https://www.nytimes.com/2017/07/13/business/economy/labor-market-wages.html

This is a short article that investigates why certain roofers are calling for additional H2B permissions to import cheap labor. The people writing the article weren't primarily trying to do so, but because they did ask SOME of the right questions, and did refer correctly to how capitalism is supposed to work, they brought readers to the edge of various conclusions, possibly including minimum wage raises.

The way that capitalism is SUPPOSED to work, relative to wages, is that when workers are needed, and no one is willing to work at the proposed wage, the wages are supposed to rise. The employer in the article says that she can't offer higher wages, because she would have to charge more for her company's services, and would lose business accordingly.

What's left out of the story, is that that is ALSO supposed to be how capitalism balances itself. When people want to buy something, and no one is willing to sell it to them for the amount they are offering, they are supposed to raise what they are willing to pay.

All of the so-called self-balancing of costs and wages and prices falls apart, however, if cheats and work-arounds are allowed. The roofer in this article would NOT lose business to competitors, if the competitors had the same limitations on wages, because they would have to raise prices the same amount as she does.

Bringing in foreign workers, means that this economy is purposely directing part of it's wealth away from itself, into the economy of another country. The wealth that the foreigners create through their labor, goes back to their country of origin. That defeats the whole point of capitalist competition.

Wages are held down entirely artificially in this way, and the cost of living is allowed to remain high, and even increase. When it does, local workers become even harder to find, instead of easier.

The implied support for raising minimum wage, is that competing companies who MUST give living wages by law, would no longer be tempted to help foreigners drain away the wealth of the local economy.

We have the same thing over here. Companies want to use cheap labour to boost profits.
I have no problem with the wages. But. People want to buy cheap and are not prepared to pay the price of using local labour so how can you change this?

the balance here has always seemed like a chicken or egg dilemma

the chicken being the cost of products and services and how it relies on the cost of producing or performing


and the egg being, the ability of consumers to earn money that meets the costs of the products and services


you often hear that if wages go up, so too will the cost of the products and services, but so what, because people would have the increased wage to cover the rise

so if to pay for basic goods and services a living wage of 12 hr is what is required, where employers are used to paying 9 or 10, the price of the goods and services will rise so the employer can maintain his or her profits




which seems to mean that the overall wage-costs ratio is not affected at all,,,

(IF you don't consider any of the other many variables

for example: the increase in customers that might occur if more people could AFFORD the product

if I sell a product at 10 bucks a pop, using 5 employees that receive 50 cents each and average 80 customers who can afford it, thats 800 dollars in sells and 2.50 in wages

but if I sell at 10 bucks a pop, using 5 employees at 1.50 each but there are now 200 customers who can afford it(due to an increased wage) that is 2000 in sales and 7.50 for the wages. So my increase in wages would NOT require me to raise the price of the product and I would still be making MORE profit.)

This is a very open ended debate. There will always be pros and cons to higher wages. For a small company, a wage hike may hurt a lot more than a multinational such as the popular fast food operations and large box stores where the upper executives are making multi millions of dollars while employees are not doing so well. Just think, if those people took a couple million less, paid their people better, local economies would start to improve. Hence, the roofer would get more business, and need more people..
Money like electricity, has to make the full circle.from rich to poor, then back up again.. the more money that circulates, the bigger an economy can grow.
Just a thought.. have a great day.

You'd have to increase productivity so the employee would want more!
That isn't the thing with the foreign labour. The point is are you prepared to pay the price of using local?

Indeed. Which is why I emphasize the DETAILS of the exchanges. When the circulation of money takes the wealth OUT of the economy, the circulation you refer to is defeated.

This is why there has been a huge increase since 1980 in the relative incomes of the one percent, versus everyone else.

Right now, US regulations have been "adjusted" to favor the ability of multinationals to wick away the wealth of the customer class of Americans. As long as that continues, things will get worse.

If there is more money flowing through an economy, productivity would go up as you increase the number of people who will be able to afford the product.
If you are already at maximum capacity, supply and demand says you can hike the price a bit.. or, you can expand your operation with new equipment and people.
Just a thought. Have a great day.

I agree that things favour multinationals. Especially when they can put money in off shore accounts, move head offices to avoid taxation, etc. All those leaks have to be fixed before an economy can run smoothly and grow.

People want the goods and services. OF COURSE they want the best deal they can get. But when you "solve" the high cost of what customers want, by lowering their ability to earn the money to buy things (which is what happens when you use foreign labor to reduce your costs), you only create a very short term rise in sales, followed by an addiction-like need to lower wages even further.

The CORRECT way to increase sales, without damaging your economy, is to improve productivity. Not just decrease wages.

I agree but from a British perspective.
Can I run this past you.
If a pound of tomatoes is $1 if picked by immigrants and $1.5 if picked by national's what one would you buy?
People I've put this to all say the $1
They want cheaper products at the same time as wanting employment.
Hope I've got this across right

You are touching on the expansion of an economy. This is a closely related area, where things are being done very wrong right now.

