[PEN-L:1686] Re: Minimum wages in real terms

[dhenwood@xxxxxxxxx (Doug Henwood)]

At 7:46 PM 12/3/95, Paul Zarembka wrote:

>I'll have to give your numbers more thought, Doug, but something is out of
>sync.  Capital had surplus value in 1968, agreed?  So, if $7.15 was the
>minimum wage then (in 1995 dollars), more should be sustainable in real
>terms in 1995 (as productivity increased).  It's as simple as that
>(unless you think productivity is moving downward).

Without tearing apart the numbers for a few more years, I'd guess there are
several things at work: 1) profit rates were higher in the 1950s and 1960s
than now, so there was more wiggle room for K; 2) productivity may be way
up in mfg, but not in services, so the entire economy is suffering more
from Baumol's disease; 3) the public sector is larger; 4) fringes accounted
for an ever-growing share of total compensation from the 1950s through the
early 1990s, meaning that the average hourly pay figures understates the
total reward to labor.

BLS only started reporting manufacturing productivity separately from
nonfarm business in 1977, so it's difficult to measure the Baumol disease
effect using this series. But here are some numbers from the productivity
series that are a start. First, the pay/productivity gap began showing up
only starting in the late 1970s. From 1950 through 1995, nonfarm
productivity rose 118% and total compensation rose 98%. From 1977 to 1995,
productivity rose 48%, and compensation 4%. For 1950 through 1977,
compensation rose faster than productivity.

The manufacturing-services gap can be appreciated from this: from 1977 to
1995, overall biz productivity rose 1.0% a year, and pay 0.2%. In mfg over
the same period, however, productivity rose 2.2%, and pay 0.1%. Between
1990 and 1995, mfg productivity rose an average of 3.9% a year, and pay
just 0.2%

>Can you translate your numbers into Marxist categories?

Well, that was sort of the spirit behind the exercise, but I'll defer to
Anwar on this one. Thinking of supervisory salaries above the average wage
as a return to capital was enough for back-of-the-envelope Marxism, no?

>Anwar Shaikh--if you are watching this, what do your numbers indicate?
>
>Paul Zarembka
>
>P.S.  There must be a misprint in a sentence of yours.  "Here are some
> numbers to show just how impossible this is. The employment/pop ratio
> was 56% in 1950; it's 7% now..."  I don't get the 7%.

Sorry, that should have been 63% now; I guess I meant to say it was 7
points higher. The perils of on-the-fly composition....

Doug

--

Doug Henwood
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