Friday, May 3, 2013

Wage theft?

 blodget.png


It shows total US wages as a proportion of total US GDP — a number which continues to hit all-time lows. Blodget also puts up the converse chart — corporate profits as a percentage of GDP. That line, you won’t be surprised to hear, is hitting new all-time highs. He’s clear about how destructive these trends are:
Low employee wages are one reason the economy is so weak: Those “wages” are represent spending power for consumers. And consumer spending is “revenue” for other companies. So the short-term corporate profit obsession is actually starving the rest of the economy of revenue growth.
In other words, we’re in a vicious cycle, where low incomes create low demand which in turn means that there’s no appetite to hire workers, who in turn become discouraged and drop out of the labor

The systemic plight of labor | Felix Salmon

5 comments:

  1. I wonder if the new minimum wage proposal in Michigan will make a positive difference in consumption within the local economy

    ReplyDelete
  2. What will the new Michigan wage rate be again? And I don't think it will make much of a difference in the inequality gap and could actually cause more competition for low income jobs.

    ReplyDelete
  3. It was proposed to be ten dollars, but I'm not sure this will be helpful to end this cycle, at least in Michigan. I could see this causing employers to rel more on capital and technology, and potentially layoff workers.

    ReplyDelete
  4. I think 10$ will cause many businesses to lay off workers who can either work more themselves or replace with an investment in technology. I think restaurants will see this more as a profit issue because they need to keep those workers due to hours and how busy they get, but they'll still want the same profit margins for operating. Most food places will probably get more expensive so I think spending power would then go to your purchases at large stores. It would be nice for everyone to receive an additional $5k a year if full time employed at min. wage. Within your town for every 100 workers there is an additional $500,000 going through the economy. For every 1000 workers, 5,000,000.

    ReplyDelete
  5. This is exactly what I was trying to talk about last class, we were ROBBED >X0

    ReplyDelete