Raising Wages on the Denominator

A blog about business and economics.
Nov. 28 2012 2:26 PM

Raising Wages on the Denominator

Something that I think goes missing from most discussions of work is that incomes can be increased not just in the numerator (what's the nominal wage you get paid) but also the denominator—how much do things cost?

For example, if we're wondering about the jobs of the future and whether the typical person in 2052 will be able to afford a visit to the doctor this turns out to be basically a question about how many doctors there will be, not what kinds of jobs people have. Insofar as doctors are scarce, lots of people won't get to see the doctor. By contrast, if doctors are plentiful then a decent society shouldn't have a difficult time organizing things so that people can see the doctor. It's quite possible that doctors really will be too scarce for everyone to be able to get lots of doctor's visits. It used to be that doctors made house calls, but they're too scarce now for any reasonable person to pay for that. But the point is that if doctor-scarcity comes to pass, it'll be a question of doctors not a question of good manufacturing jobs versus lame yoga instructor jobs.

So then the secondary question becomes whether some new innovation will make it possible for middle-class people to enjoy a decent standard of health care despite doctor scarcity. The hope is that if a very fancy computer can win Jeopardy in 2011 then by 2052 perhaps a fairly banal computer will be able to do lots of diagnostic work.


Long story short, if it were possible to get a medical condition reliably diagnoses for the price of Internet access that would be a huge de facto increase in the wages of incomes of bloggers and yoga instructors and carpenters and baristas all across this fine land. By the same token relaxing anti-density regulations would not only increase numerator wages by improving productivity and agglomeration, it would increase wages on the denominator side by reducing the cost of housing in desirable locations.

In general, if we think past the admittedly severe cyclical problem of high current unemployment and think about the long-term economic issues that people are struggling with I think it's often more productive to think of them on the consumption side than the income side. Will people be able to get treatment when they get sick? To live in a decent-sized house in a safe neighborhood with a convenient commute and adequate schools? To eat a healthy diet? To have fun? If you can achieve those things, you've by definition got at least an okay good job and a decebt income regardless of what the specific nature of the work is. But right now lots of people can't get that stuff. But to fix the problems, you have to go to the source. Better health care delivery systems and better cures, more housing and more good schools. All that good stuff isn't something different than an agenda for higher wages, it's exactly how you achieve higher wages.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.



The Self-Made Man

The story of America’s most pliable, pernicious, irrepressible myth.

The GOP Senate Candidate in Iowa Doesn’t Want Voters to Know Just How Conservative She Really Is

Does Your Child Have “Sluggish Cognitive Tempo”? Or Is That Just a Disorder Made Up to Scare You?

The Supreme Court, Throughout Its History, Has Been a Massive Disappointment

Why Indians in America Are Mad for India’s New Prime Minister

Damned Spot

Now Stare. Don’t Stop.

The perfect political wife’s loving gaze in campaign ads.

Building a Better Workplace

You Deserve a Pre-cation

The smartest job perk you’ve never heard of.

Rehtaeh Parsons Was the Most Famous Victim in Canada. Now, Journalists Can’t Even Say Her Name.

Parents, Get Your Teenage Daughters the IUD

The XX Factor
Sept. 30 2014 12:34 PM Parents, Get Your Teenage Daughters the IUD
Sept. 30 2014 12:04 PM John Hodgman on Why He Wore a Blue Dress to Impersonate Ayn Rand
  News & Politics
Sept. 30 2014 2:36 PM This Court Erred The Supreme Court has almost always sided with the wealthy, the privileged, and the powerful.
Building a Better Workplace
Sept. 30 2014 1:16 PM You Deserve a Pre-cation The smartest job perk you’ve never heard of.
Sept. 30 2014 1:48 PM Thrashed Florida State’s new president is underqualified and mistrusted. But here’s how he can turn it around.
  Double X
The XX Factor
Sept. 30 2014 12:34 PM Parents, Get Your Teenage Daughters the IUD
  Slate Plus
Behind the Scenes
Sept. 30 2014 3:21 PM Meet Jordan Weissmann Five questions with Slate’s senior business and economics correspondent.
Brow Beat
Sept. 30 2014 2:56 PM How Faithful Is David Fincher’s Gone Girl?
Future Tense
Sept. 30 2014 2:38 PM Scientists Use Electrical Impulses to Help Paralyzed Rats Walk Again
  Health & Science
Bad Astronomy
Sept. 30 2014 7:30 AM What Lurks Beneath the Methane Lakes of Titan?
Sports Nut
Sept. 28 2014 8:30 PM NFL Players Die Young. Or Maybe They Live Long Lives. Why it’s so hard to pin down the effects of football on players’ lives.