What theories are there for raising wages?

Maybe this forum is best because there may be a variety of answers. Or maybe SDMB isn’t where I should post at all. However… Many candidates claim they will “raise wages.” Given that corporations are sitting on (depending on whose estimate you use) trillions of dollars, given that the stock market is up 135% since 2009, and given high ratios of executive compensation to average wages, it seems as if the money to raise wages rests in great measure with the companies that are doing so well. What methods or theories are out there that would redistribute this money to the working class? How are people proposing we raise the average working class wages? (Aside from raising the minimum wage).

What is the ‘working class’ going to do to earn those higher wages, or do they just get it because they should? I think that’s the key to any meaningful answer (forget about what the candidates promise…that is so much wind). You need to understand WHY wages (for some sectors) have stagnated, as well as why some corporations are maintaining large war chests of funds (i.e. ‘sitting on (depending on whose estimate you use) trillions of dollars’) and why the overall stock market is up since 2009 (though it’s down over a thousand points+ this year) and why all those things aren’t really related.

You probably have come to the right place, as I’m sure there are plenty of 'dopers with ideas on how to snatch wealthy from the evil CEO types and redistribute it to…someone (I’m guessing someone will be along to talk about living wages or maybe upping the minimum wage level, which will redistribute some wealth to the lower end of the ‘working class’ but won’t really address the rest).

I’m not asking about the advisability of raising the wages of workers, nor am I asking how the situation came about. I’m asking how it might be addressed if someone were to choose to do so.

Well it depends on how creative you want to get.

You ideally would tilt the supply demand scale in favor of labor. As you note, there is plenty of room to increase wages but there simply hasn’t been any pressure to do so.

You could reduce the domestic labor pool by enforcing the use of e-verify for all job applicants.

You could increase the demand for labor by goosing domestic consumption through Keynesian spending.

You could increase the demand for Domestic labor by making foreign labor more expensive through a minimum wage tariff on imports from low wage countries.

You could force other countries to sign horrible trade agreements that will drive jobs to the US.

Wage inflation can be pushed by increasing pay for government workers.

You could put a third of American workers in suspended animation and reduce the labor force by a third (also reducing our GDP by almost a third).

You could revitalize the labor movement.

Why do YOU think wages have stagnated despite rising productivity? Its largely the result of capital taking a larger share of the benefits of increased productivity than they had in the past.

Raising the minimum wage (by legislation, not executive action) is pretty much the best option. It would be nice if the M.W. were raised, simply to keep pace with inflation.

Keynesian spending on big infrastructure projects, which will also increase community wealth – better roads and bridges mean easier/faster commutes, which means more job options; better electrical grids and communications grids means more efficient usage, which means savings; etc.

How about six sevenths?

It’s an empty campaign promise. We’ve been down this road many times. And the MW will get raised when Congress is ready to do so, not when the president decides.

Japan tried that, not with marked results.


I have a question related to this that I’ll throw out there because I don’t know the answer.
We waste a lot of money on healthcare costs, but if we spent the same gdp totals as Canada did and went to a universal healthcare system, that would free up a trillion dollars in capital.
Where would it go? Some people would be making less money or fired in medicine since there would be less wasted money going up to prop up jobs that were not needed, but how much would go towards higher wages? Most? Almost none? Would most of it go to the company owners/investors? Or would people actually get substantial raises?

I think Japans number 1 problem is the shrinking population. They need to have more sex and more kids. I don’t care how good your economic policy is, if your fertility rate is only 1.4 you have a smaller and smaller economic population base care of an older and older population.

Worldwide, the last 30 years has probably seen more people move out of poverty than any other time in history. According to the UN we have the lowest extreme poverty than ever before. This is in part because jobs that used to be Western countries have moved across the globe. Lower-end American workers now have a lot more competition and, while I understand the hand-wringing, overall it has been a huge boon.

In my OP, I’m postulating that a great deal of capital/wealth is held by larger companies and corporations, that their stockholders are reaping benefits, as well as upper level executives, and that a great deal of their wealth is held as cash reserves. If that is so, how does that money get shifted? Are there governmental imperitives that can do it? The private sector clearly has little incentive as of now to do so.

What is the executive class doing to earn the higher wages they are already getting (unlike the working class, which is not), or do they just get it because they should?

I stand corrected: we’d never want to emulate that dirty rotten shithole that is Japan, because correlation always equals causation.

In a sense, just increasing the scope of health care or providing any other government service is “raising wages”.

