Jackson50 on 22 March 2009
| Avinash_Tyagi said:Here's what they argue, was that between 1929 and 1939, productivity rose 30% and that labor was down 21% and that it was an above market wage that kept employment depressed You argue that wages were artifically increased by FDR to a level that resulted in increased unemployment, however as the graph shows wages continued on the same trend growth as always without being inflated beyond where they should have been. Wages are sricky jackson, employees don't expect to see their wages decline and they expect to see wage increases over time, as the graph shows the argument that you are using that wages were inflated doesn;t seem to exist in the trend line. You can argue that wages were kept up when they shpuld have fallen, but that assumes that employers will cut wages instead of workers, if i'm an employer the last thing I want to do is cut wages, because it hurts moral and may laed to strkes and work stoppages, I will cut workers and hours before wages. |
Actually, that graph bolsters my argument. The gray area highlights the significant gap between wages and productivity. As I said in my previous post, if wages are higher than productivity, jobs will be shed. Workers were being paid more than they were worth. Wages might be seen as sticky downward by today's Keynesians, but before Hoover, this was not the case. Hoover changed this because he was opposed to the decline in wages during the recession of 20/21 when he was the commerce secretary. Needless to say, that was another failure of Hoover's that was unfortunately perpetuated.
