Welcome to DU! The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards. Join the community: Create a free account Support DU (and get rid of ads!): Become a Star Member All Forums Issue Forums Culture Forums Alliance Forums Region Forums Support Forums Help & Search

white_wolf

(6,238 posts)
Fri Jul 27, 2012, 12:18 AM Jul 2012

How will competition in the labor market drive up wages?

This is something we hear all the time from libertarians, but it seems to fly in the face of supply and demand. There will always be a greater supply of people needing work than there will be of people hiring. Businesses don't compete for workers, in most cases, workers compete with workers thus driving wages down. Has anyone ever heard libertarians actually explain how their solution works? It makes no sense, it seems purely based on wishful thinking.

9 replies = new reply since forum marked as read
Highlight: NoneDon't highlight anything 5 newestHighlight 5 most recent replies

madrchsod

(58,162 posts)
1. it used to when there were jobs in this country
Fri Jul 27, 2012, 01:20 AM
Jul 2012

when i entered the job market in 1968. i could quit a job and get another the next day. they would ask you if you could start after they read the application.i started out at 3.25 an hour at one job,went to another at 3.75, and one year later i was making 8.50 plus piece work pay.

if there were more jobs in the usa there would be a demand for workers and companies would be in competition for the best and that would raise the wages of all workers.

yes it used to work but i guess we just got to greedy

white_wolf

(6,238 posts)
8. "We" didn't do anything. The capitalists did.
Fri Jul 27, 2012, 02:22 AM
Jul 2012

That is the problem, the majority of people have no real say in our government.

salvorhardin

(9,995 posts)
4. Here's the thinking...
Fri Jul 27, 2012, 01:32 AM
Jul 2012

The thinking is that stiff competition in the labor market means that for any given job category, the subpar will be driven out, thus leaving only the competent and excellent. Because employees know employers know they're getting the cream of the crop, they can demand higher wages, and employers will happily pay for the best.

Obviously, it doesn't work. What happens is that employers then readjust their notion of what makes an exceptional employee, then ratchet up the job requirements until they can claim a shortage of skilled workers. Since there's now a shortage of skilled workers, they're free to pay less.

This is why unions still matter. Employers have disproportionate power over employees. Unions help bridge that power gap.

 

Dokkie

(1,688 posts)
5. It actually drives wages down
Fri Jul 27, 2012, 01:34 AM
Jul 2012

and along with it prices of goods and services. But this is no fault of libertarians, technological advancement on one had has increased the population of the world and one the other hand through mechanization decreased the amount of humans needed for production. Increase in population plus less demand for worker equals a huge supply and low demand of worker

The question is, do we want jobs for the sake of having jobs or do we want jobs because there's actual need for workers? if we want the former then we should enact regulations that regulate mechanization which will in turn force companies to hire more human workers or we can embrace this new reality and stop fantasizing about the 1800s

limpyhobbler

(8,244 posts)
6. Invisible hand, Libertarian tooth fairy, and a ton of willful self delusion.
Fri Jul 27, 2012, 01:59 AM
Jul 2012

I try to avoid them they are the most personally unpleasant people on earth.

There may be an actual argument. But the belief of most free-market libertarians is that they simply don't give a shit about that. They got theirs already, they mistakenly feel secure for some reason, not threatened. And they are further deluded to think that they earned their secure status through their own efforts. Libertarianism isn't really a political view as much as it is a mental health disorder. Psychiatrists should look into this and get it in the next DSM. Libertarian Personality Disorder.

PS.
http://www.democraticunderground.com/101744227

Selatius

(20,441 posts)
7. Libertarians argue that without taxes, businesses would hire more workers.
Fri Jul 27, 2012, 02:01 AM
Jul 2012

The problem with the argument is that even if businesses paid no income or sales taxes, they wouldn't hire any more workers unless the demands of trade required that they staff more people.

Any good capitalist knows that he must run his operations as lean and as efficient as possible. He would not hire an extra worker until it is the last resort because it would bump up his labor cost.

quaker bill

(8,223 posts)
9. It works at "full employment".
Fri Jul 27, 2012, 07:03 AM
Jul 2012

At the peak of the boom in housing here, companies were stealing each other's labor, even illegal immigrant brick layer crews were being plundered by offers of $1 an hour more a person for the project a few blocks down the street.

The problem is that periods of full employment have been very short lived, and the trend reverses when unemployment is high. Monetary policy has been worked in a concerted way to prevent or shorten periods of full employment to prevent inflation for the last 30 years by raising interest rates to slow the economy anytime something close to full employment is reached.

Keynes understood that wage losses during periods of high unemployment are larger than wage gains during periods of full employment. His take was that this business cycle favored capital over labor in an enduring way during each cycle. So he proposed making government as the "employer of last resort" during down phases of the business cycle to keep the labor market tight and reduce wage losses during the down phase. It would also work to extend and broaden the gains in the up phases to create balance or benefit to workers.

Again, policy has been active toward keeping a loose labor market where competition for labor does not exist. This and other problems with Fiscal Policy (Bush* tax cuts) have combined to result in dramatic wage declines. When you subsidize capital over labor (cuts in the capital gains rate), you get capital growth and labor decline, there is no magic here.

Latest Discussions»General Discussion»How will competition in t...