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What happened to wages?

Discussion in 'Off-Topic' started by hobbsyoyo, Jan 11, 2020.

  1. hobbsyoyo

    hobbsyoyo Deity

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    In the US, this month marks the 10th straight year of job growth. This is unprecedented for recent American history yet people are still being pinched economically as wages have been stagnant since the 70's when adjusted for inflation.

    So what happened? How do we fix it? Or is it something not worth being fixed?

    I'd say it's a major problem given how the cost of housing, education and medical care have skyrocketed in the intervening decades. A straight forward fix would be a hike to the minimum wage but it would have to be big enough to potentially shock the economy.


    Have wages seen the same stagnation in other countries in this time period or is this a uniquely American phenomenon?
     
  2. El_Machinae

    El_Machinae Colour vision since 2018 Retired Moderator

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  3. hobbsyoyo

    hobbsyoyo Deity

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    Your graph shows exactly that trend. It has picked up a bit in the last ~5 years but otherwise yeah it was at the same level in 2015 as it was in 1979 and lower at many points in between. Even with the recent uptick, it has not been enough to make up for the intervening years. Moreover, the cost of living across several metrics has not been stagnant, which is a big problem. If COL hadn't risen so dramatically, this situation wouldn't be as big an issue.
     
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  4. Synsensa

    Synsensa - Retired Moderator

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    Looking at just median wage is a trap. The real trend you need to look at is wealth distribution. Even with the most forgiving interpretation of basic wages, even if you point at every marginal increase and go, "See, wages are rising!" you'll see a major issue if you look at how the wealth in our society is hoarded distributed.

    That wages have grown is ultimately meaningless when you look at the amount of capital that exists. Productivity and generation of wealth has never been higher. The workers see marginal gains while those at the top hoard an incredible amount of wealth. That there exists a conglomerate of uber-rich sycophants who can buy politicians and propagandized sentiments is damning and makes any increase in base wages a joke.
     
  5. El_Machinae

    El_Machinae Colour vision since 2018 Retired Moderator

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    What is really missing is the cost of inputs on those Rising wages. We moved from a world of no student loans to a world of necessary student loans. And the pay back on those loans is effectively an automatic reduction in take-home wages. That won't be reflected in my graph. If wages have gone up $100 per week, but student loan repayment is $200 per week, then it's effectively both a wage reduction and a transfer of wealth upwards
     
  6. Narz

    Narz keeping it real

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    That's what they want you to think. What kind of start on adulthood is being $50-100k in the hole?
     
  7. Hrothbern

    Hrothbern Deity

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    yes

    also

    If you calculate the change over time of real wages you need to adjust the actual wages with inflation.
    But what definition of inflation is used ?
    That starts already that inflation differs per income class
    and can you really use yoy inflations when lifestyles have changed ?
    When average household sizes have changed ?
    When housing cost in proximity of jobs have changed ?
     
  8. amadeus

    amadeus Bring back the Civ2 theme!

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    Sort of like a mortgage, I suppose.

    I don’t like the price of college nowadays but you are borrowing for increased income down the line as statistically college grads still outperform high school grads in total lifetime earnings.

    I don’t wholly disagree with you in principle, just think it needs to be put in perspective.
     
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  9. Birdjaguar

    Birdjaguar Hanafubuki Retired Moderator Supporter

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    There are a lot of things going on.
    • 10 years of slow economic growth
    • Growing economic inequality
    • High student loans affecting millennials
    • Housing costs going up in the important job expanding cities
    • Low inflation rates for the 10 year span
    • Low income wages growing in the past three years over inflation rate and rate of changes in healthcare costs
    • Upper middle income wages growing in the last three years
    • Lowest unemployment in recent memory, even U6 is down
    • Percent of workforce employed (~64%) lower than in 2000 (~68%)
    So are we better off now than when? What are we comparing? Who are we comparing and what is the yardstick we are using? Income? Net worth? Hours worked? Lifestyle?
     
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  10. JPetroski

    JPetroski Deity

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    You're right that it's what they want you to think. Bachelor's degrees can be had for about $20k, all-in. Maybe less.
     
  11. Kaitzilla

    Kaitzilla Lord Croissant

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    Indeed.

    That debt cannot be discharged with bankruptcy either.

