While there maybe no place on a balance sheet that reflects the value of experience of the existing employees, I would argue that suddenly replacing all of the worker level employees at McD’s or Wallmart would throw the store into chaos. Removing supervisors and managers too would mean closing down the store. There is plenty of value there, and that is one reason coordinated strikes work.
There could also be a liability for pension/retirement obligations.
In my opinion, part of the reason for low stimulus spending after 08 was to keep labor markets loose. This way, large corps don’t have to keep raising pay to compete for skilled and semi skilled workers. This is part of what has kept wages flat while corporate profits have gone up.
Agreed! Part of this policy shift needs to be in the tax code, with more progressive tax rates coupled with limited and targeted tax deductions, that make the actual effective tax on people with large incomes more than the tax on the working poor. Extending the EITC to become a real basic income would be an incredible step forward.
Spending on infrastructure is a good way to bump up employment, and it provides real improvements to efficiency and quality of life. I would like to see policy that reacts to economic downturns quickly - like if unemployment goes up to X%, then $Y more money is spent in the next quarter. Projects would be planned so that they can take on some extra people and get prep work done early, or whatever. There is always minor street repair/resealing that can be done, and schools always need roof repair and a new coat of paint. People doing those kinds of things can start working in a week or two, if the policies and funding are there to make it happen.
First, the top and bottom 10%s have exactly the same credentials - so in that I agree. That was a broad example - you neither automatically hire people in the top 10% or not in the bottom. (Actually, in my old company HR would not pass through people in the bottom 10% - and higher - so we did automatically not hire people there.)
Yeah, technically workers are not assets in the accounting sense. So are lots of things. In the non-accounting sense workers can be either assets or liabilities. In these discussions we often treat workers as commodities, which is not always true.
Probably true for McJobs. But lots of workers work way more hours than they have to, for no more immediate pay. To some extent this might be in hopes of raises and promotions, but to some extent it comes from enjoying work. Maybe this should be rephrased as highest wages for best work experience - which in some case might be least amount of work.
Why would you characterize that as saying it isn’t OK for workers to bail? All it says is that if you do bail, it would be advisable to have a Plan B.
I read that as “if you are going to sit on your ass and not work, you aren’t going to have money to exchange for the labor of others - including food.”
Which isn’t 100% true - you could have capital that works for you rather than your labor, or you could have someone else support you - but for most of us, its pretty true.
Capitalism is inherently competitive - it isn’t necessarily a FAIR competition. Labor as part of capitalism is also inherently competitive. If you are an MVP on your McDonald’s team or win more cases in a court of law or hit more home runs than anyone else in MLB - you are a more attractive employee that the guy who tries to get paid the most for doing the least. (Unless you are so talented that hitting home runs isn’t work for you). So when it comes time to creating the most competitive baseball team - which will sell more tickets and make more money - owners look for the guys with talent and drive. And the guys who don’t have it get cut in middle school. Likewise, the smart McDonalds manager (and they aren’t all smart) tries to keep his good employees happy with enough hours and a decent schedule - and when he needs to cut hours, cuts the guy who shows up and zombies his way through the work day - because a good employee at McDonalds can be more efficient than two bad ones - and keep your labor costs down.
It doesn’t matter whether something feels like work to the worker. What matters is whether it feels like work to the employer.
The worker’s subjective experience of how her works feels only matters to the employer if she decides it isn’t worth her time and her departure harms the employer. From their perspective, what matters is how the workers’ contribution affects THEM. If Smith can hit 50 homers effortlessly, someone will pay him a great deal of money for it. If Jones can hit just five homers trying as hard as he can, he will struggle to remain employed as a professional baseball player unless he has some other skill. “Work” as a commodity is valued by the purchaser not by how difficult it seems to the employee but by how valuable it is to the purchaser. Indeed, I would suggest that it’s a bad sign if the work seems to be giving the employee a lot of trouble.
This might seem like nitpicking but it’s a rather important distinction in any economic transaction - or, for that matter, any transaction at all; everyone is a supporting player in the other person’s story. To the baseball team, what matters is whether Smith can hit and field; how hard he finds it is not of concern to them unless it serves as a signal of future changes in Smith’s contributions.
Of course, employers do not always correctly judge an employee’s contributions, and so will often make errors, which is why five teams didn’t think Jose Bautista was worth anything. I would suggest that this is probably far MORE prevalent in most industries than in professional sports, wherein a person’s performance is very coldly measured. But, transactions made on imperfect information are part of life.
