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Author Topic: Economic Status of Working People - in Decline or no ?  (Read 198 times)

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Offline Michael Hardner

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Economic Status of Working People - in Decline or no ?
« on: March 30, 2019, 12:26:49 pm »
This came from the 'Incomes Collapsing' thread.

Uneducated workers used to get a house, a job, education paid for - what happened ?

I'll start: a global manufacturing economy that was unionized, labour-intensive, and had lots of income due to post-war decimation of Europe leading to N. American domination.

Fight me :)
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Offline TimG

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Re: Economic Status of Working People - in Decline or no ?
« Reply #1 on: March 30, 2019, 01:57:00 pm »
We got richer and more educated. That is what happened.

To get richer every worker and company needs to be more productive.
Being more productive requires workers that can handle complex tasks and operate machinery.

More importantly, the number of people who have a university education is at an all time high.
Anyone with any ability gets a degree today. Smart people without a degree are very rare.
It never used to be the case in past when lack of opportunities meant there were plenty of very smart people without any education.
Not anymore.

So the degree has become a requirement for jobs.
Not because people learned anything useful
But because it is a filter that allows employers to tell which employees are more likely to be productive.

The net result is the jobs open to the uneducated are the jobs no one else wants.
« Last Edit: March 30, 2019, 02:20:51 pm by TimG »
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Offline Michael Hardner

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Re: Economic Status of Working People - in Decline or no ?
« Reply #2 on: March 30, 2019, 02:31:01 pm »
Quote from: TimG on March 30, 2019, 01:57:00 pm
We got richer and more educated. That is what happened.

I think in this discussion we should try to be very clear and basic.

"Richer and more educated" doesn't seem to me to explain why people can't afford the basics as easily.

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To get richer every worker and company needs to be more productive.

I think that's right but this way: "As companies get more productive, the owners get richer..."

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Being more productive requires workers that can handle complex tasks and operate machinery.

More importantly, the number of people who have a university education is at an all time high.
Anyone with any ability gets a degree today. Smart people without a degree are very rare.
It never used to be the case in past when lack of opportunities meant there were plenty of very smart people without any education.
Not anymore.

Ok.  I'm still trying to draw the line between all of this, which makes sense, and today...

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So the degree has become a requirement for jobs.
Not because people learned anything useful
But because it is a filter that allows employers to tell which employees are more likely to be productive.

The net result is the jobs open to the uneducated are the jobs no one else wants.

And they pay nothing.  And there are less of them.  Because those jobs went offshore ?
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Offline TimG

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Re: Economic Status of Working People - in Decline or no ?
« Reply #3 on: March 30, 2019, 02:42:24 pm »
Quote from: MH on March 30, 2019, 02:31:01 pm
I think that's right but this way: "As companies get more productive, the owners get richer..."
No company can stay in business if the value of the labour provided by the workers exceeds the cost of paying for that labour. More productivity is a necessary prerequisite for increases to worker wages. Whether more productivity actually translates into higher wages depends on the job but will happen in most cases.

Quote from: MH on March 30, 2019, 02:31:01 pm
And they pay nothing.  And there are less of them.  Because those jobs went offshore ?
Some went offshore, some were replaced by machines that require a smaller number of more skilled workers. Prior to WW2 a lot of uneducated workers were needed on farms. That is no longer the case but farm production is still done here and is much higher than in the past. The same pattern is repeated in many industries.
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Offline ?Impact

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Re: Economic Status of Working People - in Decline or no ?
« Reply #4 on: March 30, 2019, 02:45:26 pm »
Quote from: TimG on March 30, 2019, 02:42:24 pm
No company can stay in business if the value of the labour provided by the workers exceeds the cost of paying for that labour.

Labour typically accounts for 20-35% of a business revenue, some service sector industries have that at about 50%.
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Offline TimG

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Re: Economic Status of Working People - in Decline or no ?
« Reply #5 on: March 30, 2019, 02:48:52 pm »
Quote from: MH on March 30, 2019, 02:31:01 pm
"Richer and more educated" doesn't seem to me to explain why people can't afford the basics as easily.
Because the definition of the "basics" today includes a cell phone, internet access, a car or two, free healthcare and many other things that would considered gross luxuries in the past. On top of that, there is more demand for the available housing in cities because the number of people competing for that housing has increased dramatically. The net result is people may feel they are worse off but they are not really.
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Offline TimG

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Re: Economic Status of Working People - in Decline or no ?
« Reply #6 on: March 30, 2019, 02:50:20 pm »
Quote from: ?Impact on March 30, 2019, 02:45:26 pm
Labour typically accounts for 20-35% of a business revenue, some service sector industries have that at about 50%.
What does that have to do with anything? It does not change my point that if the cost of labour exceeds the value the company can get from the labour then the company cannot stay in business.
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Offline Michael Hardner

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Re: Economic Status of Working People - in Decline or no ?
« Reply #7 on: March 30, 2019, 02:56:10 pm »
Quote from: TimG on March 30, 2019, 02:42:24 pm
No company can stay in business if the value of the labour provided by the workers exceeds the cost of paying for that labour. More productivity is a necessary prerequisite for increases to worker wages. Whether more productivity actually translates into higher wages depends on the job but will happen in most cases.

