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Originally Posted by KMA-628
Actually, I am the same as the corporations you so detest.
My partner and I are in the middle of a start-up company. Our workload is increasing fairly heavily and we will probably need to higher lower-paid workers to cover the brainless part of our jobs that take our time away from the more profitable parts. Then, as the workload increases even more, we will probably have to higher more skilled workers.
In other words, I can only afford to pay so much per hour. I justify bringing in a new worker by comparing the work that they will do with the value that work has. If I have to pay the person more than the value of the job, what do you think I will do? Answer, not hire. It would be more profitable for me to continue to increase the hours I am working than to pay a new hire more than the position is worth.
The rule of thumb is that I will continue hiring until the additional cost associated with hiring the last worker is equal to the revenue generated by that worker. Now, if the "cost per worker" is higher, do I buy more labor or less? Answer: Less. If the "cost per worker is higher" do I buy more or less labor? Answer: More.
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KMA,
I would like you to address the following:
In the European countries, productivity has increased as wages have increased for the past 50 years, according to Jeremy Rifkin (
The European Dream), even surpasing the productivity of the US.
Has this created more jobs? Not necessarily. But what has happened is that people work less. They get to spend the money they make on things they feel make their lives better, such as, vacations and family time. They don't ultimately make more money, but they work less by receiving higher wages.
Currently they need immigration and higher reproduction to meet the growing demand of a tax base.
I want to repeat: both he and I recognize the model has problems and is not yet fully realized.
So we have the option of having unemployed people, as you suggest by the business model you are using in the portion I quoted, or hiring more people at higher wages, but not working them for very long.
So a very simple example: you have $100 dollars to spend on labor.
You can follow the American model: hire one worker @ $10/hr and work him 10 hours.
Or the European model: hire two workers @ $15/hr and work each of them for 3 hours.
Then it becomes an empirical question as to whether or not productivity would increase 3 fold. If I understand him correctly, Rifkin's argument is that it does.
But don't get hung up on that very glib example, please. Refuting those specific figures isn't the point, but to use it heuristically. For example, to further flesh this out. We might wonder about the plight of each worker who now only earns half as much ($45 income rather than a single worker making $100). But two responses to this: a) higher productivity would increase profits. It might be that you would actually have $200 to spend on labor, so you could have the workers produce for 6 hours. b) two workers in a family could conceivably work for 3 hours each (6 total is still less than 10) and be able to reap the same total financial reward, while allowing each member to be productive work force (satisfying and healthful for economy) and family time (satisfying and healthful for society).
You might be in the perfect position to try an experiment. You could, for example, strike a deal with one of your laborers that essentially states: I increase pay, reduce your hours, but your productivity needs to increase X amount (to be determined so the overall equation remains basically static). Try that for a month or two with your employee. If the productivity doesn't increase, back to the American model of driving wages down and increasing hours. I personally think that model produces downward pressure on producivity.