I think you are misunderstanding the concept. Yes, it is rational to try to maximize your income for the least amount of work. However you are also competing against others who are looking to maximize their income. They may decide it is worth their while to work a bit harder than you, up until the point it isn’t.
Which economic theory is that?
Most economic theories implicitly understand that the objective is to maximize utility for as many people as possible. They disagree on the best approach.
The reason economists generally like the free market (within certain constraints) is that it is the most efficient way to communicate measurements of value. The market is also efficient at signaling where there are shortages and surpluses. High salaries for computer programmers would indicate they are in high demand and that their skills are valuable. Low salaries for bartenders and waiters indicate that their skills aren’t particularly rare. Theoretically, the market should attract the best and brightest to compete for the most lucrative jobs. It signals companies to produce more of products that are in demand and less of others.
Of course it’s fair. If you suck at your job or are too expensive, I should have the right to hire someone who does it better and/or cheaper.
Back in the day “survival of the fittest” was fair because the world was a much harsher place. If you couldn’t survive, you didn’t, and it didn’t make sense to waste precious resources on you.
The message is basically if EVERYONE sat on their ass, absolutely nothing would get done and we’d all starve to death. Since at least some people will have to perform some sort of work, what isn’t fair is to have large numbers of people not working, yet reaping the benefits from those who do.
The one question no one ever answers in these discussions is who should do all the crap work?
It unfairly characterizes workers who seek higher wages and lower productivity as not contributing enough. That is pejorative, even if they are free to do it and accept the consequences. That is my point; you have made a judgement against workers that you have not made against owners who make the same economic calculus.
In most industries, most employees are not superstars, such that their individual contribution can have a huge financial impact on the company, as they do in sports or film. In practice, there is often little difference between two accountants or project managers of similar background and experience. In an attempt to compensate employees in a manner that is fair and equitable, companies create various performance and compensation systems. When these systems don’t align with the marketplace, employees are free to negotiate a higher salary with a different employer.
As Karl Marx noted in Capital (1867) “The capitalist maintains his rights as a purchaser when he tries to make the working day as long as possible, and, where possible, to make two working days out of one. On the other hand…the worker maintains his right as a seller when he wishes to reduce the working day to a particular normal length…Between equal rights, force decides. Hence, in the history of capitalist production, the establishment of a norm for the working day presents itself as a struggle over the limits of that day, a struggle between…capital and… the working class.” Ditto with wages.
I’ll let msmith defend this, but of course the same applies to business owners. Not all such folk can quit and live off their savings and investments.
They don’t. Class ranking in and of itself is rarely used, but employers absolutely look at GPA to the extent that they look at education.
There are two things to break apart in your statement. First, you are correct that they are not assets or liabilities in the accounting sense, but it does not help because it’s still a misguided way of thinking about things. Hence people corrected the OP. It is risky thinking to to mix terminology because you introduce necessary ambiguity, and the workforce is most definitely not an asset or liability in the economic sense. Whether or not a particular laborer is useful to any particular employer isn’t really the call of an outsider to make without careful study.
Which brings me to the other point. We don’t treat workers as a commodity in economics; we treat labor as a quantity defined by the time it is at work or cost of procuring it. The intricacies of what company hires whom and why are generally beyond the scope of all but the most finely-detailed aspects of microeconomics - literally down to study specific industries or workplace cultures. It’s almost impossible to properly measure, because issues like culture, individual drive, what people actually learned at school instead of what their diploma says, or even which individuals know which other individuals are too complicated to be known, let alone modeled. It’s not that economics don’t understand these issues, but they can never be taken into account.
What we can measure if the productivity of labor, and that is usually closely correlated with its value.
This seems to characterize the employee relationship with the employer as a strictly voluntary one, and technically this is true. But in practice, it’s not. Since people are generally paid based on how easily they can be replaced, rather than the value they add to the company, those employees at the bottom of the pay scale lack any bargaining power. Someone who is offered a job as a fry cook at McDonald’s for minimum wage can’t exactly say, “You know, I don’t think this wage is fair for the work you’re asking me to do. I’d like to start at $15 per hour instead.” They don’t have any power to make such a request because there’s a line of desperate people behind them who would take that job, even if the wages aren’t fair wages.
