Let me try once more to help you see the errors in your “argument”:

If you increase prices by raising wages then all other costs of production increase too.

This is a serious error on your part. We have already accounted for the total cost of labor – you can’t count that cost twice. Either a cost is labor, or it is something else. We have already assessed the increased cost as labor – using your own formula. Regardless, unless 100% of all cost is for labor, increased wages benefit the employee. As you say – it approaches 1, but unless it reaches 1, a raise in wages is just that – a real raise.

The only extent to which you can increase median prosperity by distributing existing wealth ‘more broadly’ is by taking from the rich – confiscating their profits – and giving it to the not so rich.

This is called taxation. It has been practiced for millennia, and is one of the basic foundations of civilization. The state has a monopoly on power, and those who have more wealth to lose naturally spend more to defend their larger interest.

On the other hand, unions increase median prosperity by compounding the value of labor. There is no downside for the capitalist, who is still free to charge the prices the market will bear – which is increased when laborers collect increased wages. It is quite shortsighted to ignore that rising purchasing power on the lower end of the economy is what drives true growth in the economy.

It’s a shame that such an economic philosophy has never managed to increase median prosperity anywhere – unless of course you’re talking about a median level of poverty.

It is precisely these two implementations of such an economic policy, along with technological innovation, that have made possible the increase in prosperity in western nations over the past 150 years. Without progressive taxation and unionized labor, the west would not exist as you know it today.

…unions exist not to improve the productivity of workers but instead to jack their wages above market levels, which will never improve general prosperity. The only prosperity it will improve, to some extent, is that of union workers – but only to the extent to which other workers are not unionized. In other words, their increases in prosperity come at the expense of other workers and those increases become less and less as a higher proportion of the workforce becomes unionized and procures the same gains. The only legitimate, non-destructive role of unions is to ensure that market rates are being paid and to ensure safe working conditions. Unfortunately this is not the role that unions have assumed.

Unions exist, as you indicate, to promote the welfare of their workers first, but they also play a direct roll in improving the situation of all labor, by supporting workers’ rights, minimum wage laws, and other pro-worker initiatives. Unions can improve the relative situation of all wage-labor – and have been shown to do so through the history of the USA over the last 150 years. Did you miss the economic vitality of post-war America? Need a refresher? Unions make prosperity possible.

Your disdain for the value and contributions of unions demonstrates a very transparent disgust for those who work with their hands, and is very distasteful to most people who actually do work for a living. There is a good reason that most workers support unionization when given the opportunity – unions work.

Peace.

DS

Of course wage hikes are paid for by an increase in prices. However, the price increases are not larger than the salary increases, so everyone is better off.

The price increases are not larger than the salary increases? In your example, maybe not – they’re exactly the same.

At $75/hr, the laborer needs to work 1.33 hours to generate one unit of revenue (that’s the cost of living). Revenue = $100/hr, Labor = $75/hr

At $100/hr, the laborer generates the same unit of revenue in 1.25 hours. The difference is how much better off he is. Revenue = $125, Labor = $100/hr

Labor goes up $25, revenues go up $25. Why? Because in this hypothetical example, the increase in labor costs is being funded entirely by an increase in consumer prices. It’s not being funded by either a decrease in production costs or a decrease in profits. So the consumer is paying every single cent of the increase. You are merely taking the simple fact that two numbers, when increased in a linear fashion alongside each other, will yield a smaller and smaller ratio, headed towards 1 – and using it out of context in order to make an entirely fallacious point.

Once again you are completely ignoring the simple fact that wealth and prosperity are not measured by nominal sums of money but by actual tangible things that have value to humans. A piece of paper with an amount printed on it is not wealth. So when you talk about shorter times to produce a unit of revenue, you are talking about a shorter time to produce a unit of revenue that is worth less in a climate of higher prices.

Also, if you raise everyone’s wages across the board then the other costs of production – materials, fuel, transport etc – rise too.

