing as proof.

I don't care what his reputation is.

The point was and is that it is way more likely that Alan Krueger knows what he is writing about in this case than you. Given that you did not know that a non-compete clause in a labor contract was restricting the supply of labor or what "payroll" includes, there is much more evidence to support my observation than your biased views.

 

[coloradoatheist]

huh ld? Office space is a cost to an employee, along with IT costs, training, and other costs depending on what position it is. Using sales change minus payroll change can only give you a rough estimate which could be used to compare time frames or across industries to compare overhead between them. But you wouldn't use it to see if an employee has a positive marginality.

SD,
Wages are important, but not everything. Otherwise countries and economies that were 100% consumption would be the best economies and they are not, far from it. What makes an economy better is productivity, not wages. Countries like Mexico and the Philippines on paper have employees paid 100 times what US employees are paid, but it doesn't mean they are anywhere close to what a US employee really earns.

 

[Underseer]

The only force that has consistently shown to increase wages as the wealth of a company increases are union forces.

Collective labor that is protected by the law.

When the government stops protecting unions the wages for most stagnate.

The greater the government protects the rights of collective labor, the lifeblood and physically productive element of a company, the greater the middle class.

You add in things like free college education and universal health insurance and the middle class thrives.

The rich do not do as well but they exist.

Yes, there is a wage premium in that scenerio but it has drawbacks. It leads to slow job growth, higher unemployment, and for workers it ties workers down more to their career path. Number 3 is most important as a drawback that I see.

The irony is that we need to put in things in so corporations act more like corporations.

There wasn't enough information in the paper to make decisions. If all the can point to is Jimmy Johns non-compete then it's a stretch.

Wow, you will make any excuse for the elites.

What, do you think they will give you a pony after the economic distribution of America starts to look like Mexico?

In the 1960s, someone working a full time minimum wage could live off of that wage without government assistance.

Now the economics have changed so that no someone working minimum wage probably needs food stamps to get by, and there are a growing number of people with full time jobs living on the streets.

So between now and the 1960s, we should have much lower unemployment than we had in the 1960s right?

Don't forget to take into account that Bush II decided to stop keeping track of people who gave up looking for work, so modern unemployment numbers might be calculated in a different way from the same numbers in the 1960s.

Tell you what. Let's go one step further.

Since the 1960s, minimum wage has been falling behind the cost of living. So you should be able to show that over time, as the ratio of minimum wage to cost of living decreases, the unemployment numbers should go down. Sure, there are likely to be fluctuations, but over such a long period of time, you should be able to prove some kind of correlation proving your claim about the relationship between minimum wage and unemployment rates.

 

[laughing dog]

huh ld? Office space is a cost to an employee, along with IT costs, training, and other costs depending on what position it is. Using sales change minus payroll change can only give you a rough estimate which could be used to compare time frames or across industries to compare overhead between them. But you wouldn't use it to see if an employee has a positive marginality.

Office space is not a cost of an employee, because if the employee is not employed, the cost remains. Same for IT.

 

[coloradoatheist]

huh ld? Office space is a cost to an employee, along with IT costs, training, and other costs depending on what position it is. Using sales change minus payroll change can only give you a rough estimate which could be used to compare time frames or across industries to compare overhead between them. But you wouldn't use it to see if an employee has a positive marginality.

Office space is not a cost of an employee, because if the employee is not employed, the cost remains. Same for IT.

So laptops are free now? Phone lines are free? Cube space is free? It costs the same to an employer whether there is 100 employees or 300 employees?

 

[bilby]

huh ld? Office space is a cost to an employee, along with IT costs, training, and other costs depending on what position it is. Using sales change minus payroll change can only give you a rough estimate which could be used to compare time frames or across industries to compare overhead between them. But you wouldn't use it to see if an employee has a positive marginality.

Office space is not a cost of an employee, because if the employee is not employed, the cost remains. Same for IT.

So laptops are free now? Phone lines are free? Cube space is free? It costs the same to an employer whether there is 100 employees or 300 employees?

That depends on how the office space is paid for, and generally is a step function of the number of employees, not a smooth linear cost. If you have 200 employees, your real estate costs for office space is likely much the same as for 195 or 205 employees. If you have 400 employees, it might be about twice as much - or it might not. There is a complex and non-linear relationship between the cost of real estate and number of employees, while the payroll costs are much closer to a linear relationship to employee numbers, particularly when considering employees with similar duties.

