Dank n Edgy

The dorkest, edgist forums known to puny hoomans

You are not logged in.

Announcement

Welcome to DnE, the online psych facility. (Run by the inmates, for the inmates.)

#1 2016-02-24 19:25:49

absentinsomniac
Administrator
Registered: 2012-06-09
Posts: 16,757

Bargaining power and unemployment, wage curve, and alternatives

There's been a pretty solid amount of research suggesting unemployment does, in fact, affect (effect?) wages. Like, in 40 different countries they've found pretty solid evidence for it. Somehow, this meta analysis is downplaying the role of it, however: http://onlinelibrary.wiley.com/doi/10.1 … 254.x/full


However, according to these guys, http://ftp.iza.org/dp1665.pdf


The meta analysis is basically overstating the importance of a -.07 vs -.01 wage curve elasticity and uses questionable arguments to this end. Basically, over 40 countries have found strong empirical evidence for a wage curve. The U.S. has been pretty contentious and macro-economists have not been interested in this area of study for whatever reason, according to this paper. It claims American macroeconomists have been working with the Phillips curve which is not the best fit for this kind of study, as using microecnomic data produces a better, more robust fit. The original Phillips curve publication only provides simple functional curves and as such simple functions are generally used. (And are lacking, apparently, because it's not dynamic).


The conclusion of this paper is essentially that based on studying states, the U.S. does indeed have a wage curve and it is consistent with other countries. We aren't special.


I'm partial to the wage curve, obviously.


Fucc

Offline

#2 2016-02-24 19:27:26

loon_attic
Banned
Registered: 2012-06-08
Posts: 10,263

Re: Bargaining power and unemployment, wage curve, and alternatives

affect


sloth wrote:

Comfy does not provide challenge, challenge provides success, success provides happiness. Our world is not comfy, although we tried to make it so. Slaves of our own inventions, yada, yada. Not only on a technological level, also on a social and political level. Nothing more but apes. Apes with psychosomatic disorders.

Offline

#3 2016-02-24 19:27:41

loon_attic
Banned
Registered: 2012-06-08
Posts: 10,263

Re: Bargaining power and unemployment, wage curve, and alternatives

kill me please


sloth wrote:

Comfy does not provide challenge, challenge provides success, success provides happiness. Our world is not comfy, although we tried to make it so. Slaves of our own inventions, yada, yada. Not only on a technological level, also on a social and political level. Nothing more but apes. Apes with psychosomatic disorders.

Offline

#4 2016-02-24 21:02:11

V.R.
receive {_, _} -> void.
Registered: 2013-04-02
Posts: 5,352

Re: Bargaining power and unemployment, wage curve, and alternatives

This really isn't new. Arthur Okun famously observed an empirical converse relationship between rate of unemployment and decline in GNP (for every ~1% in the former, ~3% in the latter).


"Humanity Is Overrated" - Shrek

Offline

#5 2016-02-24 21:38:24

TheWake
Illuminatus Sacerdos
From: Yankee-Occupied South
Registered: 2012-06-09
Posts: 8,272

Re: Bargaining power and unemployment, wage curve, and alternatives

Excuse my rustiness on elasticities if I mess this up. Just wanted to put this into terms the uninitiated can understand.

what we're looking at is,

elasticity of the wage curve=
    (%change in wage) / (%change in unemployment)

So we're looking at something relatively inelastic. If the elasticity is -0.1, then for say a 50% decline in the unemployment rate one gets an increase of 5% wages.

Elasticity (absolute value, ignoring the minus sign):
> 1    is Elastic
= 1    is Unitary elasticity
< 1  is Inelastic

Last edited by TheWake (2016-02-24 21:40:23)


The Grasshopper Lies Heavy

WsEkePS.png

Offline

#6 2016-02-25 03:35:00

absentinsomniac
Administrator
Registered: 2012-06-09
Posts: 16,757

Re: Bargaining power and unemployment, wage curve, and alternatives

That's almost nothing, wow. I should research more and dig into it.