More productivity isn't a necessary prerequisite to wage increase, though.  Wage increases can be obtained if the operator agrees to it and can remain profitable though.

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Some went offshore, some were replaced by machines that require a smaller number of more skilled workers.

Yes, good point.

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Prior to WW2 a lot of uneducated workers were needed on farms. That is no longer the case but farm production is still done here and is much higher than in the past. The same pattern is repeated in many industries.

Yes but ... doesn't help solve our question.   I agree with the basic facts of how business works though.
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Offline Michael Hardner

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Re: Economic Status of Working People - in Decline or no ?
« Reply #8 on: March 30, 2019, 03:05:09 pm »
Quote from: TimG on March 30, 2019, 02:48:52 pm
Because the definition of the "basics" today includes a cell phone, internet access, a car or two, free healthcare and many other things that would considered gross luxuries in the past. On top of that, there is more demand for the available housing in cities because the number of people competing for that housing has increased dramatically. The net result is people may feel they are worse off but they are not really.

Phone and internet are cheaper, two cars are a function of two income earners.  'Free' healthcare has been around for a few generations.

The housing thing is a factor - in a few cities.

So we have that and manufacturing going down due to offshoring. 
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Offline TimG

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Re: Economic Status of Working People - in Decline or no ?
« Reply #9 on: March 30, 2019, 03:08:49 pm »
Quote from: MH on March 30, 2019, 02:56:10 pm
More productivity isn't a necessary prerequisite to wage increase, though.  Wage increases can be obtained if the operator agrees to it and can remain profitable though.
Not a sustainable model because it will make it harder to attract new capital if the business needs to expand or compete with newcomers.
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Offline TimG

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Re: Economic Status of Working People - in Decline or no ?
« Reply #10 on: March 30, 2019, 03:15:08 pm »
Quote from: MH on March 30, 2019, 03:05:09 pm
So we have that and manufacturing going down due to offshoring.
The majority of job losses has come from automation - not offshoring. It takes a lot less labour to make a car today than it did in the past. It also takes a lot more capital investment which is part of the reason why the share of profits going to the capital owners is increasing.
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Offline Michael Hardner

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Re: Economic Status of Working People - in Decline or no ?
« Reply #11 on: March 30, 2019, 03:30:06 pm »
Quote from: TimG on March 30, 2019, 03:08:49 pm
Not a sustainable model because it will make it harder to attract new capital if the business needs to expand or compete with newcomers.

You can say it will make it harder to create capital but as I pointed out, if the business is profitable and can pay then they will be able to create capital.  Newcomers didn't lower the industrial wage until offshore newcomers did.
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Offline Michael Hardner

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Re: Economic Status of Working People - in Decline or no ?
« Reply #12 on: March 30, 2019, 03:33:38 pm »
Quote from: TimG on March 30, 2019, 03:15:08 pm
The majority of job losses has come from automation - not offshoring. It takes a lot less labour to make a car today than it did in the past. It also takes a lot more capital investment which is part of the reason why the share of profits going to the capital owners is increasing.

Capital investment - shareholders or lenders ?  Lenders' profits come after the company makes their money and pays it back.  Do they make much more than prime ? 

Also - if automation has taken most of the jobs, do we have a cite ?  And why don't see see the returns from automation lifting everyone up ?  It seems to add more to the question of the thread than answering it.
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Offline Queefer Sutherland

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Re: Economic Status of Working People - in Decline or no ?
« Reply #13 on: March 30, 2019, 06:14:08 pm »
Quote from: MH on March 30, 2019, 12:26:49 pm
Uneducated workers used to get a house, a job, education paid for - what happened ?

Globalization meant north american companies, always seeking to lower costs and increase profits, found vast quantities of workers in Asia, Mexico etc. able to do the same jobs for cheaper.  No special education required means manufacturing jobs can be easily moved and taught to people in these countries.  To remain competitive, most companies have to follow suit.

This means lower prices for consumers, in the long run is probably good and unavoidable, but the people caught in this transition who lost their well-paying jobs have suffered horribly:  https://www.npr.org/sections/health-shots/2017/03/23/521083335/the-forces-driving-middle-aged-white-peoples-deaths-of-despair

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I'll start: a global manufacturing economy that was unionized, labour-intensive, and had lots of income due to post-war decimation of Europe leading to N. American domination.

Fight me :)

I don't see this as an explanation.
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Offline Michael Hardner

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Re: Economic Status of Working People - in Decline or no ?
« Reply #14 on: March 30, 2019, 06:20:11 pm »
Quote from: Poonlight Graham on March 30, 2019, 06:14:08 pm

I don't see this as an explanation.

I was trying to say the same thing you did.
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