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by paytonjjones 45 days ago
That's not how productivity works. It's not a zero-sum game.

If all construction workers can build houses 5% more efficiently, that's not the same as nothing changing. Depending on supply and demand, it means 5% more houses are built, or houses are 5% cheaper, or maybe 5% bigger, or some combination. Whether or not the construction workers all get a raise or 5% get fired (or both) depends on that supply and demand, but historically they often get a piece of the growing economic pie.
4 comments
DarkUranium 44 days ago
"Historically" is doing a lot of work here. It's a well-known fact that while productivity kept increasing, wages have stagnated since the 70s.

So you're right in an academic sense, but not for any practical purpose whatsoever, in terms of how it'll affect economy now.

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bruce343434 45 days ago
Why would the company pay more when they can just not pay more? The only things I can see happening is they might lower prices as competition ramps up, or in general as there is more supply for the same cost.
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paytonjjones 45 days ago
If there's sufficient demand, that's just what happens.

To try and explain one path: Company A doesn't raise wages but makes 5% more money. Company B pivots from Industry B into construction (because suddenly construction is having 5% fatter margins), and hires workers at more competitive wages to poach them from Company A. Company A forces to raise wages.

If there's a demand ceiling on housing it's a different story though.

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Snowfield9571 44 days ago
More like company B purchases a construction company and changes nothing but number go up for shareholders while wages stay stagnant for people producing actual value, as they have for decades.
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haaz 45 days ago
If labour supply is fixed and productivity goes up then the value and demand for labour goes up, driving up wages
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danny_codes 43 days ago
Why would demand for labor rise if productivity rises?
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danny_codes 43 days ago
Or, with current US policy, the top 10% will get 6% richer and you'll get 1% poorer. Sure, the pie can grow, but you won't (unless you are in the top 10%) get any of it.
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ragequittah 45 days ago
See the increase in CEO wages vs the increase in worker wages over the last 20 years of you want to know where that 5% will almost always go.
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