Rakesh Bhandari wrote,
>Confronted with the problem of wages not keeping up with productivity, Lawrence
>attempts to reconceptualize the data. First, he says we should look at real
>hourly compensation in the business sector, instead of real average hourly
>earnings; the former has increased by almost 9%, while the latter has
>decreased by 15% between 1973 and 1994. Why? This category "real
>compensation" includes supervisory workers and it includes "fringe
>benefits" which are doubtless enjoyed disproportionately by supervisory
>workers. Isn't Lawrence merely using data which will mask the exploitation
>and oppression of the proletariat?
If Lawrence says we should look at real hourly compensation *instead of*
real average hourly earnings, then the data may indeed mask exploitation
(I'm not sure that either data series says much about oppression). But if he
says that we can better understand what is happening to hourly earnings if
we _also_ look at hourly compensation, then I agree with him (I'll have to
read his book to find out). My research suggests that "benefits" have a
rather perverse and pernicious effect on employment and on earnings inequality.
In other words, there seems to be a causal relationship between the 9%
increase in real compensation and the 15% decrease in wages -- and not just
in terms of skyrocketing executive salaries. This is because most benefits
are paid by employers as fixed or quasi-fixed costs, which makes high-priced
labour relatively less expensive than low-priced labour.
I raised an aspect of this issue a few days ago on Pen-l in my message on
"the ninth hour" and have only received one, off-list, reply. So I'm
wondering whether progressive economists are particularly interested in the
dynamics of labour income inequality -- and how those dynamics *in turn*
affect the relationship between labour and capital -- or if the assumption
is that labour and capital are hermetically sealed compartments.
I'm with Bacon on the spider, ant and bee question. Or, to paraphrase Larry
Summers (and thus put at risk my appointment to the CEA;-): "I think
the economic logic of paying even lower wages to low wage earners is
impeccable and we should face up to that... Poor people are vastly over
compensated." (do I really have to put in a disclaimer for irony?)
Regards,
Tom Walker
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