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.