The New York Times is complaining bitterly that the workers at the VW plant in Tennessee didn't do what the NYT think that the auto workers should have done. That is, they voted not to have a union to represent them:
The “I am satisfied with my pay” rationale for voting no is also problematic. Why are VW workers in Chattanooga satisfied with making less than unionized Volkswagen workers in some other countries? Do they work less or contribute less to bottom line? Are they less skilled or less reliable?
By voting no, workers in Chattanooga very likely not only limited their own pay raises, but probably those of their relatives, friends and neighbors. That’s because the higher pay that generally results from collective bargaining at a major employer tends to influence the pay scales at nearby employers, even if those other workplaces are not unionized.
Please note that I've not edited or elided here: these really are the two paragraphs as they first laid them out. And it's things like this that make me wonder whether the people who write these editorials ever bother to read them. For they've used two entirely contradictory arguments about what explains wage rates, one after the other.
That first argument is that workers in different places should be paid according to the productivity of their labour. Doesn't matter what local wage rates are, if you're adding $x to the value of a car then your wage should be $y.
The second argument is very different: it is stating that if local wages are higher in general then your wages, in that locality, will be higher. If car workers in Tennessee are being paid more money then the people who flip hamburgers in Tennessee will also be paid more. Not that there will be any change in the value the flippers are adding, no change in their productivity, just that because local wages are higher then all local wages will be higher.
And that's why those two views conflict. Either wages are determined by productivity, not location, or they're determined by location not productivity. Trying to claim both in the same piece is just a bit much for me.
As it happens it is the second argument that is correct. Wages are determined by the best available alternative job for that skill set in that location. Someone able to make cars productively somewhere there are no cars to make won't get a carmakers' wage. But if carmarkers' wages are high then yes, given that being a carmaker is an alternative to flipping burgers then where there are high carmakers' wages then burger flippers' wages might well rise. Location, not productivity, is the key.
What makes it all so annoying is that one of the very best explanations of all of this is by Paul Krugman. Who is, perceptive readers will note, the economic columnist writer for, umm, the New York Times. You think they'd give a shout out down the corridor or something when composing these editorials, wouldn't you?