[pydry]

>It's both. Productivity has a very direct effect on the minimum amount they need to attract workers.

Productivity only puts a ceiling on the amount they'd be prepared to pay for a worker.

It doesn't affect the minimum amount required to attract them. That's determined by competition (i.e. who else is out there) and leverage (how much they need the job).

This is why business leaders lobby hard to reduce public sector wages/pensions (so private sector doesn't have to pay as much to compete for workers) and public benefits (like universal health care), which reduces worker leverage => reducing wages => increasing profits irrespective of worker productivity.

[BobbyJo]

Your second paragraph refutes your first. Productivity is an input to the supply of competition, so it does more than create a ceiling, it also serves as an upward force on the floor.

Do business leaders lobby to reduce public sector wages and benefits? That's not something I've heard before. In any case, whether or not there is competition from the government, if there is a gap between productivity and wages, then there are profits to be had by private companies willing to do the arbitrage. In the case of such a gap, the government doesn't really matter unless they are paying above the productivity rate.

[pydry]

How is productivity an input to competition among the minimum waged?

[ashtonkem]

> Productivity is an input to the supply of competition, so it does more than create a ceiling, it also serves as an upward force on the floor.

This is trivially disprovable. Did grocery stores increase the wages of their clerks once self checkout was a thing, or did they keep wages the same and lay off some of them?

Productivity only affects wages when there’s competition for labor, not when there’s competition for jobs. When there’s competition for jobs productivity gains are captured by the company, not the laborer.

> Do business leaders lobby to reduce public sector wages and benefits?

They absolutely do, yes. I’m genuinely baffled how you’ve never heard this. The Chamber of Commerce crowd is always trying to shrink governments (and their tax bills), and attacking public unions is a big part of this.

[BobbyJo]

> This is trivially disprovable. Did grocery stores increase the wages of their clerks once self checkout was a thing, or did they keep wages the same and lay off some of them?

That doesn't disprove anything. Productivity is an input to and has an effect on demand, but it's not the only factor. It doesn't need to be the only factor to matter. Lots of things matter. Economics is a complex field.

[ashtonkem]

Right, so do you have any examples of rising productivity driving up wages for minimum wage jobs?