It makes sense to lump into 'payroll' all those costs that vary approximately in a linear fashion with employee numbers. If you fire one of your 200 employees, you can expect payroll to drop immediately by almost exactly 0.5%. You cannot expect real estate or IT costs to drop at all - you just have one more 'spare' desk/cubicle/telephone/workstation/laptop, where previously you may have already had four or five (to allow for breakages/expansion/unexpected circumstances). Fire 50 of 200 employees, and you still might not see a reduction on real estate costs until the end of the year at the soonest.

You might use number of employees as a metric for passing some of these costs in an Activity Based Costing model, but more likely you would pass these costs as fixed expenses, reviewed annually, unless your company was growing (or shrinking) very fast indeed.

So yes, to as close an approximation as is reasonable for modern business accounting, laptops are not a 'per employee' cost, and nor are phone lines or cube space. They are more likely a 'per 50 employee' or even 'per 100 employee' cost. Very few businesses rent the exact number of cubicles that they need, and rent one more at a time each time they hire, and one fewer each time they fire. That would be inefficient, expensive, and a massive pain in the arse to manage. It's cheaper and easier to have a few spare desks, laptops and phone lines about the place, for contingencies.

Imagine having to get IT to remove the 53 port Ethernet router and install a 54 port unit, and run the extra cable, each time a new hire started work (and then imagine the massive cost of having such a router custom built); And then getting them to reverse the process and strip out the cabling every time someone quit. That would be crazy. If you have 53 employees, you more likely provide desks for 60 and a router with 100+ ports at the very least. So for your next seven hires, laptops, phone lines and cube space ARE are free; and each of your next 47 cost a LOT less than your 48th; While your 49th costs much the same as the previous 47, and the next 99 after that. That doesn't make the employee with badge number 101 a bigger drain on your business than anyone else. It's just another way in which reality isn't much like the oversimplified models that people prefer to consider.

 

[RVonse]

If unions are the only way to increase wages why are almost all the best paying jobs non-union?

They aren't Loren.
The highest paid jobs in the US are always union jobs. Like the medical doctors AMA union set up for the doctors or the board of directors setup for the CEO's or the pilots union setup for the pilots.

Whenever there is barrier of entry due to a requirement of a lobby or commitee.....thats a union. Whether you like it or not.

Actually, I think there is a good argument to be made the UAW is much more honorable than a typical board of directors. Because the UAW is at least honest about their intent and bargaining in good faith. As opposed to running a scam like many of the other professional organizations.

 

[untermensche]

When you have a system based on "market wages" wages reflect the general level of desperation in society.

As desperation goes up wages go down.

As helplessness goes up wages go down.

The capitalist after a profit is always on the lookout for helpless humans to exploit. They are always trying to make the lives of ordinary people more desperate.

It is a system that creates and exploits human desperation.

So now you understand why capitalists oppose social programs like Social Security and nationalized health insurance that reduce helplessness.

 

[untermensche]

If unions are the only way to increase wages why are almost all the best paying jobs non-union?

They aren't Loren.
The highest paid jobs in the US are always union jobs. Like the medical doctors AMA union set up for the doctors or the board of directors setup for the CEO's or the pilots union setup for the pilots.

Whenever there is barrier of entry due to a requirement of a lobby or commitee.....thats a union. Whether you like it or not.

Actually, I think there is a good argument to be made the UAW is much more honorable than a typical board of directors. Because the UAW is at least honest about their intent and bargaining in good faith. As opposed to running a scam like many of the other professional organizations.

Capitalism is a huge scam.

Some have convinced many they have the right to dictate over others even as that activity is destroying the planet.

The planet, the environment, is being destroyed by capitalist petty dictators that own governments which allows it.

 

[coloradoatheist]

So laptops are free now? Phone lines are free? Cube space is free? It costs the same to an employer whether there is 100 employees or 300 employees?

That depends on how the office space is paid for, and generally is a step function of the number of employees, not a smooth linear cost. If you have 200 employees, your real estate costs for office space is likely much the same as for 195 or 205 employees. If you have 400 employees, it might be about twice as much - or it might not. There is a complex and non-linear relationship between the cost of real estate and number of employees, while the payroll costs are much closer to a linear relationship to employee numbers, particularly when considering employees with similar duties.

