patrick.net

indigenous says

price discovery.

The price discovery occurs during negotiations between union and management. The reason for the pay differential vs private sector is simply due to the fact that private sector does not have the leverage if they are non unionized hence the power diffferential in favor of the company/business owner that accounts for lower pay/benefits.

dublin hillz says

The price discovery occurs during negotiations between union and management. The reason for the pay differential vs private sector is simply due to the fact that private sector does not have the leverage if they are non unionized hence the power diffferential in favor of the company/business owner that accounts for lower pay/benefits.

That is not price discovery, that is cronyism. The reason for the pay difference is there is no price discovery

dublin hillz says

price discovery occurs during negotiations between union and management.

In the private sector, unions could never get much more than the market offers: Otherwise the company would be at a disadvantage compared to others, and probably either move to an other country or go bankrupt.

In the public sector, there is no balance in such negotiations: except in times of crisis, government officials have low incentives to not give employees a good salary. They just tax more to compensate. as time passes, public employees can become parasites, taking a lot more money than they deserve from other parts of the economy.

Bottom line, the market is a much better guideline than "negotiations between union and management". You may not like the result, but it represents a truth about what something is worth.

Heraclitusstudent says

In the private sector, unions could never get much more than the market offers: Otherwise the company would be at a disadvantage compared to others, and probably either move to an other country or go bankrupt.

That assumes that we're in a perfectly competitive marketplace where companies only make true economic profits--which clearly ISN'T the case as corporate profits are at record highs. There is plenty of room for companies to raise wages...

Heraclitusstudent says

Bottom line, the market is a much better guideline than "negotiations between union and management". You may not like the result, but it represents a truth about what something is worth.

Couldn't disagree more. The market is driving the value of labor to zero. Unless you think the worth of labor is zero, the market isn't a good guideline.

good points, tatupu. I was going to respond similarly to the above reflexive free-marketeerism, but fatigue etc.

(I'm curious who disliked it. That person isn't contributing much to this site, sigh)

"the company would be at a disadvantage compared to others"

I'm hopeful that this decade or next wage-earners will start banding together and we'll get a new Buy Union (or at least Buy USA) movement going, turning the alleged fatal marginal cost of paying labor more into a corporate boon.

"probably either move to an other country"

if only we had extra-market institutions with the power to control corporations!

What would they even look like???

"or go bankrupt"

^ that's really a stupendous graph, 2000 wasn't that long ago!

Call it Crazy says

Why the fuck do you care? You're ignoring 76 people on this site!

That was literally a LOL, funny stuff, you might call it crazy

tatupu70 says

There is plenty of room for companies to raise wages...

I'm not sure I understand your point. Companies sell products in 1 market, employees are hired in an other. The room to raise wages is there, but it doesn't mean it's not a competitive situation.

tatupu70 says

The market is driving the value of labor to zero. Unless you think the worth of labor is zero, the market isn't a good guideline.

No it's not driving labor to 0. It's driving labor to costs in low wage countries, because the US made the decision to compete with these countries.

Without trade companies would have to compete for labor in the US and this situation would not exist. The problem is not how the market works. The problem is a situation that was deliberately created this way.

Even with trade, what's going to happen is China's worker will see double digits salary gains, until they are rich enough to be consumers. Companies may move to other countries, but there will be more consumers, and less cheap labor. Over decades wages will move up and corporate profits will be squeezed. Assuming we actually reach that point without revolution.

My point remains: in the meantime it is VERY UNFAIR to ask people who are in competition with foreign workers to pay taxes to subsidize people who aren't, and are paid above US labor market rates.

Bellingham Bill says

"probably either move to an other country"

if only we had extra-market institutions with the power to control corporations!

What would they even look like???

"or go bankrupt"

The profits you are showing are for companies that already moved abroad: for example Apple employs (through providers) maybe 10 times more people abroad than in the US. Production is off-shored.
The people remaining in the US are those for which the market dictates a good salary.

However do you think people doing manufacturing in the US can simply ignore foreign competition and raise wages - because they have such good profits they don't care? I think not.

Heraclitusstudent says

I'm not sure I understand your point. Companies sell products in 1 market, employees are hired in an other. The room to raise wages is there, but it doesn't mean it's not a competitive situation.

Where they sell is irrelevant. The point is that even in a competitive marketplace, corporations are making HUGE profits that used to be paid to workers. It is obviously possible for those profits to be paid out in wages to the workers instead of in dividends to the owners.

tatupu70 says

It is obviously possible for those profits to be paid out in wages to the workers instead of in dividends to the owners.

You're asking for the few companies that make huge profits, like Apple, to hire factory workers in the US with wages above market just because they can?

You mean... in an utopic world where people willingly abandon their own interests? Assuming Apple does, would it even make a dent on wages in the US? Probably not unless all companies do. Even more utopic.

Is that your definition of possible?

What about other barely profitable US manufacturers? Would they also be forced to pay more than market? Decided by who?

Heraclitusstudent says

You're asking for the few companies that make huge profits, like Apple, to hire factory workers in the US with wages above market just because they can?

I'm not asking for anything--I'm simply pointing out that it is NOT the competitive marketplace that is forcing companies to do this. It is because owners want to maximize their profits at the expense of the workers.

I'm also not saying it's the companies responsibility to raise wages--just that it's NOT because they have to--it's because they want to.