How could wages in Bitcoin work?

[Mageant]

Let's say Bitcoin is a success and continues to grow thus the Bitcoin price continues to rise, generally.

How could employers pay wages in Bitcoin?

He couldn't really make a contract with a fixed wage because it could quickly become too expensive for his business, could he?

I suppose he could pay wages in Bitcoin on calculated on a Dollar-basis. But I how could that work a pure-Bitcoin economy? You would need some kind of price index instead.

[CIYAM]

It *can* work like this:

http://ciyam.org/open

(site is still being developed but not far from complete - get ready to earn BTC for tasks in a professionally organised way)

[Akka]

This would only be important if there would be a hyperdeflation, like wages in a hyperinfaltion.

With normal inflation you get a fixed amount and for big industries the labor unions each year negotiate how much more (1 - 3% for example) the workers get.

Only difference would be, with Bitcoin they would negotiate how much less you get.

[ThickAsThieves]

This would only be important if there would be a hyperdeflation, like wages in a hyperinfaltion.

With normal inflation you get a fixed amount and for big industries the labor unions each year negotiate how much more (1 - 3% for example) the workers get.

Only difference would be, with Bitcoin they would negotiate how much less you get.

If the company's revenue is all in bitcoins, it would be easy for wages to be in bitcoins. If conversion to another currency is required, then that currency would be the wage base.

[Mageant]

This would only be important if there would be a hyperdeflation, like wages in a hyperinfaltion.

With normal inflation you get a fixed amount and for big industries the labor unions each year negotiate how much more (1 - 3% for example) the workers get.

Only difference would be, with Bitcoin they would negotiate how much less you get.

Yes, but why should workers negotiate at all? If they refuse to negotiate then nothing changes and they get to keep their high wages.

In the reverse scenario (workers needing higher wages because of inflation) the workers can go on strike and thus push the employers to the negotiation table.

The employers in the Bitcoin scenario would have to shut down the business or fire the employees to have a similar effect, both of which don't seem very viable options.

[Mageant]

This would only be important if there would be a hyperdeflation, like wages in a hyperinfaltion.

With normal inflation you get a fixed amount and for big industries the labor unions each year negotiate how much more (1 - 3% for example) the workers get.

Only difference would be, with Bitcoin they would negotiate how much less you get.

If the company's revenue is all in bitcoins, it would be easy for wages to be in bitcoins. If conversion to another currency is required, then that currency would be the wage base.

Assuming we have a deflationary scenario, which seems likely if use of Bitcoins continues to become more widespread, then the company's Bitcoin revenue would be continually decreasing (as prices go down). This wouldn't be problem for external costs (such as materials or buying stock) but for internal costs, such as wages it would be if the wages are fixed.

[DeathAndTaxes]

Well first of all this is all theoretical because Bitcoin is far too volatile for wages to be paid however hypothetically imagine a future where adoption is very high.  The BTC money supply is worth tens of billions a year and the purchasing power of 1 BTC is rising by a small but relatively consistent rate of say 5% annually.

An employer could offer an employee an annual salary of 5 BTC for the first year with a contract that the salary decrease by 5% per year with the potential of a partial offset for merit raises.  Even better would be a sort of third party CPI type number used to calculate the buying power.  The salary would be reduced by that metric instead of a fixed 5%.

In the interim I think a traditional fiat salary which is converted at payday partially or fully into BTC and paid to the employee is probably more realistic.

[Akka]

Yes, but why should workers negotiate at all? If they refuse to negotiate then nothing changes and they get to keep their high wages.

In the reverse scenario (workers needing higher wages because of inflation) the workers can go on strike and thus push the employers to the negotiation table.

The employers in the Bitcoin scenario would have to shut down the business or fire the employees to have a similar effect, both of which don't seem very viable options.

I'm sure you can add this in contracts like 3% less each year and than they negotiate to get less less  

This is already the case for other areas. In the Industry where I work, our customers usually make 5 - 10 Year contracts with us. And its already in our standard contracts that our part price is reduced by 5% each year, due to cheaper production.

[CIYAM]

In the interim I think a traditional fiat salary which is converted at payday partially or fully into BTC and paid to the employee is probably more realistic.

Right on - and already under development.

