Walmart employees to get raises

[Paul Or Nothing II]

If you leave out real wages, then yes it can be both true.

Immigrants create supply for labor, making labor cheaper. A dollar can now buy more labor for less, this is increase in purchasing power. Labor costs go down nominally, I don't know about "real" but wages go down, and wages are cheaper, and dollar is stronger.

Yes, nominal-wages go down, that is, each worker receives fewer dollars than before but production would also go up & increasing supply of products would reduce prices as well. People think that there's a limited amount of pie & the more people are there, the less of the chunk they'll get but this isn't necessarily true if the new people are also being productive. If 100 people are producing 100 pies then 110 people would be producing 110 pies so the reduction in nominal wages would be compensated by lower prices in the economy.

Can you offer examples of times when nominal prices and wages were falling as economies grew?
Lower wages are not necessarily offset by lower prices. That is because not all productivity goes to wages. Some is retained as profits by the company. The labor share of prices has fallen quite a bit in the last 50 years or so. Wages have not kept up with productivity increases and prices have also not reflected changes in productivity. Bosses and companies have been retaining larger shares than they used to.

Since you follow Keynesian economics, you'd know enough about sticky wages/prices. It used to occur frequently under metallic monetary standards because if the economy grows at a faster pace than the pace at which monetary units are growing then that would cause a price-deflation, a fall in wages/prices caused by the growth of the economy. This is the very "problem" Keynes felt the need to solve by allowing the government to increase moneysupply in line with a growing economy.

And, why would all productivity go to wages??? If it did, then what would be the incentive for the company to fund & run the operation in the first place????? You surprise me!
Just like wages are the return earned on labor, profit is the return earned on capital ivested so it would be naive to think that all the productivity should go to wages. Such things only happen in the dreams of communists, not the real world!

 

[PRB]

Yes, nominal-wages go down, that is, each worker receives fewer dollars than before but production would also go up & increasing supply of products would reduce prices as well.

Sounds about right. This is why electronics are getting cheaper, less people have (blue collar) jobs.

People think that there's a limited amount of pie & the more people are there, the less of the chunk they'll get but this isn't necessarily true if the new people are also being productive.

Productive in doing what? People can only eat so many pies.

If 100 people are producing 100 pies then 110 people would be producing 110 pies so the reduction in nominal wages would be compensated by lower prices in the economy.

This assumes there's demand to eat the extra 10 pies, or else the 10 pies are wasted, and while it'll initially make pies cheaper, it'll lead to reduction in production if demand is not constant.

 

[Zippyjuan]

Yes, nominal-wages go down, that is, each worker receives fewer dollars than before but production would also go up & increasing supply of products would reduce prices as well. People think that there's a limited amount of pie & the more people are there, the less of the chunk they'll get but this isn't necessarily true if the new people are also being productive. If 100 people are producing 100 pies then 110 people would be producing 110 pies so the reduction in nominal wages would be compensated by lower prices in the economy.



Since you follow Keynesian economics, you'd know enough about sticky wages/prices. It used to occur frequently under metallic monetary standards because if the economy grows at a faster pace than the pace at which monetary units are growing then that would cause a price-deflation, a fall in wages/prices caused by the growth of the economy. This is the very "problem" Keynes felt the need to solve by allowing the government to increase moneysupply in line with a growing economy.

And, why would all productivity go to wages??? If it did, then what would be the incentive for the company to fund & run the operation in the first place????? You surprise me!
Just like wages are the return earned on labor, profit is the return earned on capital ivested so it would be naive to think that all the productivity should go to wages. Such things only happen in the dreams of communists, not the real world!

So nominal wages will go down but wages are sticky. Seems to conflict. I agree on the sticky part- since employers have a hard time reducing pay for existing staff, they react instead by cutting the hours of the workers they have.

It used to occur frequently under metallic monetary standards because if the economy grows at a faster pace than the pace at which monetary units are growing then that would cause a price-deflation, a fall in wages/prices caused by the growth of the economy.

Were you able to find examples of a growing economy with falling prices and wages yet? If it happened frequently, there should be many examples. More often, decreases in wages and prices are associated with recessions- not growing economies. Even under metal standards. Again, the sticky wages problem. Employers can't cut wages so they cut staff. People have less money to spend on things so they buy less. Employer sees demand fall so he cuts more workers. It may work in theory but doesn't happen in reality.

 

[PRB]

Were you able to find examples of a growing economy with falling prices and wages yet? If it happened frequently, there should be many examples.

Well, if this were NorthCarolinaLiberty answering, I can predict his response "I already posted examples and evidence a bunch of times! You keep denying it in hopes people won't see your game!"

 

[Zippyjuan]

I did find a chart for the US which includes inflation/ deflation and recessions. The US has been on a metal standard of various forms until it was fully ended by Nixon in 1972. If it "occurs often" we should see deflation during growth periods. This chart runs from 1914 to 2011. Almost a hundred years.

http://inflationdata.com/inflation/Inflation_Articles/Inflation_and_Recession.asp

 

[NorthCarolinaLiberty]

Well, if this were NorthCarolinaLiberty answering, I can predict his response "I already posted examples and evidence a bunch of times! You keep denying it in hopes people won't see your game!"

You play your game so often that it should just be a sticky thread.

 

[Paul Or Nothing II]

Sounds about right. This is why electronics are getting cheaper, less people have (blue collar) jobs.



Productive in doing what? People can only eat so many pies.



This assumes there's demand to eat the extra 10 pies, or else the 10 pies are wasted, and while it'll initially make pies cheaper, it'll lead to reduction in production if demand is not constant.

Since there's an increase in the number of people consuming, demand will obviously have increased; & if there isn't then those additional workers would be utilized in producing something else that does have demand as markets are fairly efficient in resource-allocation.......Anyway, the point about pie example was an that increase in labor supply does NOT necessarily mean that "more people are going to have to share the same pie with each person getting smaller piece".

So nominal wages will go down but wages are sticky. Seems to conflict. I agree on the sticky part- since employers have a hard time reducing pay for existing staff, they react instead by cutting the hours of the workers they have.



Were you able to find examples of a growing economy with falling prices and wages yet? If it happened frequently, there should be many examples. More often, decreases in wages and prices are associated with recessions- not growing economies. Even under metal standards. Again, the sticky wages problem. Employers can't cut wages so they cut staff. People have less money to spend on things so they buy less. Employer sees demand fall so he cuts more workers. It may work in theory but doesn't happen in reality.

So, now you're going to dispute something, which is agreed upon by various schools of economic thought (including Keynesian) - that, price-deflation occurred under metallic standards because of the growth of the economy!

It doesn't take much imagination to understand the concept. If there are 100 units of money, be they dollars, gold, seashells, or whatever, & an economy is producing 100 products, & subsequently, as the economy grows to produce 105 products, & the money doesn't grow in line with the growth of the economy, then the prices of products can only fall.

I know you like to go around in circles with your arguments but if you're going to dispute something that is so widely accepted (& it's not at all a hard concept to grasp!) then I don't see a point in arguing with you on this........because that would be like arguing with someone who claims that the Earth is flat......

 

[edward222]

Wait, you mean they did this without a law telling them to?!! That doesn't seem right.

Well, there is no rule that prohibits the company from raising the salary.