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ECON 103 - Has the Value of Labor Increased or Decreased Over Time?

This is a tough question because there are a few ways to look at it. First, I need to define what labor is. Labor is the time employed in doing things that we do not value for their own sake, but for the outcomes they provide. As was discussed in the lecture in unit 3, these are things we do because we have to for survival. The opposite of labor is the time spent doing things that are leisurely, such as, sitting on a beach. A major goal of humans is to reduce the amount of time needed to be spent on labor, and increase the amount of time spent on leisure. This has resulted in humans coming up with many inventions over the years that will make basic work more efficient, such as, creating washing machines, faucets, refrigerators, etc. These inventions that were created were a product of human labor that was put in to not only create the products that will save time, but also to create enough of them, efficiently, for them to get sent to the masses. More inventions include computers, cell phones, etc. that have made work more efficient for the business world. These many inventions that have made life more “efficient” in many ways have allowed humans to have more time for leisure, and less time put towards labor, at least in theory. The result of this is that humans won’t want to put as much time towards labor, unless they feel incentivized to do so, which will naturally result in an increase in the value that humans put on labor.

However, a major counter argument to this is what has happened since the U.S. moved off sound money in 1971 (Detaching the dollar from the gold standard). Without a hard (Finite) asset backing fiat currency, governments have the ability to print as much of the currency as they would like. With each new dollar being created, every dollar in circulation is worth a little less. Obviously, since 1971, this has been the case, as can be seen in the loss in purchasing power of the dollar, and the rise in asset prices. A chart from the article (Wtf happened in 1971) shows that the average American has been asked to be much more productive, while the real value of their wages has not gone up commensurately. The chart goes parabolic in either direction, productivity going up, real value of wages going down, since 1971.

In the modern day world, a major aspect of labor, for the average person, is through the form of acquiring money, which for many people, usually involves putting in time in the workplace to earn a wage. Then this money earned from wages will be spent and put towards the necessities of life. Rather than the average person putting their time towards actually hunting for their food, or building their house, they use the money they earn to pay specialists to do these activities for them, and the average person will exchange the money for the products or services. This is a major result of the technological advances I spoke about earlier.

With that being said, the counter argument to the theory that labor has increased in value, is that the result of our money being depreciated faster than the rise in wages, has actually caused the value of our labor to decrease in real terms over time (Specifically in the last 50 years). With the value of the currency depreciating, businesses need their employees to be more productive, so they can earn additional money to cancel out the inflation. But the rise in wages, in real terms, usually does not keep up with the depreciation of the currency (Especially if you believe CPI does not account for the full loss in purchasing power). This results in the average person working more, while not being able to afford as much as they used to. In my opinion, this is an argument to be made for the value of labor actually going down. And this has major ramifications because people have less time for leisure, and they’re stuck on a hamster wheel, without the ability to retire, because they need to work more and more to maintain their purchasing power, that is being lost through inflation, which causes their hard earned savings to go down in value each year. Without sound money in a technologically advanced civilization, there’s a case to be made that the value of labor actually goes down for the average person in society.