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TheLastStarFighter on 25 July 2013
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timmah said:

This is why the idea that companies could somehow drop wages as described by some here is patently wrong. Those who think this way fail to understand what competition is and how the cause and effect plays out in this scenario. They act as if people are helpless saps who can't think for themselves, so the benevolent government must step in to make the big, bad businesses not trample the poor, helpless, mindless masses underfoot. In reality...

First, we need to set up some parameters...

  • Smart business people recognize the fact that they need good, hard-working employees to be successful
  • Stupid business people mistreat or underpay employees, failing to recognize cause and effect for this action
  • Smart employees are generally good, hard-working employees, because they realize that good employees get paid more
  • Smart employees are smart enough to look for another job or work on developing other skills if they are underpaid or mistreated

Based on these parameters...

  • Smart employers will offer competitive pay in order to keep good/smart employees, therefore maintaining a quality business
  • Stupid business owners will underpay employees
  • Smart employees leave stupid employer for smart employer and better pay
  • Smart business owner hires smart, hard-working employees to gain a competitive edge
  • Stupid and/or lazy employees stay with stupid business owner
  • Stupid business owner's business fails due to poor service
  • Smart business owner's business prospors, hires more employees at reasonable rate
  • The cycle continues


Ideologically, this is great.  Unfortunately in our current reality, it's not the truth.

The fundamental problem is why pay a smart, hardworking employee $50,000 a year when you can pay a smart, hardworking foreign worker $5000?

If a worker at a competing company is willing to take a 30% pay cut because he is scared of his job being moved out of conutry or outsourced to a non-unionized specialty firm, why wouldn't you cut your own company wages 20%?  You'd still be the better employer, attracting the better workers.

The western global economy is in decline due to outsourcing the highly paid manufactuing sector to Asia decades ago.  The impact is being felt now, and will be felt even stronger in the future without drastic policy changes.