The way an economy expands in a HEALTHY way, is that the increases in productivity allow more to benefit from products and services, more wealth to be created, and enough additional jobs to be created, to take up the natural growth in the population, as well as any people who emigrate.

Raising prices does NOT cause an increase in production. Perhaps you are referring to forcing a reduction in demand.

We have been seeing FALSE economic expansions going on here for a long time now. The bubbles that deflated in the eighties and nineties, and the one that burst and almost destroyed us entirely in 2005, were all false expansions. Additional wealth was not created, all that was done was to create additional profits in cash. The internet caused a lot of investors to imagine that it magically created money, when all that was really going on, was a lot of people buying advertising time from each other. When they finally woke up to the fact that there has to be hard products at realistic prices to drive it all, it fell apart. Before that, the expansion of the eighties was driven by lots of government spending (expanding the military and related things), at the cost of unbalancing our deficits.

The worst fakery, was the subprime loan insanity that led to the near collapse. There was ZERO real wealth creation going on there, just a lot of rich people borrowing money, investing it in the HOPE that real estate prices would continue to rise for no reason at all, and that one day everyone could cash out with huge profits, all from nothing at all. It collapsed when suddenly everyone realized that the king had no clothes, and that all that everyone was trading for cash, was each other's imaginations.

In short, it isn't JUST things like raising wages by rote, that is an artificial distortion of an economy. Lots of things are, which people aren't recognizing.

I am not going to disagree with you on the fact that there are many distortions in the economy. Economies need to be regulated or we will keep reliving the past booms and busts. I am going with the idea of a properly run economy. Along with a well managed economy, on needs well managed trade. A country needs to have a product or service to help bring money in.
Have a great day.

$1 = picked by migrants
$1.5 = picked by locals American citizens
I'm not saying a price rise I'm showing the difference in price when you have cheap foreign labour opposed to local labour!

You are obviously correct as far as you've taken it. Most people will buy the least expensive equal quality product. That's not the point. The economy can't be guided well by telling people to buy what's good for the overall economy. In addition to going against human nature, it goes against the mechanism of capitalism. Both the left and the right have tried guilt tripping people over and over again, and it's every bit as artificial and useless no matter who tries it or why.

The thing is, it isn't necessarily true that we HAVE to have foreign immigrants be paid less than locals ought to be paid. That isn't competition through efficiency, as is GOOD for economic expansion and health, that is competition through relative desperation, which drags an economy and a society down.

Right now, the strongest voices in power over the economic models we follow, support deciding the value of labor by means which have nothing to do with the real costs of supplying labor. That makes no sense, so naturally problems arise, and various new and illogical tricks are applied to the situation which make the mess even more complicated.

We could choose, instead of either adding things like welfare support or tax breaks or food stamps and so on (or put up with people begging and dying in the streets as some would have us do), to switch to paying for labor logically to begin with.

Then people should not complain or comment on cheap labour or a minimum wage!
If it wasn't a "global " economy it wouldn't happen, or a global trade in labour.
You can add what you like, at the end of the day someone has to pay for it, ultimately, that will be you, the consumer!
Even trump knows this, he must have got a price to build the "wall "and thought f@@k that we'll get them to pay for it

Are you saying everyone should just accept what others do to them, because it's complicated?

Nonsense.

Sorry for the delay in replying, I'm having trouble with the polish workers doing my garden
No, I'm not saying that,
Come on igor, it's not complicated at all.
If you want full employment and all the benefits that come with it then stop buying cheap imports or using cheap foreign labour and pay what ever the price is! Some of the difference can come from massive profits and the rest from the consumer.
Maybe of the imports are made by slave /cheap labour in these countries, but that's ok if the price is right?

It is VERY complicated, because everything about economics IS interactive. You can't make a change in one place, without it affecting ever other place.

Everything has a real cost, although sometimes the cost is in money, and sometimes it is in what you decide to put up with. I think I'm slowly coming to understand what you are saying, and that we are more in agreement than not, precisely because of this.

The current US model, of trying to pay workers as little as possible, as well as handing off as many responsibilities (health care) as they can to them, does make the bottom line appear to be much better. But the unmeasured cost, is in higher worker turnover, vastly lower employee loyalty, shoddier products and services, vastly more complicated management, and worst of all, a sure fire can-kicked-down-the-street looming burden of ex-workers unable to care for themselves in the future.

You are correct that people need to make up their minds, and either accept higher prices in exchange for workers being able to buy things, or accept things like being entirely dependent on the good will of foreign nations, and paying huge medical costs out of pocket, so that the already rich can pay lower taxes and have higher profits.

