There are a number of reasons why wages might not rise that have nothing to do with free market supply and demand.
The most obvious is you could control wages by being the owner of inelastic goods your workers require to live, such as housing. I think this is how the feudal system worked originally, workers produced cereals but the Land and the worker's cottages were both owned by the Landlord. If the price of bread decreased the Landlord could simply increase rents. So it was only when the factories came along that most workers managed to have any savings.
Another example is where a worker in debt, and must work at an existing job to pay for the debt. Obviously a worker without debt is a worker than could request a higher pay rate because they are able to be more competitive by obtaining a new employer.
Another example is the existence of non-compete agreements.
It should not surprise us that in London there exists widespread use of non-competes and their workers are typically indebted by student loans or mortgages, that the wages are so low. Look at any London software engineer thread if you'd like to be depressed, 300-400 a day and sometimes much less, for people with 10+ years of experience.
Another example is that I suspect that there is a conspiracy to hold down wages that involves both the government and companies price fixing. I further suspect this is a deliberate policy by at least the US and UK governments using a list of occupations they depend on to function. Scientists, engineers, programmers.
This shouldn't come as a surprise because even in Silicon Valley where the wages are the highest in the world for computer programmers, it was found that multiple well known corporations were involved in a wage fixing cartel. That however I suspect is merely amateur hour in comparison to the government and its partners.
On medieval rents ruling out any savings, you're probably thinking of the rack-renting of the Border clearances in the 1700s. There was room for upward mobility in the Middle Ages; for one example, look up the Paston letters and the biographies of the family, who rose from yeomen to gentry and I think minor nobility. Yeomen were freeholders, approximately, but we have records of serfs rising to yeoman status.
See Frances and Joseph Gies, Marriage and Family in the Middle Ages, for a great deal of discussion in passing; or look up A Farewell to Alms, although the situation wasn't as rosy as that book claims.
>Another example is that I suspect that there is a conspiracy to hold down wages that involves both the government and companies price fixing.
I've read a couple of anecdotes, though never could find anything concrete: the government was more than happy to offer industry the use of H1B visas for high-tech employees.
That way, wages would be suppressed, and the US military industrial complex would be able to outcompete adversaries as warfare was becoming more and more software based.
It might be interesting to see if companies in and around the DC metro area (where many of the associated MIC contractors do business) have a higher rate of acceptance for their H1B requests.
For example, if random banks and insurance companies in the DC area were able to get 2x - 3x the amount of visa approvals vs similar industries in other metros, this would, over time, push wages down in the area for all programmers. This would save the government billions of dollars per year considering how much the US spends on defense.
Why do you find the idea of a wage fixing cartel so bizarre? It's a phenomenon as old as labour markets themselves. The employer does not want a market for labour, they want a steady supply of workers for the lowest price. Since there are fewer employers than workers, it is easier to coordinate a plot against them.
Also when the economy becomes more centralized and bigger companies swallow up smaller ones, you should expect more cartels. That is just logical.
I didn't say I had evidence but I know the number of competitors for positions in the UK has been going down, not up. The price for labour however has not shifted.
This is indicative of fixed prices, in this case wages.
Does you think the prices for turnips can be fixed but not that of plumbers? It's all the same thing.
Think about how people won't buy turnips (or consumer goods in general) if the price is higher than they expect -- even if that's the break-even price. I think something similar's happening with employers: they won't pay more than $80-$100,000 for a programmer, the market-clearing price for programmers is somewhere around $130,000, and thus you get a STEM shortage. And this applies pretty much everywhere; it's astonishing how few employers are willing to admit that they can't fill positions, they aren't offering enough money.
good point. Price stickiness can apply to wages as well - it's often used to explain why it's supposedly difficult to decrease wages to keep positions filled during a recession, but I suspect in the current market the opposite is more often true: companies have a certain price point for labor in mind and are unwilling revise their payscale upward. It's a sinister version of your grandmother complaining about the price of milk, since large companies have a lot of leverage to distort the labor market.
Why are they motivated to do this though CT? I feel like I'm missing a piece of the puzzle.
Labour costs are tiny fractions of these company's profits, and code stays 'fresh' for decades. You can easily get leaps in productivity that save a huge quantity of money for the company by just thinking a little harder. And it should be the case that smaller teams are better teams.
Why do programmers even make wages similar to the middle class? Their work isn't remotely comparable to lawyers or dentists. Surely million dollar salaries should be the norm. The practice of acquhires suggest a starting salary ought to be around 1.5 million dollars.
I don't know about Facebook but yes, in Google's case they offer superior wages to their employees.
However that doesn't diminish my original statement because Google is likely to hire the most expensive talent and also their employees in London are paid I think about 30% less than their counterparts in the US. I suspect the American programmers are actually more effective at their jobs for a number of reasons e.g. being at ground zero when new domains open up but there is still likely to be wage gap which I'd explain by the depressed wage market in London. There are many very effective workers who ought to be paid twice or triple what they are currently earning. I know some of the younger programmers in the UK are being paid as little as 12-16k a year.
> workers are typically indebted by student loans or mortgages, that the wages are so low. Look at any London software engineer thread if you'd like to be depressed, 300-400 a day and sometimes much less, for people with 10+ years of experience.
Student loans are paid back based on salary. 400-300 a day is low for a senior software contractor in London, or even a FTE (hard to judge difference given benefits).
The most obvious is you could control wages by being the owner of inelastic goods your workers require to live, such as housing. I think this is how the feudal system worked originally, workers produced cereals but the Land and the worker's cottages were both owned by the Landlord. If the price of bread decreased the Landlord could simply increase rents. So it was only when the factories came along that most workers managed to have any savings.
Another example is where a worker in debt, and must work at an existing job to pay for the debt. Obviously a worker without debt is a worker than could request a higher pay rate because they are able to be more competitive by obtaining a new employer.
Another example is the existence of non-compete agreements.
It should not surprise us that in London there exists widespread use of non-competes and their workers are typically indebted by student loans or mortgages, that the wages are so low. Look at any London software engineer thread if you'd like to be depressed, 300-400 a day and sometimes much less, for people with 10+ years of experience.
Another example is that I suspect that there is a conspiracy to hold down wages that involves both the government and companies price fixing. I further suspect this is a deliberate policy by at least the US and UK governments using a list of occupations they depend on to function. Scientists, engineers, programmers.
This shouldn't come as a surprise because even in Silicon Valley where the wages are the highest in the world for computer programmers, it was found that multiple well known corporations were involved in a wage fixing cartel. That however I suspect is merely amateur hour in comparison to the government and its partners.