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.
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.
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.
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.
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.
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
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.
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.
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.
