Isn it true that productivity improvement only benefits employers? Doesn it constitute an exploitation of labor when productivity is increased?
Over time it can be shown that what people are paid is roughly equal to the value they have created. The correlation here is approximately .9. This means that the more value you create, the more you can and eventually will be paid. If somebody weren’t paid enough compared to the value that he/she created, that person would be likely to leave the job and find something that paid a fair wage. In a competitive society, it would not be possible to underpay people for long because they will seek employment elsewhere. If, for reasons of a strong union, or perhaps a situation where somebody has monopoly on a certain type of labor, somebody has been paid quite a bit more than what he/she creates in value, that situation cannot last. Sooner or later the employer will go out of business and there wouldn’t be any jobs available for people at that rate. An example would be the wages that were paid to steelworkers in the United States from the 1960’s to the early 1980’s. Higher wages made the U.S.