[phelix]

Good question. Bind wage to gold price / real estate prices? Whichever it will be it will be earning less will be psychologically hard to digest.

[edd]

Mageant, I can't think of any reason that would prevent employers from hiring employees with the understanding that their salary is subject to change annually or semi-annually based on the fluctuations in the currency exchange rate.

[CIYAM]

Try thinking *tasks* not *jobs*.

[oleganza]

If you don't know how much the price will change in terms of BTC in the next X days, but have some estimations for the next Y days, then you simply negotiate a price within this timeframe. With an option to renegotiate later.

Another option: use USD (or EUR, or $AAPL or whatever) as a reference point if both parties agree. You can say "I'll pay you next month amount in BTC equal to X USD according to the average price on Mt. Gox".

[Akka]

Try thinking *tasks* not *jobs*.

That might work for you IT guys, or any other where Work is part of a Project.

But you Guys tend to forget that you are the exception, not the standard.

I have a hard time defining payment by tasks on a assembly line, where an overperformer does as much damage as an underperformer.

And I find it impossible to do that for a cashier in a supermarket.

[CIYAM]

Try thinking *tasks* not *jobs*.

That might work for you IT guys, or any other where Work is part of a Project.

But you Guys tend to forget that you are the exception, not the standard.

I have a hard time defining payment by tasks on a assembly line, where an overperformer does as much damage as an underperformer.

And I find it impossible to do that for a cashier in a supermarket.

Sure - this is something *new* and maybe not applicable to everything (yet) but now I would say "try thinking of results".

[dree12]

I see no reason why labour unions and employers cannot switch roles.

A labour union and an employer are in a symbiotic relationship. Both benefit from the jobs offered by the employer and accepted by the labour union. Just as the union can decide to go on strike now, which harms both union and employer, the employer can "go on strike" by shutting down—harming both parties.

With a volatile value like Bitcoin's, negotiation will have to occur eventually—by both sides. Both the labour union and the employer have the option of going on strike if the other does not agree to negotiate.

[memvola]

Try thinking *tasks* not *jobs*.

As Akka said. But I agree that this is where we shall go. Companies might also disappear, leaving their place to a more intricate and organic structure.

In the meantime , I think it's a good idea to index salaries to a collection of instruments. Food, housing, luxuries, etc. Even for fiat salaries, I don't know why this is not the convention.

[xxjs]

According to main stream economists, prices have stickiness, and also the public, including capitalists and business leaders, are not informed about the fluctuating value of the standard currency.

Frankly, I don't think either of these points are important in the long run. If bitcoin is used, that would be the standard currency. After a while, people would be happy with falling prices, and would also accept slightly lower wages.

If the latter is not true, that will lead to existing businesses retracting and openings for new businesses (with lower wages), thus intensifying restructuring.

[Spaceman_Spiff]

Well first of all this is all theoretical because Bitcoin is far too volatile for wages to be paid however hypothetically imagine a future where adoption is very high.  The BTC money supply is worth tens of billions a year and the purchasing power of 1 BTC is rising by a small but relatively consistent rate of say 5% annually.

An employer could offer an employee an annual salary of 5 BTC for the first year with a contract that the salary decrease by 5% per year with the potential of a partial offset for merit raises.  Even better would be a sort of third party CPI type number used to calculate the buying power.  The salary would be reduced by that metric instead of a fixed 5%.

In the interim I think a traditional fiat salary which is converted at payday partially or fully into BTC and paid to the employee is probably more realistic.

this

[justusranvier]

Well first of all this is all theoretical because Bitcoin is far too volatile for wages to be paid however hypothetically imagine a future where adoption is very high.  The BTC money supply is worth tens of billions a year and the purchasing power of 1 BTC is rising by a small but relatively consistent rate of say 5% annually.

An employer could offer an employee an annual salary of 5 BTC for the first year with a contract that the salary decrease by 5% per year with the potential of a partial offset for merit raises.  Even better would be a sort of third party CPI type number used to calculate the buying power.  The salary would be reduced by that metric instead of a fixed 5%.

In the interim I think a traditional fiat salary which is converted at payday partially or fully into BTC and paid to the employee is probably more realistic.

Alternately, a person might get hired as a janitor for 5 BTC per year, work his way up over a 30 year long career and retire as a manager still making 5 BTC per year.