Eleanor reports

1. Eleanor reports

2. Is _________ overpaid?

3. Productivity and pay

4. Productivity and pay • Pay is a set of incentives, both to workers and employers

5. Productivity and pay • Pay is a set of incentives, both to workers and employers • People are __________ resources who’s labor have ___________ _______.

6. Productivity and pay • Pay is a set of incentives, both to workers and employers • People are __________ resources who’s labor have ___________ _______. • Therefore, pay is a way of allocating those scarce resources… you and everybody else who will enter workforce

7. What determines how much people get paid?

8. What determines how much people get paid? • Supply and demand

9. What determines how much people get paid? • Supply and demand • Bigger demand for engineers than for baristas… it takes years of education to be an engineer; a couple of hours to be a barista

10. What determines how much people get paid? • Supply and demand • Bigger demand for engineers than for baristas… it takes years of education to be an engineer; a couple of hours to be a barista • But we also have plenty of people with Ph.Ds who work as waiters or baristas. No demand for doctors of philosophy or 14th century French poetry except in universities

11. What determines how much people get paid? • But not it’s just scarcity relative to baristas; it’s the ability of the engineer to add to the company’s earnings (profits) that makes employers willing to hire… and pay a lot more for the engineer

12. What determines how much people get paid? • But not it’s just scarcity relative to baristas; it’s the ability of the engineer to add to the company’s earnings (profits) that makes employers willing to hire… and pay a lot more for the engineer • A concert promoter can make money hiring Taylor Swift for $150,000 for a night… but will lose money hiring a better but unknown singer for $1,500 a night

13. Productivity

14. Productivity • Measure of output from production processes per unit of input

15. Productivity • Measure of output from production processes per unit of input • Often measured in labor hours: Sally made 20 lattes per hour; Bob made only 18. Sally is more productive, all thing being equal

16. Productivity • Measure of output from production processes per unit of input • Often measured in labor hours: Sally made 20 lattes per hour; Bob made only 18. Sally is more productive, all thing being equal • But things often aren’t equal: Sally uses the QXR173 Turbo Espresso Max machine while Bob has only the Wal*Mart “Frap-o-Matic”

17. Productivity • Productivity depends on the quantity and quality of other inputs as well as the worker

18. Productivity • Productivity depends on the quantity and quality of other inputs as well as the worker • The quality of equipment, management and supporting workers all help determine a given worker’s productivity

19. Productivity • Productivity depends on the quantity and quality of other inputs as well as the worker • The quality of equipment, management and supporting workers all help determine a given worker’s productivity • Productivity can also be reduced by other factors over which you have no control: transportation costs, corruption, poor management, substandard raw materials

21. Mark Twain “There are three kinds of lies: lies, darned* lies, and statistics.” * Word substitution by your teacher

22. U.S. productivity

23. U.S. productivity • U.S. has highest productivity levels as measured by “value added per person employed per year”

24. U.S. productivity • U.S. has highest productivity levels as measured by “value added per person employed per year” • Americans work more hours per year than any other industrialized nation

25. U.S. productivity • International Labor Office: “Americans work 137 more hours per year than Japanese workers, 260 more hours per year than British workers, and 499 more hours per year than French workers.”

28. Pay differences • What about “fair” wages, workers being “exploited” and “living wage”?

29. Pay differences • What about “fair” wages, workers being “exploited” and “living wage”? • Attempts to make salaries/wages something other than signals to guide SRTHAU makes them less efficient, therefore impacting society as whole

30. Income distribution • The “rich” and “poor” can be the same people at different stages of life

31. Income distribution • The “rich” and “poor” can be the same people at different stages of life • 75% of those who were in the bottom 20% income brackets move to the top 40% during the next 16 years

32. Income distribution • The “rich” and “poor” can be the same people at different stages of life • 75% of those who were in the bottom 20% income brackets move to the top 40% during the next 16 years • Why: longer in the workplace, more skilled, more experienced, therefore more desired by employers

33. Income distribution • More people in the top 5% income earners are over age 45… earning 3X the wages of people in 20s

34. Income distribution • More people in the top 5% income earners are over age 45… earning 3X the wages of people in 20s • Media distorts the whole issue: the fact is that it is not an issue of “poor” and “rich” classes because people typically move up over time

35. Income distribution • More people in the top 5% income earners are over age 45… earning 3X the wages of people in 20s • Media distorts the whole issue: the fact is that it is not an issue of “poor” and “rich” classes because people typically move up over time • Society as whole does not decide how to distribute income… those who get the benefit of an individual’s work decide what to pay

36. Myth alert! • “Idle rich” Only 2% of richest Americans inherited their wealth

37. Myth alert! • “Idle rich” Only 2% of richest Americans inherited their wealth • Among top earners, 62% work more than 50 hours a week, 35% work more than 60 hours (8.6 hours, seven days a week)

38. Myth alert! • “Idle rich” Only 2% of richest Americans inherited their wealth • Among top earners, 62% work more than 50 hours a week, 35% work more than 60 hours (8.6 hours, seven days a week) • Most billionaires such as Steve Jobs, Warren Buffett, Bill Gates work prodigious hours… even after becoming mega-rich

39. Myth alert II!! • Most poor people are hard working

40. Myth alert II!! • Most poor people are hard working • Of the 7.6 million families in poverty, 80% did not contain one adult who worked full time

41. Myth alert II!! • Most poor people are hard working • Of the 7.6 million families in poverty, 80% did not contain one adult who worked full time • 55% of poor households are headed by single women – just 17% of whom work full time

43. Income distribution • Beware people bearing “statistics” • E.g., income per household only rose 6% from 1969 to 1996.

44. Income distribution • Beware people bearing “statistics” • E.g., income per household only rose 6% from 1969 to 1996 • But per capita income rose 51% over the same period!!!

45. Income distribution • Beware people bearing “statistics” • E.g., income per household only rose 6% from 1969 to 1996 • But per capita income rose 51% over same period!!! • Why? Smaller households

48. Differences in skills • What is valued in the marketplace is generally no longer muscle (ex sports); it’s your mind

49. Differences in skills • What is valued in the marketplace is generally no longer muscle (ex sports); it’s your mind • This has resulted in reduction or elimination of premium for male workers in ever more occupations

50. Job discrimination • The idea of treating people as the same, no matter where they come from or look like, is relatively new (in the marketplace: Jesus figured this out 2,000 years ago, see Gal. 3:28)