Fucc

Offline

#7 2016-02-25 05:10:28

loon_attic
Banned
Registered: 2012-06-08
Posts: 10,263

Re: Bargaining power and unemployment, wage curve, and alternatives

TheWake wrote:

Excuse my rustiness on elasticities if I mess this up. Just wanted to put this into terms the uninitiated can understand.

what we're looking at is,

elasticity of the wage curve=
    (%change in wage) / (%change in unemployment)

So we're looking at something relatively inelastic. If the elasticity is -0.1, then for say a 50% decline in the unemployment rate one gets an increase of 5% wages.

Elasticity (absolute value, ignoring the minus sign):
> 1    is Elastic
= 1    is Unitary elasticity
< 1  is Inelastic

bitch i'll test the elasticity of your rectum fucking nerd ass nigga


sloth wrote:

Comfy does not provide challenge, challenge provides success, success provides happiness. Our world is not comfy, although we tried to make it so. Slaves of our own inventions, yada, yada. Not only on a technological level, also on a social and political level. Nothing more but apes. Apes with psychosomatic disorders.

Offline

#8 2016-02-25 05:10:58

loon_attic
Banned
Registered: 2012-06-08
Posts: 10,263

Re: Bargaining power and unemployment, wage curve, and alternatives

*roon_attic cries because he never understood nor paid attention in economics, resulting in frustration and a C*


sloth wrote:

Comfy does not provide challenge, challenge provides success, success provides happiness. Our world is not comfy, although we tried to make it so. Slaves of our own inventions, yada, yada. Not only on a technological level, also on a social and political level. Nothing more but apes. Apes with psychosomatic disorders.

Offline

#9 2016-02-25 05:16:37

absentinsomniac
Administrator
Registered: 2012-06-09
Posts: 16,757

Re: Bargaining power and unemployment, wage curve, and alternatives

Waaait. That's not almost nothing. A 50% change in unemployment would be down to 2.5%, which would mean wages would go up by 5% if we got down to full employment. Wages have always been pretty inelastic anyway, so depending on who that 5% effects, that could be substantial.


But yeah I need to spend time on this at some point.


Fucc

Offline

#10 2016-02-25 05:34:01

absentinsomniac
Administrator
Registered: 2012-06-09
Posts: 16,757

Re: Bargaining power and unemployment, wage curve, and alternatives

V.R. wrote:

This really isn't new. Arthur Okun famously observed an empirical converse relationship between rate of unemployment and decline in GNP (for every ~1% in the former, ~3% in the latter).

Oh wow, yeah that's pretty interesting. Seems to be a *lot* of empirical evidence for this type of result. It's still pretty different from the wage curve in that the wage curve describes wages instead of actual production. Granted they're theoretically linked.


I still wouldn't call it new. The idea of the wage curve was presented by David Blanchflower and Andrew Oswald in '94 or so. I think this is one of the first papers on it: https://www.dartmouth.edu/~blnchflr/pap … eCurve.pdf


It's super readable and mostly plain English.


Fucc

Offline

#11 2016-03-23 02:44:17

absentinsomniac
Administrator
Registered: 2012-06-09
Posts: 16,757

Re: Bargaining power and unemployment, wage curve, and alternatives

Ok, so I finally got around to doing a bit more research on this. I read "An Introduction to the Wage Curve" in  The Journal of Economic Perspectives by Blanchflower and Oswald as well as an analysis of their book, here: http://davidcard.berkeley.edu/papers/wage%20curve.pdf The link in my previous post is mostly the same as the actual Journal article.


