- Jun 27, 2011
Except that's not how those things actually work. Firms raise wages to compete with other firms. Assuming pure market forces are at work, you'd have wages continue to go up until they're paid according to productivity only if the labor supply was being entirely used up. What you're missing is that market forces aren't the only forces at work, and that the wage increases are a process. Because this is the beginning of industrialization, not all labor is being fully utilized. That's a core prospect of the time frame that we're talking about. That early stage has people in less productive industries moving towards higher productivity, which in wage terms means industry wages are competing with subsistence wages. Aka, they're paid according to the productivity of the lowest competitor. Gradually those less productive labor uses fall because they can't compete with the high productivity of factories, leading to higher wages overall.Not really. The supply is irrelevant. There could be ten million skilled workers for every available job and they would still be paid according to their productivity, again, this is assuming a perfectly competitive market.
Their wages would only be minimal if employing them all lowered their average productivity to minimal levels, which is already reflected in-game.
If there was a monopsony, of course, then that would be a totally different story, but that’s not what the game’s trying to depict.
Individual firms will raise wages to whatever they can afford to attract workers, because otherwise they would cease to exist. It has zero to do with altruism, and all to do with self-benefit.
But you also want to consider how non-market forces work. Such as government forces or monopolistic forces. The large power imbalance between peasants and rich factory owners can't be ignored when considering how wages get set.