Just bump the portion of labor costs from 75% of revenues to 80%, and every laborer is better off, because the value of their labor has been increased relative to other factors. Is that so hard to understand?

What I’m really finding hard to understand is that someone can so thoroughly misunderstand something which isn’t that hard to understand at all. The quote above shows the extent to which you misunderstand. Let’s consider ‘bumping the portion of labor costs from 75% of revenues to 80%,’ for instance. It doesn’t matter what those revenues are in nominal dollars, the proportions remain the same. If you increase prices by raising wages then all other costs of production increase too (what do you think happens to the price of steel when steelworkers get a raise?). So what 5% of the revenue pie are you going to shove aside in order to give the workers an extra 5% slice? You’re laboring under the delusion that you can simply increase wages and consumer prices to your hearts content while freezing all other costs of production. Sure you can – in the make believe world of pen and paper.

The simple truth is that you can increase median prosperity by distributing existing wealth more broadly – by dictating a higher wage for labor.

The only extent to which you can increase median prosperity by distributing existing wealth ‘more broadly’ is by taking from the rich – confiscating their profits – and giving it to the not so rich. It’s a simple socialist redistribution of wealth that you’re proposing. It’s a shame that such an economic philosophy has never managed to increase median prosperity anywhere – unless of course you’re talking about a median level of poverty.

I will say this again. Since wealth consists not of banknotes but of the things which those banknotes are exchanged for (at a rate of exchange which is not fixed in any sense of the word) then the only way in which you can increase the prosperity of the worker is by increasing their output.

I am happy to demean myself in the cause of the education of others. Your misapplication of logic and misunderstanding of arithmetic are troubling, and I hope to assist you in improving your comprehension. The realities of life show clearly that workers benefit when they mobilize to win improved compensation, working conditions and benefits through unionization.

Hilarious. The realities of life show no such thing, since unions exist not to improve the productivity of workers but instead to jack their wages above market levels, which will never improve general prosperity. The only prosperity it will improve, to some extent, is that of union workers – but only to the extent to which other workers are not unionized. In other words, their increases in prosperity come at the expense of other workers and those increases become less and less as a higher proportion of the workforce becomes unionized and procures the same gains. The only legitimate, non-destructive role of unions is to ensure that market rates are being paid and to ensure safe working conditions. Unfortunately this is not the role that unions have assumed.

What is so hard about understanding that union wage hikes are paid for by an increase in consumer prices? What is so hard about understanding that if everyone got a union raise, the only way to pay for that raise would be by raising prices? Therefore no, everyone would NOT be better off.

Of course wage hikes are paid for by an increase in prices. However, the price increases are not larger than the salary increases, so everyone is better off.

(@54. Jason:)

If you don’t want to believe that consumers pay for union wage hikes then it’s as simple as this: show me where the money comes from.

So, taking your example, let’s compare a $75 wage with a $100 wage, accounting for price increases…

At $75/hr, the laborer needs to work 1.33 hours to generate one unit of revenue (that’s the cost of living). Revenue = $100/hr, Labor = $75/hr

At $100/hr, the laborer generates the same unit of revenue in 1.25 hours. The difference is how much better off he is. Revenue = $125, Labor = $100/hr

That’s using your own figures. Just bump the portion of labor costs from 75% of revenues to 80%, and every laborer is better off, because the value of their labor has been increased relative to other factors. Is that so hard to understand?

You deride my analysis for being “simple.” You’re right, it’s as simple as abc – you cannot increase prosperity by distributing wealth that doesn’t exist.

The simple truth is that you can increase median prosperity by distributing existing wealth more broadly – by dictating a higher wage for labor.

Please DavidS, for the sake of your own self respect, grow up and learn to start thinking straight about the realities of life.

I am happy to demean myself in the cause of the education of others. Your misapplication of logic and misunderstanding of arithmetic are troubling, and I hope to assist you in improving your comprehension. The realities of life show clearly that workers benefit when they mobilize to win improved compensation, working conditions and benefits through unionization.

That’s a grown up thought for you to grow into.

