[Vision2020] wages and inflation

[Andreas Schou]

Typical.

Donovan, we were speaking about how to make minimum wage into a living wage
without causing undue inflation. I pointed out a way to do so. Now,
suddenly, the issue isn't how to make sure people can support their
families, it's whether the unskilled proles working at Wal-Mart deserve to
be able to make a living. So you don't believe that people deserve a living
wage -- that's fine. Say so. Don't pretend to make an economic argument that
resolving income inequalities is impossible.

-- ACS

On 1/14/06, Donovan Arnold <donovanjarnold2005 at yahoo.com > wrote:
>
> "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.
>
>
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