It makes sense to lump into 'payroll' all those costs that vary approximately in a linear fashion with employee numbers. If you fire one of your 200 employees, you can expect payroll to drop immediately by almost exactly 0.5%. You cannot expect real estate or IT costs to drop at all - you just have one more 'spare' desk/cubicle/telephone/workstation/laptop, where previously you may have already had four or five (to allow for breakages/expansion/unexpected circumstances). Fire 50 of 200 employees, and you still might not see a reduction on real estate costs until the end of the year at the soonest.

You might use number of employees as a metric for passing some of these costs in an Activity Based Costing model, but more likely you would pass these costs as fixed expenses, reviewed annually, unless your company was growing (or shrinking) very fast indeed.

So yes, to as close an approximation as is reasonable for modern business accounting, laptops are not a 'per employee' cost, and nor are phone lines or cube space. They are more likely a 'per 50 employee' or even 'per 100 employee' cost. Very few businesses rent the exact number of cubicles that they need, and rent one more at a time each time they hire, and one fewer each time they fire. That would be inefficient, expensive, and a massive pain in the arse to manage. It's cheaper and easier to have a few spare desks, laptops and phone lines about the place, for contingencies.

Imagine having to get IT to remove the 53 port Ethernet router and install a 54 port unit, and run the extra cable, each time a new hire started work (and then imagine the massive cost of having such a router custom built); And then getting them to reverse the process and strip out the cabling every time someone quit. That would be crazy. If you have 53 employees, you more likely provide desks for 60 and a router with 100+ ports at the very least. So for your next seven hires, laptops, phone lines and cube space ARE are free; and each of your next 47 cost a LOT less than your 48th; While your 49th costs much the same as the previous 47, and the next 99 after that. That doesn't make the employee with badge number 101 a bigger drain on your business than anyone else. It's just another way in which reality isn't much like the oversimplified models that people prefer to consider.

Except as a busy decision maker you do need to understand your costs and how much it costs per employee. And you will undercost things if you just think of it as having a spare laptop or just an extra port. If I am looking at whether to put my 100 lawyers in a $100K a month downtown space or a $50K space elsewhere you need to think of it costing $1000 a month per employee compared to $500. For a switch you need to think of the cost of the switch divided by the port capacity and that's your cost per user. Phone lines costs aren't expensive, but the license for a phone whether hard or soft can be $10-$20 a month. And you certainly need to throw in the cost of a laptop, plus the software costs for the user plus what you need to support that user. If someone ignores these costs, they would be a horrible decision maker.

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If unions are the only way to increase wages why are almost all the best paying jobs non-union?

They aren't Loren.
The highest paid jobs in the US are always union jobs. Like the medical doctors AMA union set up for the doctors or the board of directors setup for the CEO's or the pilots union setup for the pilots.

Whenever there is barrier of entry due to a requirement of a lobby or commitee.....thats a union. Whether you like it or not.

Actually, I think there is a good argument to be made the UAW is much more honorable than a typical board of directors. Because the UAW is at least honest about their intent and bargaining in good faith. As opposed to running a scam like many of the other professional organizations.

Capitalism is a huge scam.

Some have convinced many they have the right to dictate over others even as that activity is destroying the planet.

The planet, the environment, is being destroyed by capitalist petty dictators that own governments which allows it.

No, it's not a scam. The reason we are endangering the planet is because consumers want to consume the resources the Earth has because we like it. Your system would solve that issue if everybody returns to subsistence living.

 

[laughing dog]

huh ld? Office space is a cost to an employee, along with IT costs, training, and other costs depending on what position it is. Using sales change minus payroll change can only give you a rough estimate which could be used to compare time frames or across industries to compare overhead between them. But you wouldn't use it to see if an employee has a positive marginality.

Office space is not a cost of an employee, because if the employee is not employed, the cost remains. Same for IT.

So laptops are free now? Phone lines are free? Cube space is free? It costs the same to an employer whether there is 100 employees or 300 employees?

Office costs and phone lines are overhead and not specific to employees. Laptops are a capital expense. If an employee who uses a laptop leaves, the laptop stays.