Peace.

DS

Meanwhile the non-union branch was still not payed and health benefits stopped. No notice was ever given of lay-offs, no severance packages were ever offered. The owner continued to live an extravagant lifestyle off the backs of the workers he had milked. The president of the company, his girlfriend (head of HR) and a few minions went on a weeks vacation, the owner signed part ownership to his new wife and sold the rest of the company to someone who has not showed his face. So there you have it.

In this modern day of buy and sell to turn a quick profit or buy and tear apart and sell off piece by piece for self gratification, there is a new business owner who’s only concern IS self profit and is not in the business of creating a business that profits not only the owner but the workers also. I think many companies use lay-offs to get rid of workers before they reach what the business considers a unsustainable salary level and then bring in new workers at a lower wage. Workers are brought in and out like merchandise or office supplies. I don’t think they do it because the workers are bad, but just because they are a part of what a company considers an expense. Seniority might let some lazy or older workers stay but it does let the workers know where they stand and gives time for planning for the worst.

Of course a few are allowed to feed at the trough because everyone knows that divide and conquer is the oldest most successful war strategy.

Unions on the other hand have a reputation of being just as greedy and corrupt as many businesses (we’re paying that price now of greedy businesses) and the American car industry stumbled and might fall not because of unions but because of a reputation of poor quality they have not been able to overcome yet. Unions can be good just as companies can be bad and visa versa but to me in the end business can do a lot more harm to people as evidenced today, than the union of workers ever did or could do.

That’s my story and I’m sticking to it.

You’re right, it is a fundamental right to join any union or collective you like. But there is a flip side to that. It is also the fundamental right of the business owner to hire whomever he likes and to offer them whatever rate of pay he likes. Those are the fundamental rights of property, the cornerstone of civilization and freedom.

Think about it…”

I have thought about it David – evidently you haven’t. You are still trying to evade the most basic common sense. Nor do you show any signs of understanding what real wages are and how they’re affected by the level of consumer prices. What is so hard about understanding that union wage hikes are paid for by an increase in consumer prices? What is so hard about understanding that if everyone got a union raise, the only way to pay for that raise would be by raising prices? Therefore no, everyone would NOT be better off.

You’re still laboring under the delusion that we can simply print more money to make us all wealthier. You’re still don’t understand that prosperity comes from productivity and NOT nominal wage levels.

And most of all, you still don’t understand that union wage hikes are paid for by workers in non-unionized industries – and ultimately, consumers. They are NOT paid for out of the profits of business owners. If you don’t want to believe that consumers pay for union wage hikes then it’s as simple as this: show me where the money comes from.

You deride my analysis for being “simple.” You’re right, it’s as simple as abc – you cannot increase prosperity by distributing wealth that doesn’t exist. Unless you increase productivity, the best you can achieve is to snatch wealth away from one worker and give it to another. This is what unions do.

Please DavidS, for the sake of your own self respect, grow up and learn to start thinking straight about the realities of life.

It must be. I’ve seen it from inside the bilges and the deckplates of ships. It must look quite different from wherever it is that you sit. (A basement office at AFL-CIO headquarters on 15th Street in DC?).

“Unions negotiate for their members, and for their potential members.”

That’s the theory. The reality is that the Union negotiates for itself FIRST. There is a VAST difference between rank and file, (workers), and the union hierarchy,(Labor bosses).

“All those minimum wage workers are quite happy with their extra take home pay, and they can see who is fighting with them to grow their slice of the pie.”

If those min wagers are so grateful, then why has union membership been dropping like a sinking ship for the past 40 years?

The answer, fella, is that the min wage workers don;t have to do a damned thing to get their raises, except for get a skill or an education in a trade or profession that pays decently.

Seriously, David, how many people who dream of making a career out of wearing a plastic hair-bag and working a deep-fat fryer at the drive-thru “Choke n’ Puke” do you think are out there?

” It would be quite shortsighted to negotiate raises for union members and not also raise the wage floor for all workers to make sure that the poor can still make ends meet.”