Your calculation is correct, Wes. For every 100% increase in unemployment, we see a 10% decrease in wages. That being said, when the authors talk about a 100% increase, they don't mean a 100 percentage point increase in unemployment. They mean 100% of some unemployment percentage at a given time. That is to say, unemployment in Jan. 2006 = 4.7, unemployment in Jan. 2011 = 9.1. What we're calculating is the percentage increase. That is, 9.1 - 4.7 = 4.4 change in  unemployment percentage points. Now, 4.4 / 4.7 * 100 = 93.6% increase in unemployment over those years. That's pretty close to a 10% decrease in wages... This is an imperfect analysis, but it's just meant to show that 50% change in unemployment, and even 100% change in unemployment, can happen. Reaching full employment would have a significant effect on wages, imo.


Of course, it's largely supposed to deal with local conditions, not necessarily national averages...  If you double the local unemployment rate, you decrease wages by 10 percent in that area.


It's also interesting because it directly contradicts what would be expected under neoclassical labor theory http://web.uconn.edu/cunningham/econ309/classical.pdf (Page 16.)


966c793.png


Fucc

Offline

#12 2016-03-23 03:29:50

TheWake
Illuminatus Sacerdos
From: Yankee-Occupied South
Registered: 2012-06-09
Posts: 8,272

Re: Bargaining power and unemployment, wage curve, and alternatives

yeah elasticities don't deal with the measure but a percent change in the measure.

or something like that.


The Grasshopper Lies Heavy

WsEkePS.png

Offline

#13 2016-03-23 03:40:58

Green1
Member
Registered: 2015-10-21
Posts: 713

Re: Bargaining power and unemployment, wage curve, and alternatives

Thing is, though, as a capitalist/industrialist you NEVER want full employment. Fuck you want people just coming in when they want to or have to deal with their kid being sick when you want your money?  Also, you are talking national figures, but most game the system locally.

You can use things like negative credentials (criminal record, credit score, immigration status, addictions, etc) to ensure no upwards mobility so you will have a workforce that is captive. You always need whopper floppers and such. That way the jobs no one likes like, say, answering phones or flipping burgers you artificially raise the supply side.

Or a famous trick... if a workforce becomes rebellious, close down the factory and move it to a place that has massive problems with crime and unemployment who will kiss your ass to move in and provide jobs for thier underclasses instead of putting out money only for retired folks, social programs, and jails. You still own the empty factory in the old location. When the city you move to gets folks working and taxes in and starts getting uppity, you move back to the old city or new city. Like the farmer, you let the labor pool fallow so it gets ripe for lower wages. Repeat, rinse.
A very successful hotelier was talking to me on Baronne street in the Quarter after the Sept 11 attacks. He LOVED economic downturns. It meant he could replace folks he did not like dealing with and more subservient.... err.. quality applicants were pounding down his door for no autonomy, monotonous work.

Offline

#14 2016-03-23 07:18:20

TheWake
Illuminatus Sacerdos
From: Yankee-Occupied South
Registered: 2012-06-09
Posts: 8,272

Re: Bargaining power and unemployment, wage curve, and alternatives

full employment is generally a symptom of the economy doing well though

and full employment isn't no unemployment. it's no cyclical employment.

so full employment = an unemployment rate above 0%

I guess it'd be good for an employer who's doing well or no worse during a downturn, though.


The Grasshopper Lies Heavy

WsEkePS.png

Offline

#15 2016-03-23 13:50:36

absentinsomniac
Administrator
Registered: 2012-06-09
Posts: 16,757

Re: Bargaining power and unemployment, wage curve, and alternatives

I think full employment is usually like 2.5% or something. Iirc. Course then you gotta wonder how long it's gonna last before a downturn a la business cycle I guess.


Fucc

Offline

#16 2016-03-23 15:19:50

Green1
Member
Registered: 2015-10-21
Posts: 713

Re: Bargaining power and unemployment, wage curve, and alternatives

absentinsomniac wrote:

I think full employment is usually like 2.5% or something. Iirc. Course then you gotta wonder how long it's gonna last before a downturn a la business cycle I guess.

It can be 2.5 percent, but the employers hate it.

Take the restaurant boom in the US South circa late 90s. A lot were still making money off the IT boom and real estate boom which paid employees more. Demand was up for eating out. Every millionaire and their brother through up sit down restaurants. Problem was, no one wanted those jobs. Crappy hours, tips, hot stove. Someone could quit on you and get working again in a week as long as they showed up sober.

