Wealth Distribution in the USA

But people are willing to take those jobs at those wages.

My question appears to have been unclear. Sorry.
How did they decide if they were willing to pay any wage at all? (i.e. decide to recruit someone at a wage greater than zero.)Imaginary Example:
Imagine there was a business that had an office with 5 desks and that was all the office could hold.
But they had enough work for 6 people.
Would they just decide to employ a 6th person?
And how would they make that decision?Real Example:
My company needs a very specific skill set to help run and develop their system.
There are only about 5 people in the world that have that skill set.
It would be very useful if the company had 2 people with that skill - it would halve development time, bringing all the benefits of a fast release turnaround, etc.But to hire someone with that skill set would cost somewhere between 100,000 and 200,000.
That is the market rate.So - why do you think we haven't hired someone?
It would definitely be advantageous to have another developer.
And we know the market rate.How do you think we decided that we were not willing to pay that particular wage?Edited by Panda, : No reason given.Edited by Panda, : No reason given.Edited by Panda, : No reason given.Edited by Panda, : No reason given.

But we're not talking about utility termsat least we shouldn't be. What matters is selling price; selling price is the benefit to the company of producing some good/service; it is the 'value' as considered by the company. I've said this in another thread; and while it's all good and true it is also completely irrelevant here. To derive utility, yes, but not to derive a selling price. Let's consider a very simple example: A man purchases a block of wood for $10. He then asks someone with a hammer and chisel to shape the block of wood into a carving that sells for $50. The value our wood carver adds to the product is $40the selling price of the output minus the selling price (cost) of the input.What utility he adds is, of course, irrelevant; the benefit he provides for the original purchaserhis 'value' to the purchaserof the block of wood is the increased selling price he creates by reshaping the wood. Who cares? Businesses don't exist to create 'real value'. They exist to make money. A business without any income that produces the cure for cancer will fail; a business with positive net income that produces condiment-sized packets of airworthless crapwill succeed.The 'real value' of the good/service being produced is irrelevant to the company in determining whether additional inputs (which is what labor is) are justified by their contribution to overall income. Again, who cares? We aren't interested in utility to the consumer. We are interested in the selling price of the final productthe benefit to the company. No one cares about 'real value'. We are talking about money and only money.

Why should that be the only factor taken into account? Let me put to you the same scenario I put to Percy.Remember our striking truckers? Let's imagine that you are responsible for negotiating the pay deal for those unionised workers. Do you think the fact that the economic impact of the truckers not undertaking that work results in losses that run into the millions might be relevant to your position in those negotiations? If you were the negotiator would you say "The number of people who can do the job that determines its value"....? Or would that stance be a dereliction of your duties as negotiator on behalf of the striking workers?In such a situation the economic benefit the workers provide, the value of their labour in terms of utility, is very much a relevant factor in wage negotiation and determination. Do you understand and accept this?The idea that value in terms of utility (aka economic benefit) be a factor in wage determination isn't the crazy-wild-eyed-naive-end-of-economics-as-we-know-it lunacy that you and Percy keep relentlessly insisting it is. It's a factor in any wage negotiation with any union. It's really rather common. And that's why we need something more.Can you see that the increasing exclusion of economic benefit as a factor in pay deals, the increasing reliance instead on pure supply and demand as the sole dictator of rewards, is a large part of the reason that wealth is distributed in the way that is the topic of this thread?Can you see that if one wants to change the wealth distribution that is the topic of this thread then factoring in economic benefit to reward (through unionisation at the bottom and increased shareholder power over executive pay at the top) is very arguably a major part of the way forwards.

It appears we are talking about different things.If you want to know what I am talking about see Message 424

You're describing bargaining power, not value. The same drivers without a union provide the same 'value' to the company but have less power to get a better deal. Which is, of course, why unions exist.You're also conflating the loss of sales with value added.
If $1m dollars worth of sales are lost by the driver's strike, that is not the value that the drivers add to the company; that's the damage they can cause if they refuse to work.The actual value (which is only a % of the $1 sales loss - the bit we call profit) was created by all the assets of the entire company being used to create whatever widgits they created.

I'm using the term "economic benefit" to describe the economic impact of the work in question not being done. That was the basis for my use of the term "economic benefit" when I was talking about the busniess case for a new network engineer position. That is the basis for my use of the term as applied to striking truckers.If you think there is a better term to describe the economic impact of the work in question not being done then I'd be happy to hear it. In terms of utility the value is the same. Yes. In order to make "economic benefit" as I have defined it a factor in wage negotiation. I'm not suggesting that the truckers can lay claim to some identifiable portion of the profit in terms of 'value added'. But all other things being equal this does mean that the truckers labour has considerable value in terms of utility. This isn't the same as saying they are responsible for X% of profit but is instead more an indication of their vital role to profitability as a whole. Other workers can of course lay similar claim. Indeed. I'm not suggesting that we can aportion some percentage of profit to truckers, some portion to network engineers, some portion to box stackers etc. etc. etc. I never have.Edited by Straggler, : No reason given.

