Are there actually “economists” who fail to grasp these factors when creating labor models? Is it really only in “recent years” that we have been able to do sophisticated enough research to understand that there is risk when changing jobs?
It really does seem pretty self-evident, doesn’t it. I think I highlighted that part of the article mostly to poke another participant in this thread … in a GD-friendly manner 
This is kinda the point I was trying to make (not so eloquently or cogently, I admit) in the union thread. If you’re going to push for change, start with the big boys first. I don’t demonize Wal-Mart or Amazon - they employ people and they have a place in the economy. But I do demonize some of their business practices and they need to be fought from time to time, and that means we all gotta get our uniforms dirty every now and again. I wish unions and minimum wages weren’t needed but they are and I support them when the wage proposals and the people making them are reasonable.
Yet, what pushed wages up was classic supply and demand. Furthermore, Amazon is not going to employ the whole nation so, no, people can’t just show up at Amazon and make $15 plus benefits.
Answer this, if minimum wage works so well why have we outsourced 10s of millions of jobs? Why aren’t all these manufacturing jobs still in the US? Why does Detroit of today look like Hiroshima of 1945?
Socialist policies are more powerful than an atomic bomb.
And most folks in the US that have a wage make more than minimum wage. How does that happen if labor isn’t impacted, like any other commodity, by the laws of supply and demand?
Because the capitalists could, as I’ve mentioned upthread.
What we’re talking about is the lowest-earning workers, who – pretty much by definition – have the least amount of bargaining power when it comes to wages.
I have neighbors who live in mansions, but the topic is the other neighbor who lives in a barely habitable hovel.
I suppose making $0 domestically is better than making something. The labor is still employed somewhere. It’s just out of reach of your feel good policy.
So on one hand you point out that minimum wages lead to the outsourcing of jobs; on the other you seem to argue that wages are above minimum wage and therefore don’t need minimum wages.
Which is it?
Labor is not homogeneous.
Absolutely. The behavioral economics revolution was all about showing that economic actors were not necessarily rational - which was a great shock to traditional economists. The New Yorker had an article where they interviewed University of Chicago economists during the great recession, half of whom pretty much said what happened couldn’t happen because their models would be wrong. The last interviewee was Thaler at the Business School, who laughed his head off at them.
And here we have an example. How does supply and demand explain the big gap in wages shown in the article. Amazon can’t employ the entire nation, but it seems to hire and expand like crazy, the small business owner is going to find that their best most aggressive employees jump to go to a place that pays them $5 an hour more. And they’ll be left with the losers, who Amazon wouldn’t hire anyway. Pay $15 and you get to keep the good people - and maybe steal other good people from your competitors But it isn’t happening - the business owner just whines about how Amazon is unfair.
You do remember that we were at full employment before the pandemic, don’t you? Manufacturing in the US has increased while manufacturing jobs have not - for the same reason people don’t mine coal by hand any more.
Cut wages low enough and it might be cheaper to mine coal by hand than use machines. Is that where you want to go?
Nor is it perfectly fluid. There are barriers to changing jobs, mentioned in the linked article, and anyone with any business experience knows them. A company that underpays will not immediately lose all their workers. They accept a certain amount of attrition to save money on salaries. Of course since workers at the same supposed level are not identical, they lose the best ones. And go under, and wonder why.
The majority of jobs affected by a minimum wage are not easily exported. Restaurant workers, cleaners, carers, security guards etc.
They’ll always be winners and losers in a globally shifting economy, but overall US unemployment has just wobbled around between 4 and 10 percent for the last 150 years (events like the great depression being temporary).
The narrative of “All our jobs are going to China, and we need to pay people a pittance to compete!” is based on a faulty premise.
It’s also interesting that you say things like there being nothing “wrong” with paying people a low wage. I think that’s quite telling, as the implication is that there’s something wrong with asking employers to pay their full time staff a living wage. Some people only deserve X, it’s wrong to give them more.
(missed edit window)
To expand on this, if there has been a steady long-term trend, it has been the widening gap between productivity and wages.
The idea of outsourcing being the problem here is the “Look, squirrel!” of labor economics.
Arguing against a wholly invented implication is not convincing.
Well go ahead and clarify what you meant then. And perhaps respond to the other points.
Perhaps octopus wants to import the old Soviet Union “you pretend to pay me, I pretend to work” model into the US. Before WalMart increased wages it seemed that a lot of their employees hung out in the stock room and did as little work as possible. Seemed that way to me the one or two times a year I went to one.
Oh, it’s already here. People think that problem was unique to Communism because there’s a hell of a lot more pro-capitalist propaganda in the world’s nexus of capitalism (huh, imagine that), but few employees ever maximize their own productivity. Why the heck would they, it wont remotely effect them positively. The old yarn about hard work leading to promotions might be true for management positions and small businesses, but the guy in a huge corporation who has the authority to promote or set wages for a minimum wage worker usually never sees them, has no metrics by which to rate their performance, and wouldn’t care to promote them even if they did - after all, cutting wages reflects better on him than raising them does. His metrics are entirely based on cost cutting!
The old cliche about the guy working his way from the mail room to the executive suite is only true if he entered the mail room with a degree from Harvard.
Workers are not as dumb as some people think. If they are getting paid shit, they’ll effectively increase their hourly wage by goofing off as much as they can.
Just before I retired, my company had a policy of giving raises to the top 15% or so and nothing to everyone else. That worked fine during the recession, but when other companies started jacking up their pay, not so much. And we were an order of magnitude above the MW. Then sent out a shocked announcement that they found that people were no longer coming early and staying late, as measured by the number of cars in the parking lot.
My boss was told to read this to his staff. To his credit, he could hardly keep from cracking up.
Right. Also remember the whole phenomenon of Freakonomics? The book was titled that by Steven Levitt and Stephen Dubner because Levitt’s work on incentives and socioeconomics was considered somewhat out of the mainstream (freak economics). Though Levitt did stick to the idea that economic actors were rational - just that they were responding to far more inputs than what was assumed by mainstream economics. And that sociological factors had a massive influence on economic actors.
I remember when I was getting my economics degree (undergrad) that a lot was focused on these abstract models which really made a lot of, IMO, silly assumptions about rationality.
When I studied Econ, there was an acronym for this kind of thinking:
Observational
Conceptual
Theoretical
Orientations
Perhaps
Unusually
Simplistic
What part of the country is this $166,400 per year waitstaff job?