Sigh…unions aren’t supposed to be bastions of social engineering, bubba. They’re supposed to be business organizations dedicated to securing as much return for their members’ labor as they can.

Let me tell you about shortsighted. If I was the President of the Almagamated Brotherhood of Thugs, I’d campaign AGAINST minimum wage laws, “living-wage” laws and all the other subsidies for the unskilled or the over-supplied.
Let ‘em make pennies on the dollars they earmn today…let them earn what the market will bear and live in abject poverty.

MY Lads and Lasses, I’d be right in there swinging to get ‘em good pay, great training and bennies second to none…and I’d bust their asses if they pulled any shenanigans. No dopers or drunks, no slacking, no goofing off on the Company’s time.
Woe the management ass-kisser who tries breaking my peoples’ rice bowl to make him or herself look good.
You don’t owe the Company your labor, but the Company doesn’t owe you employment either.

So, the point is that MY union’s people would be doing well because they’d be a quality, dependable and honest workforce. An asset not just to the union, but to the companies smart enough to employ ‘em.
And people being how they are, they’d display it. My guys and gals would be living in nice homes, driving new cars and trucks, hauling boats…

And back to that former minimum wage schlub who’s now living under a bridge or in a cardboard box in the bushes behind the “McVomit’s” franchise parking lot.

He looks out one day and sees a blinged out, righteously phat Cadillac Escalade drive up, and on he rear bumper is an “Amalgamated Brotherhood of Thugs” bumpersticker.
And he wants to get him some of that.

THAT, chum, is how you recruit for the Labor movement.

The way the unions are doing it now, I got at least a one hundred dollar a day raise when I told those lazy greedy bums to go piss up a rope.

It’s the American workers that count in this country David.

That’s what I’ve been trying to explain. Unions give workers a collective voice through organization, which is a fundamental right.

@53. Bilgeman:

As a union member, which you apparently are not, I paid my union officials to get ME a raise.
The minimum wage guy can damn well negotiate his own compensation package.

Your understanding of the relations of labor & capital is lacking. Unions negotiate for their members, and for their potential members. All those minimum wage workers are quite happy with their extra take home pay, and they can see who is fighting with them to grow their slice of the pie. It would be quite shortsighted to negotiate raises for union members and not also raise the wage floor for all workers to make sure that the poor can still make ends meet.

It is true that minimum wage increases will be in some part passed on to consumers – but ultimately, minimum wage standards raise the standard of living of all citizens. A 10% increase in the minimum wage puts real money into the hands of hard working Americans, and this gain is greater than any attendant price increases.

Your ragging on company unions doesn’t dissuade me at all from my support for organized labor. If you don’t like your union – organize your members to get yourself put in charge. A 3% discount is not a massive difference – and as you say, this is a “bogus” union – imagine what a “genuine” union would do for workers. I’d imagine wage parity would be the answer…

@54. Jason:
Your simplistic analysis has more holes than a sieve. Most of your questions are not even relevant.

QUESTION: So what if everyone was unionized and everyone got a raise?

ANSWER: Nobody would be better off. The price of everything produced by everyone would be higher in order to fund those pay rises. Without increasing worker productivity, there is no alternative source for those pay rises. The money has to come from somewhere.

Do you not understand that even under your simplistic analysis, if everyone was unionized and got a raise, they would be better off? You claim that labor represents most of the cost of goods sold – but unless you change your tune to claim that labor represents 100% of the cost, a raise in wages is a raise in real income, which by definition means everyone is better off unionized. Simple. It’s about re-assessing the real value of labor.

Think about it…

55. AThinkingPerson:

I wish for David S. a job in the real world faced with a union boss, a union card and a pen (and the prospect of being paid not according to quality of work but seniority). That’ll snap him back to reality.

Sounds good to me. I could get behind that wish. It’s the boss that threatens to fire anyone who dares to mention organizing that worries me.

Peace.

DS

That greedy rich bastard can only carry so many people on his back.