idobi, if that's how you want to run your business, you're free to do so. Perhaps my premise needs to be reworded to reflect what I meant. Very well, "It makes economic sense to hire someone only if his productivity is greater than his wage. An employer who adhered to the principles of economics would hire without regard to current overall productivity, as in such a case hiring would only increase productivity".
However, you provided three examples you thought were unproductive, and I countered with reasons that hiring those people would lead to greater productivity. Your original premise was that "cleaning staff, secretaries and teachers don't produce income for a business", and I proved you wrong by citing three simple examples. The crucial point is that the increase in productivity is provided by other employees, as their time is freed up by the hiring of this new employee, and hence the three jobs you listed are indeed productive.
Businesses don't exist to ensure you have an enjoyable time working. If the increase in productivity due to the increase in morale is worth more than $3/hr, it makes sense to hire a cleaner at $3/hr. Of course the world isn't a cold hard equation. Cost-benefit analyses of this type are difficult to perform. But businesses are inherently selfish. A reasonable business owner would only make those decisions which would benefit his business. And the degree of benefit is measured in profit.
Cleaning staff - you hire them because your time is worth more than theirs. If you didn't have cleaning staff, at say $5 per hour, you would have to clean your place yourself. If you earn more than $10 per hour, hiring someone else at $5 per hour to do your cleaning means more profits for your business. Therefore, cleaning staff are productive.
Secretaries - again, if the time you save not doing an hour's secretarial work earns you $10, it makes sense to hire a secretary costing $5 for the same period of time. Secretaries are productive.
Teachers - Either you spend 6 hours a day educating your children, and miss out on earnings of $60 (assuming you can earn $10/hour), or you pay someone else $5 an hour to do it.
All private sector jobs, hired without government coercion, must be productive, even if they are not directly related to production of the actual good or service.
I'm afraid it is you who is demonstrating total ignorance of economics. The decision to hire a candidate is not based on how much money is earned by the business as a whole, it is determined by how productive that individual is. If the individual cannot produce more than his wage, no matter how much money the company is making it does not make sense to hire him.
Minumium wage laws make it more difficult for people who are unable to be very productive to get jobs. Why would you hire someone at 3$/hr when he can only produce 2$/hr?
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Read my revision, it's what I really meant.
idobi, if that's how you want to run your business, you're free to do so. Perhaps my premise needs to be reworded to reflect what I meant. Very well, "It makes economic sense to hire someone only if his productivity is greater than his wage. An employer who adhered to the principles of economics would hire without regard to current overall productivity, as in such a case hiring would only increase productivity". However, you provided three examples you thought were unproductive, and I countered with reasons that hiring those people would lead to greater productivity. Your original premise was that "cleaning staff, secretaries and teachers don't produce income for a business", and I proved you wrong by citing three simple examples. The crucial point is that the increase in productivity is provided by other employees, as their time is freed up by the hiring of this new employee, and hence the three jobs you listed are indeed productive.
Agreed. Most of the fruits of civilisation were motivated by self-interest.
Businesses don't exist to ensure you have an enjoyable time working. If the increase in productivity due to the increase in morale is worth more than $3/hr, it makes sense to hire a cleaner at $3/hr. Of course the world isn't a cold hard equation. Cost-benefit analyses of this type are difficult to perform. But businesses are inherently selfish. A reasonable business owner would only make those decisions which would benefit his business. And the degree of benefit is measured in profit.
Cleaning staff - you hire them because your time is worth more than theirs. If you didn't have cleaning staff, at say $5 per hour, you would have to clean your place yourself. If you earn more than $10 per hour, hiring someone else at $5 per hour to do your cleaning means more profits for your business. Therefore, cleaning staff are productive. Secretaries - again, if the time you save not doing an hour's secretarial work earns you $10, it makes sense to hire a secretary costing $5 for the same period of time. Secretaries are productive. Teachers - Either you spend 6 hours a day educating your children, and miss out on earnings of $60 (assuming you can earn $10/hour), or you pay someone else $5 an hour to do it. All private sector jobs, hired without government coercion, must be productive, even if they are not directly related to production of the actual good or service.
I'm afraid it is you who is demonstrating total ignorance of economics. The decision to hire a candidate is not based on how much money is earned by the business as a whole, it is determined by how productive that individual is. If the individual cannot produce more than his wage, no matter how much money the company is making it does not make sense to hire him. Minumium wage laws make it more difficult for people who are unable to be very productive to get jobs. Why would you hire someone at 3$/hr when he can only produce 2$/hr?