The fruits of productivity increases are shared with workers . . .

  • Even when rank and file minimum wage labor is not remotely responsible 
  • Capital investment (capitalism) benefits workers
  • Employers recognize achievement by their workers and reward it, or they will fail as good workers migrate at first opportunity

Our earlier article  Crazy Economics was launched due to an article by the usual suspects advocating that fairness required that increased productivity be reflected in increased minimum wage. We believe those two particular concepts are not properly connected. The claim was made that a minimum wage of $26 an hour is justifiable based on productivity statistics that have little relation to those who initially work for minimum wage.  Besides the idea being absurdly inflationary the leftist thought process included this: “Equally important is how the fruits of productivity are divided”.

Indeed, it is important as to who, and how, the ‘fruits’ of productivity improvements are divided…but pay increases related to the percent of improvement in productivity is not the only, nor even the best, way.

Those who make the investments, their savings or their wealth, that is put into things like automation or better methods of production by which to achieve the scale, or cost reduction, of output, should certainly, and fairly, receive the rewards for their risk. The workers also should share the fruits of improved or increased product output…and they do, but it does not always mean higher pay matching percentage of increased output.

Workers share, almost invariably productivity improvement through better working conditions, less physical exertion, job satisfaction, and other valuable, though perhaps less measurable, or visible, rewards. Perhaps, as importantly, workers also do not share the risk which the investors take…sometimes efforts to increase productivity fail, or the demand for the product on which the investment is justified fails to materialize . Such risks are seldom shared by the workers, while the payoffs, if any, nearly always are.      dlh

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