Greedy Laobans Pocketing Profits and Underpaid Employees

There is a lot of talk (not just here) about laobans hoarding profits instead of paying their employees enough. They’re greedy, they say.

This zero-sum thinking is bad economics. For a firm to maximize profits, it pays its workers according to their productivity.

If you know calculus, I can prove it to you.

If laobans are underpaying workers, i.e., paying them wages lower than their marginal productivity, they’re not only greedy but foolish, because they earn the most profits when they pay workers wages based on their productivity.

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I pay my employees well.

My philosophy is clients first. But I can’t make the clients happy if my employees aren’t happy. So I take care of employees and pay them well but I’ll fire them if they don’t do a good job. I think that’s fair.

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Do you feel you are maximizing profit?

When my employees are happy to come to work each day because they are getting paid, they do a good job. We do B2B for self employed and salons, building client relationships is part of the job. They can’t do that if they aren’t happy to do it.

So yes. I think happy workers = happy client = more clients. Word of mouth and client testimony is better than any marketing for me.

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Of course. This is why tech and oil tend to pay very well in the US.

It’s a different mindset here. Not a good one.

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My first employee didn’t ask for enough so I asked her to think about it more and negotiate better :joy:

I’m a filthy capitalist. But that means i believe people should be paid fairly for their labor. I want to get my employees paid for doing a good job.

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I don’t think there is always a problem paying workers bellow their productivity. As long company fill at least one condition

  • pay decent taxes, either on capital or workers salary
  • generate new jobs in economic stagnate einvoroment

Otherwise government should step in. Bosses can have unspoken agreement and all pay workers little while they make millions. Because they can.

In Taiwan they should stop importing south east Asians, and pay Taiwanese more for those jobs. Increases working conditions.

That’s also bad economics.

Labor should be free to move wherever.

There is a labor shortage and Taiwanese people aren’t willing to do most of these jobs.

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Then start raising wages.

Importing SEA workers should be capped. It’s a relief valve for the labor market that suppresses wages and stops firms from investing in innovation to improve efficiency.

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I think from the point of view of bosses, much more goes into the equation than simply productivity. Andrew mentioned a few considerations. Another is retention. I think one reason I get paid decently here is because they don’t want me to quit. I have a license that only US citizens can have so it would be a pain for them to replace me. Not impossible but a headache. So they pay me a bit more than I could find elsewhere and I stay. I think they also try to be fair but that’s a long story related to the history of the place where I work, etc.

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I’ve had this debate with my students many times. I always turn to maths to decide.
(as a thought exercise so not solid numbers)
Roughly ~800 000 foreign labourers(FL) in Taiwan
average salary/FL 25 000
FL monthly payments to coyote, board and bread, once weekly freedom ~45%?(not sure on this one)
FL home remittance(hr) ~55% 13 750

800 000FL x 13 750(hr) = $11 000 000 000 leaving Taiwan’s economy.

If Taiwanese businesses paid more for shit work and/or made the positions available more enticing to young people ie: holidays, sick days, respect, they wouldn’t have to worry about getting people shipped from foreign countries.

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You have to consider psychology in your equations.

It’s not all black and white.

Paying someone more does not increase their value or productivity.

The relationship between employee and employer is one of imperfect knowledge. The employee will be encouraged to give as little as possible to meet the requirements and the employer will be encouraged to give as little as possible to meet the requirements. That is why it’s is called marginal utility.

Today, the employee is ‘encouraged’ to give their max output or encouraged to find another job. The boss is encouraged to pay crap so the upper management and him gets their bigger bonus. But due to labor shortages in the West they are forced to rethink this idea.

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I agree

That’s insanity with a labor shortage.

Who cares?

Let the money go to SE Asia and help their economies while relieving Taiwan of its labor shortage.

Taiwan already has too much foreign reserves, it doesn’t know what to do with them.

Who? Unemployment is pretty low.

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That’s the GOP logic against any sort of government financial relief. Here I’ll use it in an employee working for their income example: Employees work, they are paid money, and they spend that money. You pay employees less money, they spend less money. That’s less money spent at restaurants, grocery stores, at gas stations, on hiring someone to fix the leaky faucet, etc., which are all things that, when money is spent, create more jobs. You hire SEA workers for shit wages who send all that money back to SEA, and all that money goes to SEA instead of helping to fuel the TW economy. You pay TW workers shit wages and that’s less money that they could be putting into the economy.

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11 000 000 000/month x 12 months. Maybe I don’t understand economics as well as you.

I know calculus - prove it to me.

While you’re at it, show me a plot of productivity vs wages in the u.s.