A line cook makes no more burgers per hour, a hairdresser delivers no more or better haircuts, and a daycare worker watches no more children concurrently than they could have 25 years ago. Meanwhile the Magnificent 7 have emerged. Baumol effects might have raised wages a bit, sure. How could the relative positions of these workers not fall as all these tech-enabled and scale-enabled neighbors come on to the scene?
The whole concept of buying services from people is either that their time is worth less than yours, or they have special skills that you need and lack. “No such thing as unskilled labor,” ok, but you are definitely get sorting on how useful people’s skills are and how difficult they are to substitute or replicate.
> How could the relative positions of these workers not fall as all these tech-enabled and scale-enabled neighbors come on to the scene?
I’d like to see this worked out for real.
On the one hand, sure, a hairdresser cuts the same amount of hair as they did 25 years ago, and a fancy tech worker produces enormously more output than 25 or 50 years ago.
On the other hand, why does it follow that that tech worker should have an amount of take-home pay equal to vastly more haircuts per month than a comparable worker 25 or 50 years ago? A modern programmer does not actually need more haircuts, or more food, or more lattes, or more housing, or more doctor visits than a comparable worker any other time in the last 50 years.
So maybe something is actually wrong with the profitability of modern non-labor-intensive companies and the tax system such that their owners and employees are wildly overpaid compared to lower-productivity workers.
I’m thinking more of paying people on the margin or of some kind on tax system that compensates for inequality a bit.
Not fully worked out, but consider: suppose there are 100 people in the population, and a bunch of them are ambivalent between tech work and jobs like hairdressing. If tech work paid 10% more than hairdressing, some would do tech work and some would cut hair. If tech work paid 200%, then maybe there would be too many applicants and the employers would reduce wages. (I’ve occasionally contemplated that perhaps one reason that the big Silicon Valley employers pay so much is kind of anticompetitive: they can afford it, so they might as well, because it makes it more expensive to compete with them.)
Or alternatively, imagine if taxes were structured so that owning more than one house were highly discouraged (with appropriate provisions to make owning properties to rent them out make sense, which is something that a lot of legislators get wrong), and if permitting to build houses were not absurdly restrictive, then many different jobs with very different salaries would could still result in having enough income to afford to live in approximately one house. Some might afford two (!), and some might afford one that is much fancier than someone else’s, but if the pressure that makes someone like a hairdresser need to compete against a highly paid tech worker to pay for a similar house went away, the situation could be much improved.
(California, like many places, has strictly too few residential units in the places that people want to live, so just adjusting prices won’t help much.)
> The whole concept of buying services from people is either that their time is worth less than yours
And if everyone else's time has become more valuable then too has the time that is being saved by buying services.
If my time as a programmer is worth significantly more now than it was 25 years ago, then the time I save by buying services is worth more.
There's a reason that someone making $1mil/year is going to be willing to pay more for the exact same haircut that someone making $70k/year also gets. The time being saved is worth more to them.
You're only looking at half of the equation here. Following your logic, if my time is worth $100/hr, I should be willing to pay $99/hr for a haircut. But reality is that a haircut isn't just worth some utility value based on time saved, it's worth the lowest amount where suppliers' willingness to provide it at a given quality and buyers' willingness to pay meet.
So while the $99/hr haircut might technically save me money/time, suppliers of haircuts are generally willing to give the same haircut for $30/hr. If one supplier tried to pin their prices to the growth of their customers' income, they would go out of business. That is because the value of the suppliers time isn't increasing at the same rate.
I'm mostly bald... I got tired of paying as much as I did for haircuts and now mostly just use a pair of clippers on myself, since my goal is to take off all of it. I've paid for more beard trims the past few years than haircuts, though I mostly do that myself too.
Note, I usually use clippers on myself about once a week. Sometimes I'll use a shaver to get a closer shave, but generally doesn't matter as I don't care if there's a little growth, which is noticeable unless I literally shave daily anyway... which I'm too lazy to do, and definitely not able to pay someone else to do.
> Baumol effects might have raised wages a bit, sure. How could the relative positions of these workers not fall as all these tech-enabled and scale-enabled neighbors come on to the scene?
Supply and demand? If the population of hairdressers was small, so they could charge more and more, then their wages could keep up as a percentage. And that would be possible if for example so many people moved into high productivity work that only a small percentage remained in low automation work. But if you have a constant influx of new hairdressers or a constant influx of people willing to do low automation work, that doesn’t happen.
But the relative value of those same labor (hairdresser, daycare worker) changes. If my labor as a tech worker was $50 / hour I'm willing to pay $30 / hour for a haircut. But now if I make $100 / hour I'm willing to pay $60 for the same haircut. And in both situations I still need a haircut and the hairdresser is still the place to go to get one.
Which is fine right? If both wages just keeps up with inflation, the gap will increase by the same amount as well. In fact in this particular case I wouldn't even expect the hairdresser's wage to increase the same amount proportionally, which is also fine. Not all wages should increase at the same rate.
The line cook is relatively as valuable as they were in the past, they're just being out leveraged by people asserting a self-centered entitlement mentality.
The whole concept of buying services from people is either that their time is worth less than yours, or they have special skills that you need and lack. “No such thing as unskilled labor,” ok, but you are definitely get sorting on how useful people’s skills are and how difficult they are to substitute or replicate.