Monday, October 17, 2016

Productivity Stagnation = Wage Stagnation

Ultimately, wages must reflect productivity. You cannot justify higher wages without higher production . Efforts to counter that without changing productivity-- e.g. misguided minimum wage actions -- are, then, merely transferring money from one set of people (those whose labor value is less than the minimum and are, therefore, unemployable) to those with higher skills and labor value.

You can argue why productivity has been falling in the 21st century (I blame increased government regulation and capital controls), but unless you change this curve, overall wages are going to continue to be stagnate.

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