Same people complain when prices rise to compensate the cash flow for the business.
>Rising wages are a good thing
Rising wags are a good thing when they rise because we’re creating better jobs that are worth more, and those better jobs naturally pay higher wages.
Otherwise, we could just set the minimum wage at $100/hr.
It’s like there’s a balance to be had and going too far in one direction or another too fast is a problem!
In fact, one of the main reasons for the poor economic situation and the depopulation of a number of areas is low wages. And if we exclude those employed in the state administration and enterprises and pensioners, the difference in the average wages of employees in private companies is even greater.
Such large wage differentials exceeding 40% have been proven to lead to migration. Thus, at the local level, the same process is taking place that causes the depopulation, as many people of active working and fertile age go to work in other towns and states.
Low wages cause numerous negative effects. They limit consumption, and hence supply and investment. At the same time, savings also decrease. As a result, the revenues from taxes and fees for the state and municipalities are also smaller, which leads to the deterioration of the state and the public infrastructure. Against this backdrop, the minimum wage moving closer to the average is the least of businesses’ problems.
The social effects of these processes are devastating. Against the background of the crumbling infrastructure in the depopulated areas, there remain those who are ready to work for very low pay or do not want to work at all.
The former are mainly low-educated people, often from minority groups. The latter are demotivated, mostly because they receive income from pensions, benefits, temporary employment in the gray sector or money transfers from relatives.
Large areas are being formed, where the majority of the population is poor and uneducated. A situation that is passed on to the next generations and leads to tension and conflicts.
And those who leave for the big cities, looking for higher incomes, intensify the economic competition in the richer areas, causing social clashes.
The feeling of the collapse of society that many people have is not deceptive, and the roots of the process are in the low wages.
According to employers, the minimum wage and other social benefits disincentivize employees to qualify and develop, as they provide them with a guaranteed income. Another widespread thesis is that pay depends on labor productivity. In reality, labor productivity is determined by many factors, among which the technologies used, the marketing model, access to markets and the relevant pricing strategy.
And young people are also demotivated to study professions for which there are vacancies, but with low pay. Thus, a growing deficit of qualified labor is formed in a number of segments of the economy.
At the same time, the salary should provide some living minimum for the worker, otherwise the labor becomes slavish. What is the point of a workplace when the employees are not paid enough to even support themselves?
Among other things, the result of this business model is the gray sector in the economy, where people are looking for additional income.
The only one profiting from wages lower than the cost of living is the employer, and even his profit is “Pyrrhic”.
A business that exists only because of low wages is not competitive. It is even harmful to society and the economy, as it transfers the losses to the employees.
The low-wage business model largely ignores the benefits of factors of production other than labor. This directly leads to less investment, poorer technology and marketing, and lower added value of products and services. And you can see that by comparison of different economic sectors.
Increase in wages often leads to an increase in labor productivity. Higher wages mean more consumption and savings, thus greater investment, higher profits, less social tension. The increase in wages accelerates the development and application of new technologies in production and is a key factor in the development of the economy and society.
I don’t know why we don’t see this economic argument enough nowadays
If all. Wages were 100 and split equally among 10 people it’s a healthier economy vs one where 1 person has ninety one while 9 have one dollar each
A super rich person on his own can only spend so much and consume so much. Even investing in a business is not profitable because the 9 other people in that economy don’t have enough to spend to make any business viable.
While inequality isn’t bad greater equality is a great economy booster for all more so than trickle down
That assumes there is no foreign competition for the consumer spending. In the 60s and 70s labor unions pushed for increased wages pretty hard and they ended up closing down a lot of factories because they became uncompetitive. Those factories were usually the main source of income for the local communities. Once they shut down consumer spending plummeted and the towns basically fell apart.
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Same people complain when prices rise to compensate the cash flow for the business.
>Rising wages are a good thing
Rising wags are a good thing when they rise because we’re creating better jobs that are worth more, and those better jobs naturally pay higher wages.
Otherwise, we could just set the minimum wage at $100/hr.
It’s like there’s a balance to be had and going too far in one direction or another too fast is a problem!
In fact, one of the main reasons for the poor economic situation and the depopulation of a number of areas is low wages. And if we exclude those employed in the state administration and enterprises and pensioners, the difference in the average wages of employees in private companies is even greater.
Such large wage differentials exceeding 40% have been proven to lead to migration. Thus, at the local level, the same process is taking place that causes the depopulation, as many people of active working and fertile age go to work in other towns and states.
Low wages cause numerous negative effects. They limit consumption, and hence supply and investment. At the same time, savings also decrease. As a result, the revenues from taxes and fees for the state and municipalities are also smaller, which leads to the deterioration of the state and the public infrastructure. Against this backdrop, the minimum wage moving closer to the average is the least of businesses’ problems.
The social effects of these processes are devastating. Against the background of the crumbling infrastructure in the depopulated areas, there remain those who are ready to work for very low pay or do not want to work at all.
The former are mainly low-educated people, often from minority groups. The latter are demotivated, mostly because they receive income from pensions, benefits, temporary employment in the gray sector or money transfers from relatives.
Large areas are being formed, where the majority of the population is poor and uneducated. A situation that is passed on to the next generations and leads to tension and conflicts.
And those who leave for the big cities, looking for higher incomes, intensify the economic competition in the richer areas, causing social clashes.
The feeling of the collapse of society that many people have is not deceptive, and the roots of the process are in the low wages.
According to employers, the minimum wage and other social benefits disincentivize employees to qualify and develop, as they provide them with a guaranteed income. Another widespread thesis is that pay depends on labor productivity. In reality, labor productivity is determined by many factors, among which the technologies used, the marketing model, access to markets and the relevant pricing strategy.
And young people are also demotivated to study professions for which there are vacancies, but with low pay. Thus, a growing deficit of qualified labor is formed in a number of segments of the economy.
At the same time, the salary should provide some living minimum for the worker, otherwise the labor becomes slavish. What is the point of a workplace when the employees are not paid enough to even support themselves?
Among other things, the result of this business model is the gray sector in the economy, where people are looking for additional income.
The only one profiting from wages lower than the cost of living is the employer, and even his profit is “Pyrrhic”.
A business that exists only because of low wages is not competitive. It is even harmful to society and the economy, as it transfers the losses to the employees.
The low-wage business model largely ignores the benefits of factors of production other than labor. This directly leads to less investment, poorer technology and marketing, and lower added value of products and services. And you can see that by comparison of different economic sectors.
Increase in wages often leads to an increase in labor productivity. Higher wages mean more consumption and savings, thus greater investment, higher profits, less social tension. The increase in wages accelerates the development and application of new technologies in production and is a key factor in the development of the economy and society.
I don’t know why we don’t see this economic argument enough nowadays
If all. Wages were 100 and split equally among 10 people it’s a healthier economy vs one where 1 person has ninety one while 9 have one dollar each
A super rich person on his own can only spend so much and consume so much. Even investing in a business is not profitable because the 9 other people in that economy don’t have enough to spend to make any business viable.
While inequality isn’t bad greater equality is a great economy booster for all more so than trickle down
That assumes there is no foreign competition for the consumer spending. In the 60s and 70s labor unions pushed for increased wages pretty hard and they ended up closing down a lot of factories because they became uncompetitive. Those factories were usually the main source of income for the local communities. Once they shut down consumer spending plummeted and the towns basically fell apart.