Profit per employee up....why not wages?

Local_Historian wrote: If you get profit sharing pay, your pay does decrease. Just a thought.

Not at my company. If we have a bad year, you get nothing.

Of course, the commission sales people do get screwed if we have a bad year.
Then again they make much, much, more than me when they have a good year. One year our top salesman made more than our CEO.

So in all seriousness, what defines a fair market wage? Is it fair market if the employee can't afford the products they produce? I'm not talking porsches, I'm talking Walmart quality fare.

I know there is a formula for this, but it's been a long time since I've had to figure it.

SS - so you get your wages, but nothing extra, that's what you mean, right? OK - some companies work that way, other companies decrease your pay.

Another question - does your company ever justify away bonuses, even if they have record years? If not, then you truly work for a good company.

I will never work in a commission based job ever again - no, no, no. It's just not a risk I'm feeling young enough to take anymore. Set me an HOURLY wage, specify overtime, grant or don't grant bonuses, but NOOO commission. And no salary - I'm too old to be a corporate slave anymore.

Call me a fuddy duddy and a non risk taker - you're right.

Fair market wage is what the employer has to pay to attract the level of skill, education and commitment they wish their employees to have. If I can find a group of teenagers willing to dig with hand shovels for $5/hr over their summer vacations, why should I have to pay more than that? If I can't find workers willing to dig with hand shovels for that wage I can either choose to offer more money per hour until I find a wage at which I can attract workers, choose not to take on the work, or do the work myself, right? Fair market is the negotiated price between buyer and seller.

A farmer might think their wheat is worth $100 a bushel, but if they can't find a buyer at that price, they won't be able to sell their wheat. The fair market value for a bushel of wheat is the price derived by negotiations between producer and purchaser. One wants to get as much as possible, one wants to spend as little as possible and between them they arrive at a price both are willing to live with. Labor is no different - it is a commodity for sale. The laborer wants to negotiate the highest price possible for their labor and the employer wants to negotiate the lowest price possible. Whatever the two of them are willing to live with is the fair market value of the labor.

OK - serious still - what if fair market is lower than what people can really afford to live on, but they take the job anyway, because something is better than nothing? I know it's the people who determine the breaking point, but ----ahh, cannot get out of my head what I mean to ask - read my mind for me, Printsmith!

I know Colorado how to deal with this in 2000, I believe, and teacher salaries - they suddenly had to raise them because it was almost school time and they were still short a very large number of employees.

So in all seriousness, what defines a fair market wage?

OK - serious still - what if fair market is lower than what people can really afford to live on, but they take the job anyway, because something is better than nothing?

Fair market wage - unfortunately- is not defined by what a person can afford to live on. It's not defined by if they can afford to buy what they produce, and it is not defined by how much it costs to live.

PS eluded to it- Fair market wages are determined by 2 major variables.

Supply and Demand.

Yes there are other minor forces involved, but those are the big ones.

Government jobs are the exception to supply and demand- a government worker would be totally worthless and make 100 grand a year because government can just confiscate the money to pay it's employees. They get away with this until the citizens raise hell about it.

Government laws and regulations also distort wages with things like the minimum wage. Many workers are actually overpaid in this economy because of minimum wage laws.

In China- they have had no minimum wage laws until recently. The market paid a 12 year old factory worker 38 cents a day. Supply and demand. Now China factories are having problems filling those positions so wages are rising. They are rising pretty fast. The good economy has brought down the supply of workers at the same time that demand for workers is rising.

We can do all kinds of things as employees to make the supply and demand rules work in our favor- like develop a skill that is in higher demand - with fewer workers to compete against.

Fair market wage has nothing to do with standard of living- it has to do with what cost an employer can replace a given skill. In a bad economy like ours- there are more skilled workers than there are jobs- wages go down. They keep going down until the supply and demand rules work in favor of employees again- or until we make 38 cents a day.

It's not an emotional thing- it's a market economy thing. The market does not care if you can afford to pay your rent.

An illegal immigrant coming here years ago did not make enough to pay the rent, so they got 4-5- 10 of them together to rent a place. The market did not care how much they earned- so the illegal worker had to figure it out and deal with it.

They figured it out- stop picking tomatoes- and learn to be a carpenter, a plumber, an electrician etc.

Local_Historian wrote: OK - serious still - what if fair market is lower than what people can really afford to live on, but they take the job anyway, because something is better than nothing? I know it's the people who determine the breaking point, but ----ahh, cannot get out of my head what I mean to ask - read my mind for me, Printsmith!

I know Colorado how to deal with this in 2000, I believe, and teacher salaries - they suddenly had to raise them because it was almost school time and they were still short a very large number of employees.

In a perfect world, the cost of living should fall if wages are falling. If enough people can't afford housing, rent should fall, home prices should fall etc. But as we are seeing right now with the foreclosure crisis, prices are falling, but not falling fast enough.