So yes, people technically agree to the wages from the start, but they agree to them not because they believe that it’s a fair wage for the work provided, but because choosing not to take the job would have far worse consequences. If your choices are limited to being underpaid for something, or not being paid at all, and you’ve got rent to pay and kids to feed, the only real choice is to take the low-wage job. Then once you have the job and can now meet some of your needs, you can then fight for wages that you think are more fair than the original offer.
hexen:
Nope. You have almost everything in your opening post wrong.
Most of what you posted, and a fair amount of what others posted in response, is either propagandized and mostly ingenuous arguments about vague economic theories and events, or twisted up examples of how various people have used the nomenclature of real economic theory incorrectly, in order to cover and excuse their abuse of the system.
In particular, particularly since the success of the 1987 Wall Street movie, it has become fashionable to ERRONEOUSLY describe capitalism and capitalist economics, as being entirely based on interactive human greed.
This is yet ANOTHER example of using popular cliches, to excuse bad behavior, and build abuse on top of abuse.
Some general important and so far entirely overlooked observations:
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any economic system or enterprise which ignores the REAL costs of doing business, will inevitably result either in the collapse of the economic system or enterprise, or the destruction of the society which allows it to go forward. Number one REAL cost being ignored in modern times: the REAL COST of LABOR.
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pretending that everything is about something with a negative connotation, i.e. greed, makes it easy to excuse and ignore all manner of behaviors and activities which are actually entirely destructive of the enterprise. Lying, cheating, and so on.
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economic systems are complicated, and are never ESTABLISHED by economic theory, rather economic theory, after the fact, tries to EXPLAIN the dynamics of what happened, in order to try to help people repeat successes, and avoid repeating failures. But because they are built from observations of organic activities, they are never even remotely as reliable as the people presenting them, would like everyone to believe.
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“Business Science” is almost entirely a contradiction in terms.
Well, you can reasonably argue that Wall Street may have popularized the idea of greed behind the economy, but a far more intellectual version existed at least as far back as Adam SMith himself:
And Smith was right. But he also said that greed, or really any human desire, could be destructive, immoral, or self-defeating as well.
Indeed, which is why good companies value their employees and treat them well. It is, however, difficult to quantify such value other than to say “this is how much we lose every day we are out of production.” Strikes can lead to bankruptcy for the company, which could not be said to be beneficial to the employees as a whole. It is a fine line that has been painstakingly drawn in favor of workers over the past 150 years.
I didn’t mean to denigrate what workers do; rather, we need to stop this modern invention that there is an inherent value to labor. The recent thread discussing the Labor Theory of Value was a bit maddening to me as it tries to discuss an anti-economic idea through the lens of pure economics. If you can’t put a number to something, it can’t be said to have economic value.
Although they do try to put numbers to it. Big companies have employee turnover metrics - what percentage of your workforce voluntarily turns over in a year. A manager at a Target, for instance, will have some of his bonus based off of whether he exceeds his retention targets. Senior executives at big companies aren’t dumb - they know that there is a cost to high turnover - hiring and training costs, customer satisfaction costs, and frankly - goodwill - if you think Wal Mart is a crappy place to work, you might not shop there. If you hear Costco is a good place to work, you might go out of your way to shop there. They don’t really want people to work six weeks and then quit - its costly.
However, those costs aren’t very high - i.e. they aren’t $15 an hour rather than $9 an hour high unless there is competitive pressure in the labor force (low unemployment). And wage is only one of the reasons someone will leave a job - they can’t get the schedule they want, the commute is too long, they feel disrespected, even that they don’t feel like they have friends in their workplace.
Which I said. But I don’t consider a GPA a credential - a degree is. You wouldn’t say graduates of a bad school with rampant grade inflation are more credentialed than those of a great school without grade inflation, would you? And I specifically said that my old company filtered by GPA, so I don’t know why you brought it up again.
Workers are definitely assets or liabilities in the broader economic sense. You mention productivity. If other things are equal, and one workforce is more productive than another, isn’t that workforce an asset? (Not in accounting terms, of course.) Economic sense covers a lot of ground. Measuring productivity as an aggregate is not the same as assigning some measure of being an asset to each employee.
In fact cities and regions competing for business often talk about their high quality labor force - so they are calling that force an economic asset.
And of course I didn’t say in economics, I said in these discussions. Those advocating eliminating or lowering the minimum wage seem to think that the impact on business would be similar to buying cheaper oil. If you are saying that this is not the view of mainstream economics, then that was my exact point. And none of the management classes I’ve ever taken treat employees as commodities either.
I’d guess that people who think that cutting salaries means that all the cuts go to the bottom line have never managed anyone.