In Biloxi, MS I literally saw big huge signs saying "Hiring... GUARANTEED INTERVIEW" on a Denny's. Something I have not seen since.

What happened? They started putting propoganda out to glamorize the industry to attract a different kind of person other than the n'ere do well. Chefs like Emeril became gods. On top of that, there are only so many places that a community can support and those with just bodies in there and bad service/ only adeqate product shuttered the doors.

Now, applying for even a low end is based all on looks and you need a resume for the big places and they 86 you at the first sign of a mistake in resort areas. In the bigger tourist areas, they bring in H1Bs claiming "lack of workers" when there are still plenty of workers. They just do not want the ne're do wells. Why when you can ship in submissive folks from other countries begging to work at lower rates who can't just leave you for the higher paid gigs once they get a good house on the resume.

Offline

#17 2016-03-23 19:36:51

V.R.
receive {_, _} -> void.
Registered: 2013-04-02
Posts: 5,352

Re: Bargaining power and unemployment, wage curve, and alternatives

The idea that the big bad bourgeois capitalist class doesn't want full employment is emphatically false, mostly a talking point for leftists steeped in Michal Kalecki and in Marx's flawed "reserve army of labor" analysis.

State-sponsored staffing programs for coordinating minimum wage laborers to the private sector are very much helpful to the capitalists, who have their job of screening employees done for them, and who then work for a price no higher than the legally mandated floor.

Moreover, it contradicts things like large corporate plutocrats being behind such projects as the New Deal (see Gerard Swope and the NRA).

Last edited by V.R. (2016-03-23 19:37:21)


"Humanity Is Overrated" - Shrek

Offline

#18 2016-03-23 20:35:13

TheWake
Illuminatus Sacerdos
From: Yankee-Occupied South
Registered: 2012-06-09
Posts: 8,272

Re: Bargaining power and unemployment, wage curve, and alternatives

I mean, all things equal, business owners solely concerned with profit want a more competitive labor market in the pool of labor they hire out of. But,

does higher unemployment = more competitive labor market?
and if so, higher unemployment is associated with a shitty economy. that's bad for business.

The corporate class is not a friend of free markets, VR. They're more interested in using government to cement their positions instead of allowing dynamic competition and creative destruction. The crony capitalist state is a tool the ruling elite uses to keep itself in both political and economic positions of power. There definitely is a class analysis to be done IMHO, although not the same as those put forth by socialists.


The Grasshopper Lies Heavy

WsEkePS.png

Offline

#19 2016-03-24 02:51:48

Green1
Member
Registered: 2015-10-21
Posts: 713

Re: Bargaining power and unemployment, wage curve, and alternatives

V.R. wrote:

The idea that the big bad bourgeois capitalist class doesn't want full employment is emphatically false, mostly a talking point for leftists steeped in Michal Kalecki and in Marx's flawed "reserve army of labor" analysis.

State-sponsored staffing programs for coordinating minimum wage laborers to the private sector are very much helpful to the capitalists, who have their job of screening employees done for them, and who then work for a price no higher than the legally mandated floor.

Moreover, it contradicts things like large corporate plutocrats being behind such projects as the New Deal (see Gerard Swope and the NRA).

Unfortunately, no.

Points:

- They DO want a reserve of labor. Supply and demand dictates if there is more supply than demand, the supply is worth less. Less labor cost, you get your pick of supply and everyone else better go to a better field, move, or read Urban Survival articles on our STW  cause they will be using it after all the money is gone for rent. Either that or suck it up and beg for lower pay.

