Quote from: NoodlesJefferson on June 22, 2011, 12:50:18 AM

Quote from: JoelKatz on June 22, 2011, 12:02:11 AM

Quote from: NoodlesJefferson on June 21, 2011, 06:51:22 PM

I'm not arguing that it would be a tough sell, though I do think that's a PR problem when trying to sell this idea. I am asking if job stability would suffer in a deflationary economy. It sounds like most people are saying that job stability would suffer and that shouldn't matter. Or that people would get use to it job instability or live with pay decreases.

They wouldn't be living with pay decreases. If I pay one week with 50 one dollar bills and the next day with one 50 dollar bill, has your pay decreased because you received fewer dollars?

There is no reason job stability would suffer. You can make the same argument in an inflationary economy and it's equally wrong. Here it goes: "Suppose I get a job for $55,000 per year. Two years later, due to inflation, I'm not being paid enough. So unless my boss is willing to raise my salary, I'll take a new job for a higher wage. So job stability will suffer due to inflation." But we all know that's not right. Both participants have an incentive to restore the wage to market value.

Your right, 2 years later $55,000 wouldn't be as much. So it has become very common place to have standard of living adjustments while working at companies currently.

And I don't think you are understanding what I am saying. In order to combat deflation companies would either need to adjust your pay, (pay you less every year) or fire you and hire someone new for less money. If you read my original question I give the example of, if someone pays you 10 bucks an hour and inflation hits at 10% a year. Why, in 10 years time, wouldn't your employer fire you and hire 10 other people at 1 dollar an hour? The only other option for the employer that I can think of is it would be common place to pass out a standard of living adjustment and pay you less every year. That or labor would start to get underpaid in order to counter act deflation and keep employees. Either way it doesn't promote employment longevity and job stability. It seems to be the same problem as inflation just in reverse.

That is exactly what they would do. Why do you think they would do things differently?