I have been told a number of times that in reality wages do not make any significant different to actual product cost.
It's simple to understand really.
If you have 1 guy who is standing, running a high tech machine that's turning out say 100 items per hour and those items are worth $20 each.
So that's $2000 per hour this unit (man and machine) are creating.
If you pay the guy $1 for this hour, or $20 for this hour. Yes, one it being paid 20 times as much as the other. But in reality, this cost it very little when put against the value of the items that are being created during this time period.
Of course, in the board room, it will look like a lot more is being spent on your wages bill, but we are probably only looking at a few dollars added to any expensive finished item in reality.
It's simple to understand really.
If you have 1 guy who is standing, running a high tech machine that's turning out say 100 items per hour and those items are worth $20 each.
So that's $2000 per hour this unit (man and machine) are creating.
If you pay the guy $1 for this hour, or $20 for this hour. Yes, one it being paid 20 times as much as the other. But in reality, this cost it very little when put against the value of the items that are being created during this time period.
Of course, in the board room, it will look like a lot more is being spent on your wages bill, but we are probably only looking at a few dollars added to any expensive finished item in reality.