- Coordinating min wage, they hate. Mickey D's one time tried to classify all workers as "executive positions", even the fry guy a few years back to avoid paying overtime and put everyone at low salary. Of course, it was laughed out of committee, but still. Staffing programs for min wage workers? Has not existed since New Deal, era politics. The federal employee unions would be all over that.  Nowadays, this is done through temp agencies and day labor outfits like Labor Ready. Yes, the employer pays more for this. But, they don't have a municipality or state coming after thier ass for constantly firing folks. As a temp, they can just tell the agency not to send you for whatever reason and suffer no consequences. Even federally protected reasons.

Last edited by Green1 (2016-03-24 02:53:53)

Offline

#20 2016-03-25 00:00:03

V.R.
receive {_, _} -> void.
Registered: 2013-04-02
Posts: 5,352

Re: Bargaining power and unemployment, wage curve, and alternatives

TheWake wrote:

The corporate class is not a friend of free markets, VR. They're more interested in using government to cement their positions instead of allowing dynamic competition and creative destruction. The crony capitalist state is a tool the ruling elite uses to keep itself in both political and economic positions of power. There definitely is a class analysis to be done IMHO, although not the same as those put forth by socialists.

I never implied that they ever were. However, they are not antipathetic to full employment, which is a nationalistic goal to begin with and shared by virtually every Strong Leader seeking to indulge the public's make-work bias.

@Green1: I was referring to proposals for a job guarantee that are all the rage with MMTers, progressives and other far-left Keynesians on the web these days. Also the problem with AS/AD analysis here is that labor markets are disaggregated and generally much more fixprice than say, commodity markets. Seniority, fringe benefits, job contracts and all sorts of social democratic labor initiatives make labor overall inflexible. Labor as an economic good is also heterogeneous and so wage differentials will be found based on geography and logistical concerns.

Employers may oppose minimum wage hikes, but in the post-adjustment period after output has been fine-tuned accordingly, the minimum wage becomes an anti-labor weapon in it being the state-approved reservation wage. The minimum wage being in line with the reservation wage also fixes expectations and acts as a gradient where you can buy labor cheaper than its marginal product since the minimum wage (like any other price control) might well undershoot.

Last edited by V.R. (2016-03-25 00:00:59)


"Humanity Is Overrated" - Shrek

Offline

#21 2016-03-25 01:19:08

absentinsomniac
Administrator
Registered: 2012-06-09
Posts: 16,757

Re: Bargaining power and unemployment, wage curve, and alternatives

"but in the post-adjustment period after output has been fine-tuned accordingly"


I don't think there's much evidence of that actually impacting low wage workers given modest increases, as there are many more channels of adjustment[1] that these (relatively small) wage increases can be routed through. Being understaffed costs quite a bit. Wallmart raised it's starting wage to 9/hour because turnover of 40% is atrocious and more expensive than paying people an extra 2 dollars an hour.


[1] http://www2.gsu.edu/~ecobth/IZA_HKZ_Min … dp6132.pdf


As for weather the minimum wage sets a psychological standard below what otherwise would occur, I guess that's possible but I'm not inclined to trust the market with this. Seems more like companies would manipulate everyone with PR to drive them downward.


Otherwise I agree.


In general I think economic theory should start paying way more attention to experiment. If something consistently gives experimental results that contract your theory, you're missing pieces. Adjust your theory. Few physicists stay relevant by doggedly adhering to some old theoretical framework that has since been contradicted by the available evidence. I realize economic experiment is fraught with error, but not so much that it can be completely ignored across dozens of studies and thousands of data points over time. We have to work with what we have available. The tools will only get better, and economists who refuse to adjust their theories along with the evidence are doomed to obscurity.


MIT Gang 4 LYFE fuk your chicago skewl, MIT represent. Ya'll acting like Einstein did wrt quantum theory.


Fucc

Offline

#22 2016-03-25 02:31:25

V.R.
receive {_, _} -> void.
Registered: 2013-04-02
Posts: 5,352

Re: Bargaining power and unemployment, wage curve, and alternatives

THE PRAX SAYS THAT ABOLISHING THE STATE IS APODICTIC LAW


"Humanity Is Overrated" - Shrek

Offline

Board footer

Powered by FluxBB