It’s rather true that Karl Marx was wrong on many things. What he wasn’t wrong on was the determination of wages. Which is useful for we can adopt his analysis to predict what’s about to happen to UK wages – they’re going to start rising, which will be nice. The reason being that people are quitting jobs in ever increasing numbers:
Proof of the UK’s economic recovery can be seen in the surge in workers moving from one job to another, Bank of England officials claim.
Almost 900,000 people moved from one job to another in the final three months of 2017, the highest number since 2004.
The population has grown since then but, even as a share of the overall workforce, it is the largest proportion since 2007. This strength may give the Bank of England more confidence to raise interest rates, with the next increase expected in May.
Think on what he said about wages. If there’s that reserve army of the unemployed out there then the capitalists don’t have to raise wages. Even if productivity and profits increase, even if the workers thereby become bolshie, the exploiters just don’t have to share that rising wealth. For they can just fire people and take some of those unemployed. Or if they need more labour they can just take some of those unemployed.
Posit that there is no such reserve army. The capitalists are now in competition with each other for the workers they can exploit, whose faces they will grind into the dust. Productivity rises, the economy grows perhaps, now wages have to rise to tempt workers away from one exploiter to another. This is how economic growth in general does raise wages – employers compete to be able to skim the labour surplus.
Excellent – so, what would we be looking for as a signal that those wage rises are coming? That workers are being tempted from one employer to another. That is, we would be looking at a subset of job separations. One subset is when people get fired – not what we want to look at. Another is people who voluntarily quit for another job. If they’ve quit it’s not a terrible leap of logic to think that they’ve done so to go elsewhere for a better job. True, “better” doesn’t necessarily mean more money but it most certainly does mean more income in that wider economic sense. Fewer hours, more pension, better conditions, less risk of injury and so on, these are all increases in income if not wages.
Fortunately we can pull this out of our usual statistics. People who voluntarily quit tend not to get unemployment pay. People who quit for another job really, really, tend not to get unemployment pay. So, look within the number leaving jobs for those who don’t claim – a reasonable assumption is that those are voluntary quits.
Voluntary quits are up, we should assume that most to all of these are moves to a better job and thus that wages are going to accelerate in the near future as the effect of there being no reserve army of the unemployed works through the system. And note the truly joyous part of this analysis – even Owen Jones should be able to understand it. For this isn’t some neoliberalism, it’s not even neoclassical economics. This is straight classical econ, right from the pen of Karl Marx himself.
Fully employment is what raises wages. For what economists consider full employment to be we’re around and about at it. Wages are going to rise, the increase in voluntary quits being a sign of that, a portent, or even just a confirmation.
This was your reporter, Karl Marx, writing in from the 19th century.
I know it’s not politically correct to cite immigration as a contributory factor in low wages, however the report currently being prepared for the Home Secretary appears to be point that way, at least as regards medium to low-skilled labour. While employers say it’s migrant workers’ attitude rather than pay, the corollary is that without a ready source of migrant labour they would have to incentivise British workers to change their attitude by paying higher wages. I recall an especially fruitful period during the early ’80s when my particular industry was expanding and there was zilch immigration to speak of…following… Read more »
Of course there is a reserve army. They live in Krakow. Old-fashioned closed-system views of employment economics don’t work while we have freedom of movement of workers.
From observing history what I expect is employers to scream louder and louder demanding access to foreign employees.
It’s amazing that our economy is so decrepid that the only way we can out-compete other economies is to destroy those economies by taking their workers off them. Economics of empire. Why bother competing, just take their resources off them and stop them lot being able to compete.
Dittoes to the above. Tim’s arguments are airtight in a national labor market that is airtight – but the UK’s has a foreign release valve that affects the employer’s perceived options and thus how far he will go to retain existing employees.
That the foreigners in question come from lower-intensity and lower-productivity markets, and those moving to the UK will be eager to start out at less than the domestic average, means that any errors in Tim’s outlook may be on the side of excessive optimism for wages.
It’s obviously people resigning because they’re going to flee the country before the Corbynapocalypse.
Spike’s correct. A lot of perfectly good economic arguments presume a closed system. When one of the factors is open, like the effect of immigration on the domestic labour pool, it’s necessary to recognise the openness. Yes one can see the argument being valid in those areas of employment that protect themselves from outsiders. But they tend to be the ones that are in the strongest position on earnings bargaining in the first place. For those effectively competing with the rest of the world on wage bargaining, not so good. Certainly applies to the unskilled & semi skilled. But skilled… Read more »