… but this premise – that the value of labor will be determined by the market – begs an interesting question: Has the market priced us all out of a living wage?

When we trade our labor, the true value of that labor is whatever others will voluntarily give us in trade. We can use force to temporally force a better deal for ourselves but in the end it comes back to the true value. We can’t escape it.

I would point out that despite the seeming widespread perception that things are worse, people’s standards of living are higher than anytime in history. I think well manage. Most importantly, regions were people trade the freest have the highest standard of living.

We all work to make money to live. Over the past 5 or 6 decades, many of the basic premises of work and life have begun to erode: the concept of owning your home (without a mortgage), the single-income family, and now retirement. Has the market priced us all out of a living wage? What do we do about it?

Lots of anti-union stuff posted here but the union people did not design the cars.

By creating cumbersome work rules and dictating what labor saving innovations could be employed, the union abrogated to themselves the functions of management and as such took on responsibility for the outcome.

Industrial design is not a matter of creating well engineered one off items. Its about creating products that you can mass produce given the real world constraints on the manufacturing capabilities of the company. By creating many of those restraints, the union effectively closed off many technological improvements that engineers might have made had they been more able to control how the cars got made. As such, they had to go with inferior designs that could be made under the constraints imposed by the unions.

You put a watt or calorie in a motor, that input’s value isn’t determined by the output of the motor.

Well, yes it is. A watt put in a motor that pumps a gallon of oil has a greater value than than a watt put into a motor that pumps a gallon water. People will spend a lot of more money to put a watt into motor pumping oil than they will a motor pumping water.

Labor is an input.

But its not a mindless input. Workers can see the writing on the wall and alter their behavior accordingly. My argument is about how workers of poorly managed companies should respond to save their jobs. People have refused to organized precisely because they understand that the unions mindless approach to wages will destroy their competitive advantage and cost them their jobs.

You put a watt or calorie in a motor, that input’s value isn’t determined by the output of the motor.

If the motor is the worst or the best the value of the inputs remains constant.

I mean do you expect to pay less on the electric bill or for your transportation’s diesel fuel just beacuse your ROI sucks?

For that to happen in reality the owner of inputs must have a real ownership stake in the decisions of which motor to use.

Granted the owner of the motor may get a different motor or reduce the number of inputs in some other way. But the value of each input remains independent of ROI.

Labor is an input.

Thanks for the clarification, I had the same thought as Brian.

OR

If value is determined by the labor involved then all we should have to do to solve poverty is raise the minimum wage to $100 per hour. When you try to answer why this clearly would not work under any economic system (it violates the 1st and 2nd laws of thermodynamics for one thing) the truth of this post and the lie of socialism becomes obvious. As Margaret Thatcher said, “the trouble with socialism is that eventually you run out of other peoples money.”

That is not unlike the results of self-publishing, with no editor to catch a typo like “where” for “were”.

The domestic automakers’ cars are not valued as highly as either foreign or transplant automakers’ cars – therefor the labor to produce them is not as valuable. This determination is not made by management but by the consumer.

Isn’t the value of labor exactly what the competitive market of the labor pool says it is?

Depends on the perspective you adopt. If you look from the perspective of the company, then the market will dictate what price they pay to fill any particular position. However, if you look at it from the consumers perspective, then the work of people in different companies have different value depending on the value of the product they make.

For example, imagine you have a choice between hiring two different land scape companies. Each company uses crews of the same size. One company’s management has chosen to invest in tools and training in advanced methods. The second company’s crew uses old tools and just sends their guys out to muddle through. If each company charges the same, which company will you choose?

Obviously, if the workers in the second company aren’t willing to work for less and allow their less competent management to compete on price, they will soon be out of a job.

I think the post is largely correct, save for the implicit assumption that investors & management are the EXCLUSIVE creators of the value of labor.

I didn’t mean to imply that worker don’t contribute because obviously they do. Rather, I wanted to reinforce the idea that if the management can’t make a good product the workers have to reduce their own pay to make their products more competitive.

It might help if you think of workers as contractors to the company that provides the vast majority of their business. If the business is in trouble, they would need to charge the company less just to keep it going.