[cloudinshape]

You have to square the circle.

Wages in the US are artificially high because of the dollar's position, but the US needs to either a) match the wages of the countries producing similar stuff or b) increase productivity and value to the levels of countries like Germany.

Since b) requires decades in factories, supply chains, trade agreements and most importantly training in actually producing things which means science and engineering, exactly the occupations an increasingly large portion of the US population has been taught to abhor, it is very unlikely to happen. The US has spent the last decades destroying all those things, so the only real option is to sadly let wages fall to levels markets are willing to pay for. It will bring a lot of suffering but is the consequence of decades of mismanagement and complacency, and it is unavoidable so it will either happen by will or by force. And we know it won't happen by will.

Of course there is always c) keep forcing the rest of the world to pay for the US standard of living while they themselves live beneath their means, but that is the actual problem now so how much longer can it last?

[8note]

There is also d) the owners take smaller profits

[CountSessine]

The average operating margin for the S&P 500 is 10.53% (although that may have been 2018). And economists are worried that even that is high - traditional manufacturers like Ford typically manage operating margins of ~5%. Workers are already getting 95%. And then everything after that like R&D, marketing, and capital amortization has to come out of that 5%. And then finally a bit is left over for earnings for the owners. You’re mistaking wealth for income. Surely the workers could use more wealth, but what we’re discussing is the price of goods and this is operating revenue and income. And workers already get the lions share of this.

If you’re going to make US manufactured goods cost competitive with foreign goods, much of it has to come out of that 95% operating revenue that is operating expenses, most of which will be employee wages. There’s no way around this.

[hannasanarion]

workers are not getting 95%. Corporate profit and revenue is at an all time high, but wages are down since the 1980s. All that corporate growth goes into price fixing schemes and mergers to establish monopoly, and "consulting fees" to suspiciously named LLCs in the Caymans.

[CountSessine]

Read some 10-Qs for some big companies sometime. You might be surprised. Like I said - S&P 500 average operating margin was 10.53% a couple of years ago. And that’s crazy high - probably because of pharma stocks and the US’ dysfunctional generic drug regulation.

[sudosysgen]

This isn't a correct way of looking at it. You're assuming that the sum total of profit generated is in that one manufacturer. It isn't the case. You have subcontractors that also make an additional ten percent, then materials coming from a supplier that takes another ten percent, which comes from raw material suppliers that make yet another 10%, and then you're going to have consultants in R&D and marketing that might make even more than 10%, and so on. So it really can end up quite a bit higher than that.

[CountSessine]

Possibly - although if your suppliers have operating margins that are as wide as yours, or wider, it might actually make sense to just buy them and take those earnings for yourself. I wonder how many of Ford's suppliers have an operating margin as wide as Ford's 5%?

[cloudinshape]

I know these discussions always end up in worker vs owner debates, but what I'm talking here is about the nation.

Factories will need to adjust their prices, now you take that as you will, and if one is naive one can think it means executives will take a pay cut while workers do not, but in the end it mean less wealth for everyone, less money for taxes, less money for shareholders, less money for executives, and of course less money for workers. That is less wealth for the nation.

So yes, owners will take smaller profits, along with everyone else.

[southeastern]

>keep forcing the rest of the world to pay for the US standard of living while they themselves live beneath their means, but that is the actual problem now so how much longer can it last

Our entire society is built on this, though. Silicon Valley wouldn't exist if electronics couldn't be produced for comparatively cheaper overseas. You bring up an interesting moral point, but if you're serious about that there's a lot of reckoning society will have to deal with. It's not just going to affect minimum wage lol. It'll affect wages across the board. You're really talking about totally reforming the economy

[tomcam]

> Silicon Valley wouldn't exist if electronics couldn't be produced for comparatively cheaper overseas

Silicon Valley literally exists because it was an electronics manufacturing center.