[Chuck Dent]

Nice Econ101 summary. Wages can only increase in proportion to productivity. Absent that linkage, wage increases merely drive inflation, with the end result that everyone is back at square 1. (Except that savings/debt has been depreciated, which is why inflation is bad - everyone shifts savings to debt to ride the bubble).

It's the same argument against the minimum wage - it does absolutely nothing to increase anyone's 'living wage'. It also impacts 'official' unemployment rates, because employers simply move to the blackmarket ie illegal immigrants.

[A. Pole]

Nice Econ101 summary. Wages can only increase in proportion to productivity.

So what happens when the wages are decreased few times because the work is being done in a Third World country?

"Let London manufacture those fine fabrics of hers to her heart's content; let Holland her chambrays; Florence her cloth; the Indies their beaver and vicuna; Milan her brocade, Italy and Flanders their linens...so long as our capital can enjoy them; the only thing it proves is that all nations train their journeymen for Madrid, and that Madrid is the queen of Parliaments, for all the world serves her and she serves nobody." (Prominent Spanish official - Alfonso Nunez de Castro in 1675)

[hedgetrimmer]

Wages can only increase in proportion to productivity.

The US is said to be experiencing a huge increase in productivity, all the while wages and benefits are declining. Why is that?

[lucysmom]

Wages can only increase in proportion to productivity.

Wage increases once drove increased productivity through innovation (that's what made the US the leader it once was). Now the most innovative idea American industry has seems to be moving production off shore.