Wage setting (was 'Nader Demands Banning, Pulping of Harry Potter')
Max, what theory/empirical evidence lays behind your statement: the wage of the 'guy in the auto plant' is crucial in putting upward pressure on labor standards in general. I've just started to do research on the spillover (or lack of spillover) of wage increases (decreases) from one 'key' industry to other 'nonkey' industries and on the existence (or not) of an economy-wide "standard" for wage increases. I've yet to reach any conclusions. So, any thoughts on this (mechanism of spillover, how 'standard' set, etc) would be appreciated. Eric Eric Nilsson Economics California State University, San Bernardino San Bernardino, CA 91711 [EMAIL PROTECTED] winmail.dat
RE: Wage setting (was 'Nader Demands Banning, Pulping of Harry Potter')
Evidence we don't need no stinkin evidence . . . On the theory side, the simple idea that if a person with given skills can suitably perform the duties of an auto worker or sandwich man, there is some pressure on employers to offer more similar wages than otherwise (lower for the auto maker, higher for the sandwich mogul). The greater the sphere of high-labor standards jobs, the more pressure on other sectors to conform. An injury to one is an injury to all, in the vernacular. If this is wrong, I've been wasting a lot of time. In public economics, there is the noteworthy literature on the 'cost disease' in public services launched by Baumol -- increases in productivity and wages force lower productivity industries to bid up their wages in order to secure labor. More specifically, it obliges the public sector to raise spending to maintain a given output of services. Baumol also applied this to the arts. For more than that, you'll have to consult a real labor economist, which I am not. cheers, mbs Max, what theory/empirical evidence lays behind your statement: the wage of the 'guy in the auto plant' is crucial in putting upward pressure on labor standards in general. Ive just started to do research on the spillover (or lack of spillover) of wage increases (decreases) from one key industry to other nonkey industries and on the existence (or not) of an economy-wide standard for wage increases. Ive yet to reach any conclusions. So, any thoughts on this (mechanism of spillover, how standard set, etc) would be appreciated. Eric Eric Nilsson Economics California State University, San Bernardino San Bernardino, CA 91711 [EMAIL PROTECTED] winmail.dat
Re: RE: Wage setting (was 'Nader Demands Banning,Pulping of Harry Potter')
Max Sawicky wrote: Evidence we don't need no stinkin evidence . . . On the theory side, the simple idea that if a person with given skills can suitably perform the duties of an auto worker or sandwich man, there is some pressure on employers to offer more similar wages than otherwise (lower for the auto maker, higher for the sandwich mogul). Given any collection of quantities (a, b, c, d . . .) it is a tautology that one can equate any one of them with unity, then express each quantity in terms of the selected one. Hence one could, for example, take the average wage of bank window clerks as unity and express every other wage as some multiple of that wage. Is there any theoretical *or* empirical reason to believe some one wage should be set at unity in that all others vary as it does, but it is not affected by others? My own guess would be that *if* there is a key wage it is the wage for non-labor (public aid, disability, unemployment, etc.). I have no evidence for this. Mere speculation. Wages paid illegals might fall in the same category. Carrol
RE: Re: RE: Wage setting (was 'Nader Demands Banning,Pulping of Harry Potter')
CC: . . . Given any collection of quantities (a, b, c, d . . .) it is a tautology that one can equate any one of them with unity, then express each quantity in terms of the selected one. Hence one could, for example, take the average wage of bank window clerks as unity and express every other wage as some multiple of that wage. Is there any theoretical *or* empirical reason to believe some one wage should be set at unity in that all others vary as it does, but it is not affected by others? [mbs] my point does not depend on designating any kind of index wage that obliges all others to follow it. It is simply that for workers in the same labor market, there is pressure for wages to converge to some degree, so that if there are increases in wages above the median, that should pull up lower wages. If the sandwichman makes five bucks and the autoworker fifteen, you could normalize the former at one, making the latter three. It would still follow, by my hypothesis, that a rise for the autoworker has some positive impact on the sandwichman. I take the point that an increase anywhere ought to help the entire wage distribution, if we are talking about money, so in this sense the auto worker is no more key than the sandwichman. Some dimensions of labor standards might be different -- all or nothing benefits, such as safety rules. My own guess would be that *if* there is a key wage it is the wage for non-labor (public aid, disability, unemployment, etc.). I have no evidence for this. Mere speculation. Wages paid illegals might fall in the same category. Carrol [mbs] Insofar as this is a different labor market, there is less impact on other markets. It is less easy to substitute across groups. There is a lot of evidence that public benefits affect low-wage labor markets, including Cloward Piven's Regulating the Poor. Suppose we turned the question around. What trade policy would best serve service sector workers -- one that improved the (higher) wages of manufacturing jobs (for which service sector workers were qualified) and made these jobs more plentiful, or one that reduced the price of consumption goods and created more jobs in sectors with below-average wages. mbs
RE: RE: Wage setting (was 'Nader Demands Banning, Pulping of Harry Potter')
OK, I am a labour economist (out of practise mind you, but one none the less). The relevance of the argument depends greatly upon the institutional setting of the labour market(s). Some industries have equality in bargaining power because of unions or because individuals skills are highly valuable, while others do not. therefore the gains to wages in one sector do not necessarily flow onto others. in addition, some sectors may find it beneficial to pay efficiency wages to avoid high turnover and the loss of productivity, while for others high turnover may not be so costly. Additionally, the argument that workers will move to where wages are higher, forcing wages up everywhere, is hindered greatly by the consideration of demand (are there enough jobs available?) and workers own demographics and attributes (particularly geographical mobility, skills etc.). enough for now. -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]] Sent: Tuesday, 15 August 2000 2:06 To: [EMAIL PROTECTED] Subject: [PEN-L:590] RE: Wage setting (was 'Nader Demands Banning, Pulping of Harry Potter') Evidence we don't need no stinkin evidence . . . On the theory side, the simple idea that if a person with given skills can suitably perform the duties of an auto worker or sandwich man, there is some pressure on employers to offer more similar wages than otherwise (lower for the auto maker, higher for the sandwich mogul). The greater the sphere of high-labor standards jobs, the more pressure on other sectors to conform. An injury to one is an injury to all, in the vernacular. If this is wrong, I've been wasting a lot of time. In public economics, there is the noteworthy literature on the 'cost disease' in public services launched by Baumol -- increases in productivity and wages force lower productivity industries to bid up their wages in order to secure labor. More specifically, it obliges the public sector to raise spending to maintain a given output of services. Baumol also applied this to the arts. For more than that, you'll have to consult a real labor economist, which I am not. cheers, mbs Max, what theory/empirical evidence lays behind your statement: the wage of the 'guy in the auto plant' is crucial in putting upward pressure on labor standards in general. I've just started to do research on the spillover (or lack of spillover) of wage increases (decreases) from one 'key' industry to other 'nonkey' industries and on the existence (or not) of an economy-wide "standard" for wage increases. I've yet to reach any conclusions. So, any thoughts on this (mechanism of spillover, how 'standard' set, etc) would be appreciated. Eric Eric Nilsson Economics California State University, San Bernardino San Bernardino, CA 91711 [EMAIL PROTECTED]
