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It hasn't kept pace because it isn't the worker that is increasing their own productivity. It's the capital improvements paid for by the owner of the business. So it's the owner that should reap the result of the productivity increase. It's the process that has become more productive, not the worker. Without the new technology, the worker's productivity doesn't improve much.
The other reason is that if all the competitors have the same productivity improvements, it hasn't increased their competitive advantage. Supply and demand of the entire market will determine where the new equilibrium will be. Fewer workers are needed, so their value decreases. Simple supply & demand.
The cashier at the grocery store can check out a whole lot more people because every product has a bar code on it that can be scanned. That's a lot quicker than what we used to do when I worked in a grocery store in the early 70's. Each product had to have a price tag on it, and the cashier had to find that price tag, then accurately punch the correct price into the cash register. And if a price change occurred, a stocker had to go out and physically mark up the price on each product on the shelf. Now, they just change the price on the computer, so the scanned product comes up at the new price.


This is all true - but wasn't it also all true in the 1910's when Henry Ford invented the production line? And yet his workers went from making $2.50 a day to $5 within a few years. Wasn't it also true in the 1920's when unions got some muscle and forced the business owners to fork over part of the "increased productivity" to the working class and thereby created the great American middle class?

Wasn't it also true in the 1950's, when the "middle manager" arose in great American corporations, and when salaries jumped and the middle class grew even more, to the point of dominating the American economy? Wasn't it true in the 1970's, when the minimum wage was increased to keep up with inflation?

Yes, productivity has increased thanks to a lot of things, but now we find corporations taking the extra income and stashing it in accounts overseas, not spending it on further productivity enhancements, and continuing to grind down workers - who often have to turn to food stamps or other means to get by.

Look, I'm not trying to turn this into some communistic paradise, heck, I'm a member of the "owner" class myself. But it's clear that we are hollowing out the middle class, and that boomerangs against us because more and more people have less and less money to fuel the economy and drive growth - growth as we came to know decades ago.

They even have self-checkout lanes, where a single cashier can oversee a dozen checkout lanes. If we paid based on productivity gains, she'd be paid 12 times as much as a single cashier.

And I'm not asking that she be paid 12 times as much, just as nobody asked Henry Ford to pay his workers 50 times as much simply because they were producing 50 times as many cars. I do think that generally speaking, a reasonable "minimum wage" should be a "living wage", not a "poverty wage", which is exactly what it is today.

Yes, this presages an entire conversation about competing with slave wages in Indonesia, and international competition, and NAFTA, and Irish taxation policies and a raft of other things, but it's clear to me (at least) that the minimum wage ought to be re-evaluated in light of today's economy and costs of living.

Of course there are those who counsel "no minimum wage at all", and who apparently don't want to consider what happens to actual people when those wages fall in half, or worse - as they surely would, but I choose not to engage with them because they are beyond reason.

(I find much to compare with the early American economy of the South, where wages were non-existent for slaves, and where precious little productivity growth ensued, and in the North, where advances in technology were encouraged by the invisible hand of productivity and where economies thrived. Hence cotton mills in Massachusetts vs. cotton plantations in South Carolina. Yes, that's right, I think a "minimum wage" helps drive productivity forward, whereas cheap-to-free labor does not. "McDonald's" as a concept is "productivity" [more burgers with fewer workers]; Howard Johnson's was not, see?)
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