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Yup..because when labor costs go up cuts have to be made to maintain revenue. You cannot change one side of the equation and expect the same answer.
(rounded for easier math)
20 people at $5/hour = $100
20 people at $7/hour = $140
Where does that extra $40 come from in labor costs ? Does the company just "eat it" or make cuts in other places.
This is what happens to contain costs:
14 people at $7/hour = $98
So 14 people are better off than they were..but 6 are now SOL with no income.
So people who get paid more don't spend that money at businesses they just save all that money. You are looking at it from the cost side not where the money goes.
So people who get paid more don't spend that money at businesses they just save all that money.
Save? Don't you mean invest? That money is invested in companies that provide millions of jobs for others, or in municipal bonds that provide the capital for cities, towns, counties, park districts, school districts, etc., to complete capital improvement projects for which they otherwise wouldn't have adequate funding.
Yup..because when labor costs go up cuts have to be made to maintain revenue. You cannot change one side of the equation and expect the same answer.
(rounded for easier math)
20 people at $5/hour = $100
20 people at $7/hour = $140
Where does that extra $40 come from in labor costs ? Does the company just "eat it" or make cuts in other places.
This is what happens to contain costs:
14 people at $7/hour = $98
So 14 people are better off than they were..but 6 are now SOL with no income.
If a business didn't need those workers, they would have fired them already. The question is, are those workers producing enough to make it still worth having them employed? The answer is usually, yes.
Where does that extra $40 come from? Either a small hit on profits, a small increase in prices or through productivity. Happier employees work better. This is productivity over time compared to wages.
If a business didn't need those workers, they would have fired them already. The question is, are those workers producing enough to make it still worth having them employed? The answer is usually, yes.
Where does that extra $40 come from? Either a small hit on profits, a small increase in prices or through productivity. Happier employees work better. This is productivity over time compared to wages.
Want a even more depressing chart? Get the chart thats from before 1970 where wages and productivity followed each other much more closely.
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