[expat_panama]

These two graphics may help explain the article's points. 

 

My thinking is that there are a couple of things overlooked here so far.  One is that worker income and productivity are not in lock step. 

The big one has got to be that while labor is important to production, contrary to the populist view it's not everything.  Capital matters too.  An eight hour day with a $3 shovel digs a much smaller hole than an eight hour day w/ a $500,000 excavator.   That excavator has to be paid for too.

 

Another big reason that the complaint about lagging wages is bogus is the fact that wages simply do not always to all the lagging.

 

For the past few years productivity growth has ground along averaging less than a % annually, but worker income's been growing

 

This may or may not cause inflation; mho is that in what's going on is that this time it's income for capital is lagging productivity.

 

 

[Sacajaweau]

Let’s just look at government workers.

[Cboldt]

I far from have a good handle the subject of economic prosperity, other than it is in large part a matter of pure psychology and confidence. At any rate, the observation relating to capital causes me to ponder that one man's capital (the excavator in the eyes of the ditch digger) is another man's labor (the excavator builder).

As for the premise of the article, any linkage between (worker) productivity and (worker) wages is, as you notice, contrived. Work is paid for, at the value of the worker's time and how much competition there is for that grade of worker. The value of the output of the worker is highly variable based on other factors.

[expat_panama]

It's a beautiful mid-week morning (and remember Pearl Harbor Day) as the NASDAQ punches up a half % in rising volume!  IBD is still looking out on the outlook as just 'market under pressure' but we can hope.  Futures traders have no comment; they got stock indexes flat just like metals as gold/silver continue their sideways bases.

Today's major econ stats:

7:00 AM MBA Mortgage Index
10:00 AM JOLTS - Job Openings
10:30 AM Crude Inventories
3:00 PM Consumer Credit

Headlines w/ our morning coffee:

Sorry Luddites, AmazonGo Will Be Huge Job Creator - John Tamny, RCM
When Checkout Lines at Grocery Stores Go Away - Justin Fox, Bloomberg
Carrier Is a Loss for Mexicans and Americans - Donald Boudreaux, PTR
Trump's Carrier Deal Won't Make the U.S. Great - Matthew Mitchell, RCM
Obama & Trump Are Both Wrong About Saving Jobs - David Dayen, TFT
Growth Under Trump Will Make His Job Easy - Tom Del Beccaro, Forbes
The Constitutionalism of Crony Capitalism - Greg Weiner, Law and Liberty
Can Donald Trump Be the Euro's Savior? - Daniel Gros, Project Syndicate
Trump Must Repeal Dodd-Frank Right Away - Editorial, Investor's Business
A Bigger Econ. Pie That Few Get a Slice Of - Patricia Cohen, New York Times
Castro, Socialism, and the Shortsighted - Richard Rahn, Washington Times

[wastoute]

One may debate “trickle down” with libtards until the crack of doom. Notice how even they won’t try to defend or even explain Socialism’s “trickle up”. They dumbest dumbass knows increasing gummint does not improve the economy.

[Fzob]

Outside of Union rhetoric I have never seem any reason to connect productivity to hourly wages. Maybe someone can explain.

[Mr. Jeeves]

I've always had a hard time understanding how these measurements of productivity are measuring actual productivity. Seems like there is a subjective component - not unlike the unemployment statistics - that can be massaged tactically to make governments look good.

I would think that stagnant wages are a sign that wage-payers aren't feeling all that good about their profitability, meaning any productivity increase was necessary simply to run in place. That is true in my own business, where we are operating far more intelligently and efficiently than we were five years ago - and have to just to generate the same level of revenue in a much tougher marketplace.

[bert]

The concept of worker is out of date.

With regard to employees today, the market does nor require workers. The market increasingly requires thinkers.

Those physically fit but mentally lazy are unfit for the current workplace.

[Vermont Lt]

I recall reading a study in the late 1990s that indicated if people just worked when they were at work, productivity would skyrocket.

There is a lot of lost time in most jobs.

[Alas Babylon!]

It all comes down to supply and demand.

When someone has a rare, unique skill, and there is a strong demand for it, the competition for the skill will cause the compensation for the person with that skill to rise. Others will try to get that skill until it is a common skill.

If the individual has a rare, unique skill that nobody wants, then compensation is low.

If the individual has a common skill that nobody wants, then compensation is low.

If the individual has a common skill, but is widely wanted, then those who want that skill can pay whoever accepts the least for it.

[LS]

On the relationship between labor productivity and all productivity you have hit on something that may provide the missing link to my hypothesis—and I repeat. I’m not stating a proven truth but advancing a what if:

One of the big disconnects between classical free market theory and reality over the past 10 years has been the absence of hyperinflation. With $17 trillion in debt and QE1,2,20, where is the money going?

I have argued that the computer/robotic revolution has so astronimically increased productivity that money/prices haven’t caught up and that we have been in a deep deflationary hole.

So what you may be saying is that labor productivity can only go so far, even for the brightest, most skilled people. Yes you can invent a great new process, but physically implementing it is subject to your own limitations of time, space, and health. MACHINE productvity, while not limitless (they break down) nevertheless is of vast orders of magnitude more than human.

It is the productivity gain of machines/computers that we have been unable, I think, to properly value since 1990, and once we get that, the biggest struggle will be to better re-connect human productivity inputs to them on a MARGINAL scale so that labor is more proportionately recompensed.

And I have no idea how to do that. The patent system just isn’t built for that, but neither is the old hourly wage system.

[discostu]

That’s because there’s now a mismatch between productivity and the need for workers. More automation means higher productivity with fewer lower skilled more replaceable and therefore lower paid employees.

[Let's Roll]

Only if they’re union.

[Let's Roll]

Ironically, this is today’s FR word for the day.

http://freerepublic.com/focus/f-chat/3502180/posts

[hawg-farmer - FR..October 1998]

PUBLIC UNIONS HEH HEH

[1Old Pro]

Unions.......