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I've found it helpful (both for convincing, and for clarifying your own thoughts) to phrase things like this in ways that are compatible with "mainstream economists" view of how things work.

The standard riposte to arguments like the one in the article is "well, then someone would pay their workers better and make more money, and those firms would come to dominate."

The response to the response is something like, "managers are being paid in non-pecuniary status benefits via underpaying their underlings, in a way that reduces total firm output, and there are coordination & principal/agent problems in getting management to agree not to be compensated in this way".




"well, then someone would pay their workers better and make more money, and those firms would come to dominate."

Not only would they, they do. Google, Apple, Facebook, Wall St etc pay people well, and are very profitable. However, paying more allows an employer to hire different workers.

Paying the same people more is completely different.


There's a really important distinction here between 'paying more' and 'paying enough'.

If you hire knowledge workers and pay them the bare minimum living costs, they will struggle in their personal lives.

They'll have to do things themselves that they could otherwise pay professionals to do, they'll have longer commutes, or if they're a miserly type they'll be dissatisfied with the feeling of 'working to live' rather than to build for the future.

That holds whether they're rockstars or barely capable of doing the job. Up to a point, paying too little is like running your car with diluted fuel.

In the past I've had jobs with a low salary that were fine until the workload increased.

When that happens, the shortcuts that you could take on a high wage (flat instead of house share, living closer to work, paying for lunch rather than making it, owning and running a car, laundry/ironing in a customer facing environment, etc ...) are not possible. Sleep, diet, exercise start to suffer.

That's the real issue in my mind - some employers just seem blinded to the fact that they're pushing people away. It doesn't matter how loyal an employee is - humans have running costs (both in terms of time and money), and employment adds to those running costs.


I think most people from those companies (I can't speak about Wall St) would make more money in other companies. The employers those companies usually hire are exceptionally good at what they do, but simply the reputation of those companies is enough to make a lot of really good people want to apply and accept an offer, ever if they could get a more senior position and more money elsewhere.


Even within a job class, there is a lot of variation in workers. E.g. I don't think most Walmart workers would have a shot at a job at Trader Joe's or Starbucks.


The notion that employees at Trader Joes are different than employees at WalMart is the curiously American breed of classism, where the poor people get their groceries bagged by poor people but the rich people get their groceries bagged by temporarily embarrassed millionaires with art degrees.


It is completely clear to me when I go shopping that Walmart employees are (1) older, (2) less attractive, and (3) less well spoken than employees at Trader Joes or Starbucks. The difference is pretty big.

Your intentional exaggeration aside, I would be very surprised if most Trader Joe's and Starbucks employees didn't have some college.

To the extent that there is classism, it is in the people at Trader Joe's and Starbucks doing hiring, and the customers that these companies cater to when they making these hiring decisions. Not me for documenting the facts.


Is your claim that there is a substantial overlap in <characteristic of interest> between the two firms or that the distribution is the same? Not being from the USA my knowledge of the two companies is limited but I believe they serve different market segments and sell different product mixes although they're both basically big box superstores. While workers at either are most definitely members of the proletariat I imagine tenure of employment and highest degree are both higher at Trader Joe's than Walmart.

The American variant of classism is more amusing than average to be sure.


I don't believe that there is a meaningful difference in employment pools between WalMart and TJ/Starbucks but I acknowledge that many customers of Starbucks strongly feel differently.


>"managers are being paid in non-pecuniary status benefits via underpaying their underlings, in a way that reduces total firm output, and there are coordination & principal/agent problems in getting management to agree not to be compensated in this way"

That may be true, but managers are also paid in a way that hurts them directly if they reduce the firm's value like that (options, equity). So then it becomes a question of which effect dominates, and it seems like a highly extraordinary claim to say that the "non-pecuniary status benefit" comes out on top.

Perhaps there's a systematic bias that causes managers to think they're maximizing value by underpaying workers, even if they aren't really.


>The standard riposte to arguments like the one in the article is "well, then someone would pay their workers better and make more money, and those firms would come to dominate."

This assumes that workers, firms, and managers are all economically rational agents. Doing so not only overlooks all the findings of behavioral economics and social psychology, but also ignores the major role of ideology in shaping the modern workplace. People mistreat workers because they take their thinking on labor relations from an ideologically-tinted worldview in which you have to mistreat workers to make the economy go -- whether it's conforming to the archetypes has nothing to do with whether it's economically rational.


>well, then someone would pay their workers better and make more money, and those firms would come to dominate.

Software patents, non-competes and NDAs often prevent this. I suppose that is the point of all of them.


The same can be said for getting lobbyist money out of Congress. Letting the fox mind the hen-house is a horrible way to run a society.




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