 

[coloradoatheist]

So laptops are free now? Phone lines are free? Cube space is free? It costs the same to an employer whether there is 100 employees or 300 employees?

Office costs and phone lines are overhead and not specific to employees. Laptops are a capital expense. If an employee who uses a laptop leaves, the laptop stays.

It's a cost of having an employee. The same thing with the overhead needed for an employee to work. Both of those need to be accounted for and contribute to the cost of having employees. If I have to pay for someone to have a $1000 laptop but they will only bring in $300 of revenue then I lose $700 by hiring that person. If that's a good business decision........

 

[laughing dog]

So laptops are free now? Phone lines are free? Cube space is free? It costs the same to an employer whether there is 100 employees or 300 employees?

Office costs and phone lines are overhead and not specific to employees. Laptops are a capital expense. If an employee who uses a laptop leaves, the laptop stays.

It's a cost of having an employee.

Office space is not a cost of having an employee. According to your reasoning, if I add an employee to my staff but do not alter my building, my cost per employee falls since I can allocate the cost of the office among more employees. Of course, one can do arithmetic anyway he or she wants to, but your reasoning leads to poor decision-making.

 

[untermensche]

Within a company there are three things that are needed to produce anything.

You need non-living materials, this includes capital.

You need physical labor.

And you need mental labor in all it's forms. And mental labor is not something done solely by a few giving orders from the top. Every worker is using their mental capacities to perform their jobs.

In other words there are things that have to be done by humans.

All three are essential.

None can be said to be the most essential or more essential than any other.

Without any one the triad collapses.

 

[coloradoatheist]

It's a cost of having an employee.

Office space is not a cost of having an employee. According to your reasoning, if I add an employee to my staff but do not alter my building, my cost per employee falls since I can allocate the cost of the office among more employees. Of course, one can do arithmetic anyway he or she wants to, but your reasoning leads to poor decision-making.

And without office space where are the workers going to work? On the street? Maybe you can get lucky with a business that doesn't need office space. This is crazy, you definitely need to understand your costs for the space you are using per employee. If you didn't, there would be no difference in a office space costing $100K or $50K a month.

- - - Updated - - -

Within a company there are three things that are needed to produce anything.

You need non-living materials, this includes capital.

You need physical labor.

And you need mental labor in all it's forms. And mental labor is not something done solely by a few giving orders from the top. Every worker is using their mental capacities to perform their jobs.

In other words there are things that have to be done by humans.

All three are essential.

None can be said to be the most essential or more essential than any other.

Without any one the triad collapses.

And without an organization, it collapses. Go out and find 500 people on the street and say, "hey let's start a business" Waiting for you to do that.

 

[laughing dog]

And without office space where are the workers going to work? On the street? Maybe you can get lucky with a business that doesn't need office space. This is crazy, you definitely need to understand your costs for the space you are using per employee. If you didn't, there would be no difference in a office space costing $100K or $50K a month.

There would be 50K per month difference. Duh. Your responses are evading the issue. If an office of 20 loses an employee, then according to you, the cost per employee just rose. Arithmetically that is true, but it is a meaningless number for decision-making.

 

[untermensche]

And without an organization, it collapses. Go out and find 500 people on the street and say, "hey let's start a business" Waiting for you to do that.

Is that something other than mental labor?

It certainly is a part of having a productive business.

A part, not the whole thing.

 

[coloradoatheist]

And without office space where are the workers going to work? On the street? Maybe you can get lucky with a business that doesn't need office space. This is crazy, you definitely need to understand your costs for the space you are using per employee. If you didn't, there would be no difference in a office space costing $100K or $50K a month.

There would be 50K per month difference. Duh. Your responses are evading the issue. If an office of 20 loses an employee, then according to you, the cost per employee just rose. Arithmetically that is true, but it is a meaningless number for decision-making.

Yes, costs per employee did just go up and with a replacement they would have to look at all the costs for that new employee including office space.

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And without an organization, it collapses. Go out and find 500 people on the street and say, "hey let's start a business" Waiting for you to do that.

Is that something other than mental labor?

It certainly is a part of having a productive business.

A part, not the whole thing.

Yes it's a part. What you argue about is how much of the value is created by the mental part. You believe it's all the other labor that makes the whole, not the organizational part.