Well what you are describing - the effect of a driver's strike on the company - is usuallay described as an economic loss. And it's not the same as an economic benefit.The driver's strike would cost the company $1m dollars in lost sales - that would be an economic loss of $1m which can be entirely aportioned to the drivers.But if they didn't strike, their economic benefit would be some small fraction of the profit (not the sales) derived from the $1m sales made.

Hi Straggler,You've expressed uncertainty about what I mean, so let me state it plainly again. For most jobs you cannot know the "economic benefit" to the company. What you've been calling an "economic benefit" is actually just part of the business case one makes to influence a business decision. Any details about a job's contributions to a company's "economic benefit" are lost when that job is subsumed within a company to mix with all the other jobs that also contribute. Tangle and CS have said the same thing. This isn't rocket science, and it isn't mysterious or confusing.This supposed "economic benefit," being that it cannot be known with any accuracy, not even whether it is positive or negative, cannot be used as a factor in setting wages. There is not the remotest link to wages. Wages are set by market forces along with other factors such as tariffs, unions, minimum wage laws, etc.You're other argument also makes no sense, that companies should pay their workers more because they make money from their labor. Workers sell their labor to companies for their wages. Employment gives them no claim on a company's revenue, profits or losses. They're not entitled to more money when the company does well, and correspondingly, they're not given less money when the company does poorly (except in dire circumstances).--Percy

You're again claiming a link between some incalculable "economic benefit" and wages. No such link exists. Wages are set by market forces. The CEO claims that under his leadership the company had $100 million in revenue that it otherwise would not have had. Prove him wrong. You'll quickly be deep into imaginary numbers. Unlike you, I don't believe that some minimum level of food, housing and healthcare should be conditional upon employment.--Percy

You made a business case arguing how much better or worse the company would do if they hired the new employee, a business case that took into account prevailing market level wages for that job. That has nothing to do with setting the employee's salary were he hired.--Percy

It shouldn't, but you were talking about justification. Sure, but that would be threatening the employer into coughing up the wage rather than obtaining the wage by showing that the truckers deserve it because of all the value they are adding. If there were another group of truckers who were willing to take all the jobs for the current pay, then there wouldn't be anything I could do to eliminate that fact. And your argument on all the money that would be lost if my truckers striked would instantly vanish. But if there are other people who will provide the same utility at the lower wage, then they are going to win the job and your argument about how much utility is being provided loses all its weight. I think I get it, its just that it doesn't happen for the vast majority of jobs. There's plenty of people to do the jobs so the market forces end up dominating. You can't argue about how much money the company is going to lose if you don't do your job when there's somebody standing outside who's willing to take over. You're not getting what we're saying. Your ideal just isn't realistic, that's all. How common?

quote:

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In 2010, the percentage of workers belonging to a union in the United States (or total labor union "density") was 11.4%

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. No, not really. It never really was there to begin with so it isn't being excluded. Its just not the way the real world works. You can't bring the economic benefit of your employment into argument when there's another person willing to sell the same benefit for a lower price. None of your arguments matter anymore at that point.That being said, I suppose that if you could somehow begin including the economic benefit as a factor in pay deals then the distribution of wealth might be able to be spread out a bit. Wait... I thought the idea that wage should be linked to economic benefit was just a strawman? I'm not convinced its a major part, nor do I see how its very possible in the real world.

As I said, their wage was considered to be the current market rate of 100-200k. Yes, we estimated the economic benefit of that additional employee.But you said that was not possible.
So, maybe I am misunderstanding you.Edited by Panda, : No reason given.

The misunderstanding must be arising because the "business case", which is how much the company might benefit from the added employee, is not the same thing as the "economic benefit of that additional employee" to the company. This is a distinction I was forced to make because of Straggler's claim that there must be a link between the "economic benefit" to the company and wages. He was making a business case for a business decision and calling it the "economic benefit" of the added job. That's wrong. The additional employee enables the company as a whole to additionally benefit - the additional benefit is not due to that one job all by itself.Here's a table of how much a company benefits in terms of dollars from hiring the new employee versus how much the salary should be for the new employee, using hypothetical figures, of course. Notice that no matter how much the benefit to the company, the salary is the same: Just look at the first column. On the top line it says "$100,000". If the new hire enables the company to earn an additional $100,000, then you'd like to believe that the economic benefit of that job to the company is $100,000. That figure is close enough to his salary as to almost seem reasonable.But the last scenario in the table says "$5,000,000". If the new hire enables the company to earn an additional $5,000,000, then you'd like to believe that the economic benefit to the company of that job is $5,000,000. But that's ridiculous, isn't it.That's because it isn't that job that's contributing $5,000,000 to the company's bottom line. All that additional job does is allow the company as a whole to perform in way that enables it to make an additional $5,000,000.It gets even more ridiculous if one tries to claim a link between this supposed "economic benefit" and salary. In that case you'd have salaries changing constantly due to normal fluctuations in a company's revenue and earnings (which can both be negative, though usually only the latter).--Percy

You're wrong. The value in terms of utility is irrelevant to the company. The only thing that matters labor-wise is the selling price of their goods/services with labor versus without it.Companies don't ultimately care about the utility of their products. Companies don't ultimately care about the economic benefit they offer the world.Companies only care about income and expense. The expense of labor must be justified by the creation of income.