Real Wages

Another of Ted’s LinkedIn Posts

Another good post by this guy here, I have some comments to offer, with quotes extracted I will comment on, but the gist of the post is that productivity has gone up quite a bit from the 1950s, but we’re still working minimum 40 hour weeks.

“So: what does all this mean?”

What does working the same 40 hours – and to be honest usually consistently way more – per week, and being dramatically more productive while getting roughly the same pay in real terms, mean? It means you’re getting screwed big time, because while your productive output has skyrocketed relative to the 50’s worker, your pay is roughly the same in real terms; buying power, or the standard of living you can afford.

“Why are we still so concerned with a 40-hour+ work week?”

Because it sets an arbitrary standard allowing for control over people corporations otherwise wouldn’t get, basically a holdover from the industrial revolution. Managing to performance and outputs would make more sense, but it’s way easier to make sure someone puts in their 40 hours – again, usually way more these days too – per week than it is to make sure they actually do their job well. Plus employers always think a productivity gain means more for them over a given time period. It never, or rarely occurs to them, that people have limits or that labor carries dis-utility, and as such their employees might prefer and expect a little more time for themselves as non monetary compensation, especially considering as their increase in output is almost never matched with an increase in compensation.

Basically when you look at stats and analysis like these, it paints a picture of a labor force that is increasingly robbed of the value of its output, which is usually redistributed to the famed 1%.  Of course, a decent economist will tell you a relative difference in wealth isn’t indicative of a problem in itself; why complain X has five yachts and you only have 1?  However, I think such people are too dismissive of the fact that these wealth differences matter to people.  When you see your boss pull up in a new BMW on the day of lay-offs, it makes an impression.  Plus, I feel people know inherently when they’re being screwed, or when the value they’re receiving is not necessarily in line with what they’re giving in return.

It’s my contention that via monetary, fiscal, trade, and other policies and protective legislation businesses have protected themselves from competition and produced what amounts to a permanent jobs shortage, forcing a devaluation of labor and what amounts to real wages that aren’t rising commensurate with the labor force’s increase in productivity over the years.  As labor gets more productive, it should become more valuable in real terms.  That is, nominal salaries may go up or down, but the buying power/standard of living received in return for work should have a secular trend upward along with productivity.  As that value received has, by most measures I’ve seen, stagnated or fallen, that’s a serious indication that something is massively fucked up with the system.  To the extent you can trust econometrics, George Carlin was right.  It’s called the American Dream because you have to be asleep to believe it.  In the waking world, people are working more and more for increasingly lower returns, and sacrificing their health and families and friendships on the altar of 60+ hour work weeks.