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this post was submitted on 14 Mar 2024
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politics
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I think if widget factories could have that tight of margins, the issues would be totally different.
No competent business owner would employ someone whose value could become non-viable with a fluctuation in fuel cost.
The average profit margin in the US is approximately 7%... a 10% margin is considered healthy. Fluctuations in fuel prices DO threaten businesses. That's why you see fuel/transportation surcharges and price increases.
So in this example, the revenue is $1100 a week per worker. If the worker does make $1000 for that time, that does spell doom.
Let's work it the other way. A typical business allocates 15-30% of its revenue to payroll. If an employee is making $1,000 a week, that means that if this widget factory was making enough to be a reasonably successful business in the US today, their revenue per worker would range from $3,333 to $6,667. This means the company would be "losing" somewhere between $667 to $1,333 a week by paying the same wages but losing 1 widget.
Overhead is not exclusively the $1,000 you pay Joe. It is also whatever else you pay to keep the factory in business and Joe working. Some of this, like electricity, will decrease when Joe is at work less.
Now if you consider that for decades the widget factories have been making more widgets, but paying the workers lower wages, we have a healthy widget empire more than capable of supporting a 4 day work week.
Examples like these are only helpful if we use realistic numbers. $1,000 a week for a worker's wages is plausible. $1,100 in revenue from that work is not.
I used those figures for ease of understanding and easy math. At no point did I believe there was a factory somewhere selling widgets, or that a person named Joe was salaried as he built them. My overall point is that for all economics to remain the same, average productivity per worker per hour must remain the same, otherwise there will be price increases or other economic effects.
I used those figures for ease of understanding and easy math.
Easy, but not accurate and therefore misleading.
At no point did I believe there was a factory somewhere selling widgets, or that a person named Joe was salaried as he built them.
No one thought you did.. until now.
My overall point is that for all economics to remain the same, average productivity per worker per hour must remain the same, otherwise there will be price increases or other economic effects.
Correct, things will change. The point is that the system can handle those changes. Price increases will happen, sure. But if we take a look at the year prior to [current year], prices tend to go up. Rather than use this as an argument against working fewer hours, or not paying employees more, we should be using the systems we have in place to provide as much benefit to people as is reasonable. Since the 4 day work week does work, (many examples of companies increasing productivity this way) this is a reasonable benefit to push for.