Wages, union bashing and supply and demand for workers

The media has recently been giving some space to union-bashing right-to-work legislation and the low wages being paid to unskilled workers such as hotel maids and fast food workers.

One of the most basic laws of economics is that price is determined by supply and demand and this also applies to wages and working conditions for employees.

During the long period of almost continuous economic growth there was generally a need for workers.  During this time unions gained strength, wages went up and working conditions improved.  We are now in a situation where growth is stagnating or maybe even going down and there is high unemployment.  Wages can be sticky going down but some how or the other they are going to continue dropping. .

We also have such a high level of technology that it should not be necessary for everyone to “work” most of their lives.

One way to limit the exploitation of workers would be with and income scheme such as Milton Friedman’s negative income tax or my proposal for universal subsistence payments outlined elsewhere on this weblog.

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One Response

  1. I would argue that the strength of your bargaining power is the greatest determinant of wages. The decline of unions is correlated with the stagnating of wages even as productivity increased. Meanwhile the pay of CEOs skyrocketed completely disproportionately to their productivity.

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