    It's a lot of fun watching 18 year-olds who have not experienced much of the world go all-in with their future these days.
    https://www.nbcnews.com/news/us-news/student-loan-statistics-2019-n997836

    Bad outcomes used to be recoverable from, but that isn't true when the numbers grow large enough.
    https://www.elitedaily.com/p/i-cant...ns-its-ruining-my-life-relationships-18019707
     
    Last edited: Jan 11, 2020
  12. hobbsyoyo

    hobbsyoyo Deity

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    Are people being aggressive enough when it comes to changing jobs to get a pay raise? It seems that's the only guaranteed way to get a hefty raise these days.
     
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  13. Marla_Singer

    Marla_Singer United in diversity

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    Maybe that's the real problem.

    Wages have been overall pretty stagnant in all Western countries, however, the real specificity of the US is how education and medical care costs exploded over there in comparison to other OECD countries. I would invite you to read this article about it:

    Americans actually spend less times at hospitals and visit less often physicians than Europeans, despite paying twice more for their health care. This leads to a pretty weird situations in which health spendings keep increasing in the US, whereas life expectancy is declining.



    I'm pretty convinced we could make a similar case about education costs.
     
    Last edited: Jan 11, 2020
  14. innonimatu

    innonimatu Deity

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    Living the 18th century american dream of the indentured servitude?

    You (as in a majority in an election) can just vote to abolish it, as other totally stupid and offensive practices were abolished. Outlaw that debt. Make it dischargeable by bankruptcy, or simply make it disappear. Debt is an accounting and political fiction anyway.

    There will be howling by people (creditors?) who think they'll be on the losing side, but so what?
     
    Last edited: Jan 11, 2020
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  15. hobbsyoyo

    hobbsyoyo Deity

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    To be fair, that decrease in life expectancy is driven by an opioid epidemic and not a general collapse in healthcare for the average public. Addicts are dying at higher rates, driving the numbers down. Hopefully that gets contained and reversed soon and I'm in no way implying the situation is normal or good. Just that the decline in life expectancy is a bit more nuanced than it seems at first.
     
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  16. Marla_Singer

    Marla_Singer United in diversity

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    And how does that explain why medical care is twice more expensive in the US than in other developped countries?

    You were complaining about your wage, maybe you should look at your expenditures.
     
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  17. amadeus

    amadeus Bring back the Civ2 theme!

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    Rather than “flaws” in the system itself, I think high doctor pay and sedentary lifestyles are to blame for the high cost and statistical poor outcomes. But good luck getting those things to change in the U.S.
     
  18. Birdjaguar

    Birdjaguar Hanafubuki Retired Moderator Supporter

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    5% of of patients account for 50% of US healthcare costs.This link is a pretty good explanation why.

    Opioids are only one part of the our decline in longevity. Mostly it is poor lifestyle habits plus drugs and alcohol.

     
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  19. El_Machinae

    El_Machinae Colour vision since 2018 Retired Moderator

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    There are a couple other things to consider. First off, has there been Global wage stagnation? Or is there some type of built-in phenomenon?

    Secondly, wage is determined by demand. But productivity is determined by utility. So, a skill that quintuples your productivity will lead to a higher wage. But if 10 people have that skill, the wage will not rise. But the productivity did! Each of those 10 people has more skill than the counterfactual, and yet wages didn't rise.

    I see this all the time in finance. The hotshot brokers, earning more than a million dollars per year, don't know how to use the printer. They would be willing to pay a premium for this service. But because there are 20 people in the office who know how to use a printer, a useful skill!, the brokers end up capturing all of the value of having functioning printers.

    The solution isn't a less educated Society. And if that's where someone goes for the solution, they're incorrect. An educated base. Education that allow network economic benefit. But for some reason, we let all this benefit flow upwards. Free market economics doesn't have a solution for this disparity, except that eventually the rising tide pulls up all boats. The wage will eventually become what the cheapest person demands. Yay?
     
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  20. Hrothbern

    Hrothbern Deity

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    yes

    I get later back with a longer post on this and other aspects
    But key is where the benefits of productivity end up
    and what is your yardstick

    A portion of productivity increases ended up in decreasing the amount of hours worked
    And for example with a TV
    You can nicely have that TV in your yoy inflation calculation and say "a TV" has changed X in price and that contributes to Y in the inflation and that has Z effect in the real wage calculation.

    But we do not get the same TV as back in 1960 or back in 2000, We get a whole lot of additional features.
    Real wage tries to yardstick our purchasing power, but it does not really measure like for like what is delivered.
    A TV with the features of 1960 will cost less than a nice meal in a restaurant
    And every company tries ofc to add features to their products to counter the ratee of productivity increases in order to keep at least the same amount of "real turnover". Otherwise productivity increases would only lead to every company decreasing in size.
     
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