Raising the minimum wage isn’t very useful. Point in fact, it’s basically stupid as it creates a hard break in the underpinnings of the economy, where the economy responds much better to gradually shifting forces.

The basic concept is that, if people were smart, they would bargain for a wage which allows them to be prepared for an emergency and to support themselves in their twilight years. Since, to do otherwise would stupid, no one would choose a wage which didn’t allow for this, and so the “effective” minimum wage would be pegged to this realistic number. And, practically speaking, anyone who is willing to work an honest job over a regular work week should deserve a wage which will support him through his entire life and most foreseeable emergencies.

But in the real world, most people are willing to take a wage which only provides enough for them to live day-to-day and if you gave everyone enough money to plan for their future, most people would fly to Vegas and blow it all away in a single weekend.

Thus, it makes more sense to let the market bargain wages as they will, then tax the people who are making greater than needed just to support themselves for life, and provide everyone with access to medical care and to give them money when they retire from that. Effectively, you’re doing the same thing as giving everyone a minimum wage which is sufficient for life, then imposing a tax rate on the lowest earners which takes away most of the money before they can waste it, so that you can give it back to them later.

And technically you could do things like assume that everyone has to eat, so there’s no real value in forcing people to bargain for food. You could just give them free food every week and let the market allow the lowest wages to drop equivalently, and tax the top earners again so that the government can buy all the food for everyone.

Wage redistribution that is positive to the poor can happen by lowering the lowest wages. The real question is purely who you’re going to tax by how much and whether the money which is taxed is going back into social services, or going into building explosives that will be detonated on foreign soil.

There’s a problem right now, I don’t know if it’s a big problem but it’s real, which is that Wal-Mart et al can pay their employees squat and then force the employees to make up the difference with assistance programs. That means my tax dollars are helping pad Wal-Mart’s profits. I think that if Wal-Mart wants to hire employees, they should be forced to pay them enough to keep them above the federal poverty line.
Yes, I know Wal-Mart makes a convenient boogeyman, but they’re not innocent in this.

Fair enough, though to have a meaningful solution you should understand the problem and how and why it got as it is…and perhaps even if it IS a problem. However, my own guess as to the magic silver bullet for this would be through the tax system. Some sort of basic living stipend or negative tax system would probably do the least harm. Instead of paying people some sort of artificial wage set arbitrarily to make them feel good about themselves you basically just give them the money to a certain level then if they want to work for more they can…and if not, then they have the means to live at some basic level at least. I think this would hurt the system and cost a lot, but it’s better than forcing companies to pay some arbitrary wage that is completely out of whack with the market levels for the labor they are doing and forcing companies to either pay it, move or go out of business. Instead we tax on the front end and we all pay for what we supposedly want, which is to make US workers by birth and fiat better paid than a large percentage of the worlds people…er, I guess we already have that, but this would bring up everyone to a certain level, which I’m sure will be the same moving target/slippery slope it currently is. Oh, and soak the rich, of course, since that’s what this is all really about. Of course, we will all end up paying for it, but what the hell…the rich can afford more, to be sure…

I think it’s because ‘the rich’ have invested large sums in things like automation, expert systems and outsourcing/offshoring, etc etc, and that they have a larger share because of that. Labor hasn’t kept up with that, so what you have today is fewer people doing traditional blue collar manufacturing jobs, and those jobs being more about assisting the machines or running automated systems using expert programs that do most of the specialized tasks while the humans basically monitor the progress or do finishing work, while productivity has gone through the roof. Since you can use a lot fewer humans in this sort of system, and since the humans are either very vertically specialized (meaning they are well paid) or basically interchangeable (meaning you don’t have to pay them that well, or if you do you need so many fewer it doesn’t matter) it means the overall price of labor goes down. If labor is still to high then you move your operation to where labor is lower, either in the US to states with cheaper labor or overseas. Even service related jobs (checkout clerk or waiter, say) are being automated out, so that you need fewer and fewer workers to do more and more work and be more and more productive…which is why the fruits are flowing to ‘the rich’ more than to labor, unless you count highly skilled labor. I’m doing quite fine, though I can see how expert systems and automation are going to do similar things in IT and network engineering as well down the line. Hell, it’s been happening for a while now. To configure a network or specific device like a switch, router or even firewall you just have to know the basics to get it up and running. Even the more advanced stuff are just clicks and button pushes away these days, and the systems do amazing things you’d have needed a team of engineers to do 10 years ago.

That’s my non-economists take anyway. YMMV.