Employee productivity has skyrocketed between 2000 and 2014, yet wages and benefits have been stagnant. The Economic Policy Institute shows that productivity increased by 21.6%, yet wages grew by only 1.8% during this time period. Employees are spending more of their time doing work but their compensation hasn’t adjusted to reflect this increase in productivity. The legacy nine-to-five workday no longer exists either, and Gallup estimates that it is now 47 hours for a full-time salaried worker.
The quote comes from here. The article points out that many workers now have what is essentially a 24-hour workday fueled by easy internet access. The notion of being paid for a unit of work is rarely true in practice any more. So how do you get paid your marginal product? And how can workers get back some of that productivity increase mentioned in the article. Economic theory assumes that the productivity increases would accrue to workers. But few workers produce things that can easily be valued which means it is difficult (impossible?) to pay them their marginal product. And remember, that a worker is paid the marginal product of the marginal worker which would mean that someone should be paid the worth of the least productive worker in their firm.
Even so, look at the graph below.
The graph above shows labor compensation as a percent of GDP over time. Note how low the percent is.
Thoughts?
This brings up the point that stress and burnout can eliminate any marginal productivity brought on by increased wages. Furthermore, I believe the negative consequences due to "over-working" needs to be stressed as well. In Japan, there is a term called "Karoshi" which directly translates as overwork death and the VICE video provided below helps shows how Japanese companies are easing their work hours in order to improve productivity and prevention of Karoshi.
ReplyDeletehttps://www.youtube.com/watch?v=Nwnd-nopQBo
The concept of a 24 hour work day due to internet access does result in people working off their clock, and yet production is still happening. The graph above shows how even though people have increased their productivity, there is a clear disconnect between productivity and wage.
ReplyDeleteOf course there is definitely imbalance between productivity and wage. A perfect example immediately comes up into my mind is that the CEOs' high wages don't necessarily match with their productions. In our reading, Kwak points out that few years ago, CEOs's wages were like 20 of their employees', whereas their wages today are over 200 of their employees'. I'd say that wage in real life really doesn't equal to the marginal production.
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