At the same time, he was wary of extensive government involvement in determining wage rates.
Moreover, he neglects to note that wage rates will increase as China becomes more prosperous.
Savings calculated strictly on the basis of wage rates obscure the real cost of outsourcing.
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But even if they are, wage rates are not the sole factor driving up the public-sector wage bill.
And since it is hard to cut nominal wage rates, price stability could put a floor beneath real wages.
Given a constant money supply, nominal wage rates fall, but real wage rates rise because total output has gone up.
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Although this decreased hourly wage rates, it supported old employees who have retired and minimized job loss, according to Hiltz.
In other words, the supply of workers will shift to meet the demand, although probably at slightly lower wage rates.
The reason why is pretty basic: When we devalue we're actually lowering real wage rates, thus reducing the cost of hiring.
What is the effect of a bigger labor pool on wage rates?
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While ruling out "a complete free-for-all" on public sector pay, the authors claim greater flexibility in wage rates would improve work standards.
Wage rates and large capital expenditures are the primary driver of this.
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As a result, the two pilot groups still work under separate contracts, which have some of the lowest wage rates in the industry.
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The first thing is that the two different wage rates being discussed are not the same thing, not the same thing at all.
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The other 5.8 billion people, including those in China, live in countries that have much lower wage rates than those in the United States.
We have automated certain positions away, walked away from contracts that were not economic at higher wage rates, and had to outsource certain functions to outsiders.
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The 7% target would apply to a contractor's work force as well as subsets of workers based on factors such as their job description and wage rates.
In return for generous campaign donations and get-out-the-vote support received from those unions, they grant generous wage rates and benefits, but they don't have to pay the bills.
And what are mean wage rates for this group?
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For instance, with assistance of rapid increase in wage rates, expected interest rate liberalization and further reforms, China is probably close to a turning point when income distribution switches from deterioration to improvement.
If labor and other markets are allowed to function without government intervention, there will be a tendency toward market-clearing prices, including relative wage rates and interest rates that reflect time preferences and the productivity of capital.
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While the direct labor required to manufacture such products is considerably lower, overall lower wage rates enable Chinese manufacturers to benefit from building, equipment, engineering and overhead costs that are substantially lower than those for their Western counterparts.
Apart from some die-hard New Classical economists, and the odd Rothbardian, everyone appreciates the difficulty of achieving such downward absolute cuts in nominal wage rates as may be called for to restore employment following an absolute decline in NGDP.
For instance, a study by Kevin Hassett and Aparna Mathur of the American Enterprise Institute, looking at 72 countries over 22 years, suggests that a 1% increase in corporate tax rates results in a 0.8% reduction in manufacturing wage rates.
Wage rates will be 10% higher.
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Most of us (myself included) will also readily agree that, if equilibrium money wage rates have been increasing at an annual rate of, say, 4 percent (as was approximately true of U.S. average earnings around 2006), then an unexpected decline in that growth rate to another still positive rate can also lead to unemployment.
What really matters for jobs and competitiveness is not consumer price inflation, but the rate of change of unit labor costs. (Unit labor costs are wage rates adjusted for changes in productivity.) A recent study from the Boston Consulting Group suggests that Chinese unit labor costs will grow at about 8.5 percent per year over the next five years.
The Labor Department determines prevailing wage based on rates prevailing in specific localities, so that it would vary from city to city.
The Labor Department determines prevailing wage based on customary rates in specific localities, so that it varies from city to city.
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