Is there a role for government in “nudging” a more equal distribution of profits in the form of increased compensation to workers for their value-added activities? What is the truth about wage stagnation or slowing rates of wage growth in the U.S.?
In this episode, journalist Noah Smith and EconTalk host Russ Roberts evaluate various wage indices and measures in a lively debate that illuminates the complex variables affecting labor markets, wages, and structural changes in the diverse U.S. economy. These questions address topics from the conversation, and intend to encourage further thought and shared response.
1- This week, California became the first state to mandate female representation on corporate boards headquartered in California effective by the end of 2019. How might a similar requirement for worker (employee) Board representation (co-determination) be received by the public? Is this a role for state, federal, or any government intervention? Explain.
2- Smith mentions that the focus on the small quantity of labor in the IT sector should go to the number of warehouse workers and not the small number of tech engineers. Amazon announced raised wages for over 200,000 workers (October 2nd). Do you believe this raise to a $15 minimum wage is based on productivity gains? Why or why not? [Bonus question: How would EconLog’s Scott Sumner answer this question?]
3- Russ and Noah come to an agreement that data since the year 2000 presents a significant juxtaposition between rising corporate profits and wage rate growth (though not stagnation which represents zero growth). Russ suggests a filming of their discussion with multiple data charts to address their differing opinions as to the cause of this. What other factors or measures you believe should be included in this future discussion?
4- The idea of market power concentration by firms as a primary cause of slowed wage growth troubles Roberts. Russ suggests, firms’ productivity may have led to changes in the type of worker (lower skilled) that is needed, which would account for lower wages. To what extent do you agree with Russ’s skepticism about the claim that fewer firms in geographic areas leads to “squeezing” workers by reducing the cost of production that is wages?
5- A curious structural phenomenon in today’s labor market is the emergence of temp agencies through which firms are paying for a valuable service of acquiring workers, resulting in lower pay to workers. What incentives, for workers and/or firms, do you believe are driving this workplace trend?
READER COMMENTS
SaveyourSelf
Oct 5 2018 at 10:03am
Good God, No. Government is not a rationing tool. It is a tool for managing and minimizing violence. Using government to ration resources increases violence in the society, which contradicts the entire purpose of having a government in the first place.
The above described “mandate” is rationing. Again, the government has no business rationing. Doing so hurts everyone, even the people the mandate is aimed to help. Because, instead of decreasing transaction costs by reducing violence in the markets, it increases violence in the markets and thereby increases transaction costs. Everything gets more expensive, so standard of living goes down. It’s simple, ugly, predictable, and entirely preventable.
4 – Russ’s skepticism is well founded. Different types of workers being counted as the same could produce very strange statistical outcomes. One of the commenters in this weeks podcast pointed out that competition with low skill workers internationally is probably the most significant cause of any such wage trends. Because that is what competition does. It drives prices down.
5 – Temp agencies are specializing in managing the costs—which are considerable—that are otherwise unavoidable when searching for new hires or severing working relationships. They have another role of managing costs associated with mandated benefits.
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