Well the United States is a very big and diverse country. Things cost more in Alaska and Hawaii because they have to import most things a long distance, Hawaii has high housing prices due to the limited amount of land, while a lot of the south east US has a relatively low housing cost combined with the fact they don't have the cost of heating their houses. So to say minimum wage needs to be the same for such a large area really isn't fair to all people. Where I'm at even the people who make tips get $9hr or more where in other states people making tips can be paid as little as $2.50hr. Instead of paying $9 for your meal at McDonalds would it be better to pay $5 and know that you are required to leave a tip? It all works to the same inthe end its just the wording. People also forget there is the labor costs for the service part of the business but there is also the goods part of the business that is also affected by the labor cost of producing and transporting those goods along with the over head such as the building, equipment,maintance, and power that are all affected by labor cost. And the taxes because we know all the politicians need a raise to go with all the benifits they get, and the road to get to the business and get the goods there. So when employees say just a little price increase could lead to them making more does not account for all these other factors involved.

Please forgive me because I am not an economist.
I have read a lot of dystopian science fiction to have an idea what is going on. There is a lot of really good observations being made in this topic.
Personally, I have never owned a business but I have managed a few shops for major corporations. My experience is mainly on the consumer point of view with a small amount of the needs of labor.

I remember one time I accepted a manager position at a fleet garage in a different city. I immediately noticed the mechanics wages were the lowest I have ever seen. The drivers were paid almost twice the pay as the technicians that worked on the trucks.

One of the first things I did was set up an advancement ladder for the techs. I created incentives to advancement by requiring certain training and performance. Previously the were just mechanics paid unevenly by time with the company.

I adjusted the pay scale according to their current abilities, essentially giving everyone a significant raise. This sent the higher ups into a panic. It was a lot of managing work to convince them the change will benefit them in the long run with better equipment that is more reliable.

ASE certifications were not promoted before me. I initiated a bonus of $150 per certification and a $300 bonus if master certified was attained. At that time, to become master certified would give you a $1800 bonus on December 15th.

I established 3 tiers of advancement based on the level of criteria met. Tech1, basically the apprentice level. Tech2 the full fledged mechanic level and Tech1 the shop master level. Each level was separated by $4.00 per hour differences.

In addition I had a 24 hour shop. Three shifts where each shift had differing workloads. The first shift primarily had the lightest load because the trucks were all out on their routes. There was no incentive for first shift the benefit was their hours and a m-f work week. Since the work was primarily doing scheduled repairs and road calls I placed my highest paid workers on that shift. The shift leader got an additional $.50 per hour for his duties of coordinating operations.
The second shift was my most important shift. It was when the trucks came back after a days run. Their primary function was PMs (Preventive Maintenance) and write ups (driver complaints). Only 40% of their workload was scheduled maintenance. This was my most populated shift with the bulk of my techs. 2nd shift received a shift differential of $.50 per hour and the shift leaders got $1.00 per hour for their operational load.
The third shift was responsible for making sure all the drivers got out on time. Their job concerned the start up issues that comes with a fleet. They finished up work that could not be completed by the 2nd shift and established the deadline list. In addition they were shop janitors/maintenance men. Most of the maintenance on the air compressors and shop tools were done on the midnight shift. I set the shift differential at $.50 per hour and the shift leader at $.75 per hour.

My shop was now a happy shop. I watched the condition and reliability of the fleet improve quickly. With less downtime the trucks were on the road more and it raised the profit across all departments. Maintenance costs went down. I got a raise.

I believe people want to work. They want to work where they are appreciated and rewarded for their dedication. It wasn't just the money that made the attitudes change, It was the sense of accomplishment and the appreciation I showed to their dedication.
I have to add that this all happened without loss to the company's bottom line. No service charges or increased costs were passed to the customers. It was a temporary period of less profit that resulted in a sustained profit increase.

On the consumer side of things...

I buy using a few reasonings.
1. Do I really need it?
2. If it is something I want, Do I want it right now?
3. Can I afford it?
4. Does its quality match its cost?
5. How critical is the quality over the cost?
6. Am I buying quantity?
7. At this price, how long do I need to use it so I feel it has paid for itself?
8. How long will it last?
9. Can it be maintained, recharged, refilled, renewed?
10. Will it require special storage or handling?

I don't care who makes it.
I don't care what it takes to bring it to my store.
I don't care who sells it.

If I deem that it costs too much, I won't buy it.
Even tho I know there are many costs involved with making that product available for my purchase, I don't care.

I was told I needed a drug that was too expensive.
I didn't buy it because I couldn't.
I made due without because I had to.
That's the way it is and I can accept that.

I've bought a loaf of bread for $.25 before.
To me a loaf of bread is only worth $.25 the rest is greed.

In manufacturing, the more of a product there is the less it should cost. There are less handmade things than automated assembled things. Thus the hand made things are more unique and cost more.

I have no problem paying more for a quality item.