That's not how productivity works. It's not a zero-sum game.

If all construction workers can build houses 5% more efficiently, that's not the same as nothing changing. Depending on supply and demand, it means 5% more houses are built, or houses are 5% cheaper, or maybe 5% bigger, or some combination. Whether or not the construction workers all get a raise or 5% get fired (or both) depends on that supply and demand, but historically they often get a piece of the growing economic pie.

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bruce343434 3 hours ago | parent | next [-]

Why would the company pay more when they can just not pay more? The only things I can see happening is they might lower prices as competition ramps up, or in general as there is more supply for the same cost.

	▲	paytonjjones 3 hours ago \| parent \| next [-]
		If there's sufficient demand, that's just what happens. To try and explain one path: Company A doesn't raise wages but makes 5% more money. Company B pivots from Industry B into construction (because suddenly construction is having 5% fatter margins), and hires workers at more competitive wages to poach them from Company A. Company A forces to raise wages. If there's a demand ceiling on housing it's a different story though.
	▲	haaz 2 hours ago \| parent \| prev [-]
		If labour supply is fixed and productivity goes up then the value and demand for labour goes up, driving up wages

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ragequittah 3 hours ago | parent | prev [-]

See the increase in CEO wages vs the increase in worker wages over the last 20 years of you want to know where that 5% will almost always go.