[Vision2020] wages and inflation

[Donovan Arnold]

"this means that one of several things are  happening: profits are soaring, large amounts of capital investment is  occurring, or that management is soaking its labor pool for as much as  it can get."-AS
  
  Productivity as I understand it is "real wealth" being generated. I guess that sort of meets your definition.
  
  However, Wal-Mart has had a loss in real wealth growth, as is reflected  in its stock value dropping. So Wal-Mart increasing its wages beyond  the 40% over minimum wage that it is currently paying would contribute  to inflation. 
  
 Second, even if a company has had an increase  in productivity, it is not always due to the skill of the labor force.  It could be due to another innovation, such as adding a bar code to  each item in the store to reduce labor and transaction costs. I would  argue, that most of the increases in productivity are more due to  innovation then the hard consistent physical labor of an unskilled, or  semi-skilled labor force employed by Wal-Mart. I doubt that Wal-Mart  employees work any harder than ShopKo employees, and since they are  paid similar wages. . .
  
  Take Care,
  
  _DJA

Andreas Schou <ophite at gmail.com> wrote:  

On 1/13/06, Donovan Arnold <donovanjarnold2005 at yahoo.com> wrote:   "But  indexing the rise in minimum wage to yearly estimated productivity  gains would not in fact cause inflation."-Andreas Schou
  
  Really? Humm, I find that surprising. Especially considering that the  retail market had a 48% gain in productivity in 2004 over the yearly  average since 1987. I would think an increase of nearly 50% in wages in  retail would cause inflation through the roof. Especially since those  gains were not the result of the unskilled labor force, but because of  technological and business model innovations in the retail market  created by Wal-Mart. 

Donovan --

Productivity,  as it's commonly expressed in the United States, is the amount of value  produced through non-farm labor per man-hour.  When real wages lag  behind productivity growth (as they have in retail for a long while, or  has they have in virtually every sector since 2000), this means that  one of several things are happening: profits are soaring, large amounts  of capital investment is occurring, or that management is soaking its  labor pool for as much as it can get. 

Wage growth is not  necessarily tied to inflation because productivity increases actually  increase the total value produced by the economy. 

-- ACS


P.S.  I am not an economist. Since Stephen's commented on this thread, I  assume he can slap me around a little if I've gotten this totally  ass-backward. 


  


		
---------------------------------
Yahoo! Photos
 Ring in the New Year with Photo Calendars. Add photos, events, holidays, whatever.
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://mailman.fsr.com/pipermail/vision2020/attachments/20060114/715ae613/attachment.htm