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Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?

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Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?

#131

Post by losteric »

marcosdumay wrote: post #122
losteric wrote: post #108

Earlier quoted context omitted.

Yep, that's what a labor shortage looks like :) Labor can ask for a price that's higher than the ROI of their labor for many businesses. In comparison, there's an excess supply of unskilled labor so businesses can purchase unskilled labor for minimum wage. Those people survive but do not profit from their time investment, and cannot invest in acquiring skills (aka poverty trap). The issue is that automation drives ef…

That's not what a shortage looks like. Labor can always ask for a price that's higher than the ROI they would have on many business. That's also true for every cohort of labor. If there's any definition available for "labor shortage", it is what happens when a middle class increases and wealth disparity decreases. But anyway, your point about education stands by itself.

Maybe my terminology is off, correct me if so, but when businesses fold because bigger competitors are buying all the resources needed to stay competitive, that sounds like a shortage to me.

On the labor side, getting a $120k+ job out of a 4 year/$14k investment also sounds like a labor shortage.

Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?

#132

Post by IanDrake »

IanDrake wrote: post #126
maxerickson wrote: post #119

Earlier quoted context omitted.

It takes discipline to not just piss away a million dollars (the sorts of windfalls that claim includes), it doesn't take enormous effort to set it up in low risk assets that yield income. As a cousin comment points out, it is even possible to buy management services.

But now I have 25 million and I've heard: - Dump it into the SP500 - Dump it into CDs - Give it to a money manager and hope for the best. If it doesn't work out at least you can blame him/her. Who's advise to take? It's really starting to astonish me the financial ingnorance on HN which must be attributed to younger folks who had no skin in the game in 2000 or 2007 and think investing is easy.

@aninhumer, I can't reply to your thread, but I feel like people just don't get what I'm saying.

Perhaps you could live off 25 million with a drawdown of 1%. That's 250K. So you live like that's your salary. But then the market tanks and 1% of your portfolio is now 120K. That's a big haircut.

Do you take 2% now? You've got a 250K lifestyle but you said you'd only take 1%.

You've now watched 13 million dollars vanish. Do you stay in the market and hope it goes back up or cut your losses?

People here seem to suffer from historical bias because they know the market recovers, but when it happens to you the future will be totally uncertain.

Mo money, mo problems. Totally true.

Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?

#133

Post by TylerH »

abakker wrote: post #86
roymurdock wrote: post #78

Earlier quoted context omitted.

If you are interested in learning how labor markets are taught in macro today, check out these slides from Acemoglu of MIT: http://economics.mit.edu/files/10284 Labor market models are much more about flows, and frictions to those flows, rather than "static" views of labor supply and demand. When I was studying econ, I found some of these models and equations to be the most well thought-out and powerful tools present…

Thanks - I appreciate the reference. Mankiw's treatment in the intro to econ book that I studied is definitely painful.

A lot of Mankiw's work is like that

Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?

#134

Post by IanDrake »

aninhumer wrote: post #129
IanDrake wrote: post #124

Earlier quoted context omitted.

Sorry, how does one invest in the SP500 with "no work" without using an index fund? I need to draw 2 million a year because my Porsche, Hummer, NetJets subscription, mansion and constant vacations are expensive and you said I'd have 2mill on average. I don't work and I need to pay these bills with my 8% average. So what do you recommend I do in 2001? I'm supposed to be living large like you promised but the market ta…

>I need to draw 2 million a year because my Porsche, Hummer, NetJets subscription, mansion and constant vacations are expensive and you said I'd have 2mill on average. I'm really not sure what point you think you're making here? Yes, if you spend too much, you'll lose your money. So don't spend too much.

I'm not really sure how else to explain it to you.

If you were given 25 million right now what would you do?

Your initial claim was you could put it in the SP500 and "make an average of 2 million per year (8%) without doing anything".

But then I showed you that market timing plays a major part in how well that average will work out for you.

So, what are you going to do with that money to live the rest of your life with no work and how much will you spend per year knowing that huge income volatility isn't a realistic life style?

My point is, it's not nearly as easy as you've expressed.

Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?

#135

Post by IanDrake »

klibertp wrote: post #42
IanDrake wrote: post #23

Earlier quoted context omitted.

So if you were given 25 million dollars you would automagically make obscene amounts of money with no effort? History shows otherwise with a very high rate of bankruptcies from lottery winners.

What? "Ruling class" is not about how much you currently have, but how you got what you have and what are your means of obtaining more in the future. Winning a lottery is a one time happening, and we can write it off as a balance for the random chance of getting hit by a car.

Ok, let's see where this leads.

How did the "ruling class" get their money and what is their means of obtaining more in the future?

I certainly want in on it.

Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?

#136

Post by [deleted] »

IanDrake wrote: post #134
aninhumer wrote: post #129

Earlier quoted context omitted.

>I need to draw 2 million a year because my Porsche, Hummer, NetJets subscription, mansion and constant vacations are expensive and you said I'd have 2mill on average. I'm really not sure what point you think you're making here? Yes, if you spend too much, you'll lose your money. So don't spend too much.

I'm not really sure how else to explain it to you. If you were given 25 million right now what would you do? Your initial claim was you could put it in the SP500 and "make an average of 2 million per year (8%) without doing anything". But then I showed you that market timing plays a major part in how well that average will work out for you. So, what are you going to do with that money to live the rest of your life wi…

[deleted]

Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?

#137

Post by IanDrake »

IanDrake wrote: post #134
aninhumer wrote: post #129

Earlier quoted context omitted.

>I need to draw 2 million a year because my Porsche, Hummer, NetJets subscription, mansion and constant vacations are expensive and you said I'd have 2mill on average. I'm really not sure what point you think you're making here? Yes, if you spend too much, you'll lose your money. So don't spend too much.

I'm not really sure how else to explain it to you. If you were given 25 million right now what would you do? Your initial claim was you could put it in the SP500 and "make an average of 2 million per year (8%) without doing anything". But then I showed you that market timing plays a major part in how well that average will work out for you. So, what are you going to do with that money to live the rest of your life wi…

@aninhumer I guess "making" money and income are somehow different in your book.

You're sighting a lot of conventional wisdom that I've heard before. You won't find many success stories that followed your advise.

If you ever talk to people who actually live off their wealth don't be suprized if you find that they're not sitting back on the SP500 with a 4% drawdown.

They're most likely active investors working hard (not physically, as none of us do here anyway) to make money with money.

Edit: this was in response to a post that has been deleted.

Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?

#138

Post by aninhumer »

IanDrake wrote: post #137
IanDrake wrote: post #134

Earlier quoted context omitted.

I'm not really sure how else to explain it to you. If you were given 25 million right now what would you do? Your initial claim was you could put it in the SP500 and "make an average of 2 million per year (8%) without doing anything". But then I showed you that market timing plays a major part in how well that average will work out for you. So, what are you going to do with that money to live the rest of your life wi…

@aninhumer I guess "making" money and income are somehow different in your book. You're sighting a lot of conventional wisdom that I've heard before. You won't find many success stories that followed your advise. If you ever talk to people who actually live off their wealth don't be suprized if you find that they're not sitting back on the SP500 with a 4% drawdown. They're most likely active investors working hard (n…

Sorry, I deleted my comment because I was going to reply to another one you made with a clearer argument.

>I guess "making" money and income are somehow different in your book.

I guess I should say consumption or drawdown rather than income. (My point is the capital still grows by an average of 8% even if you shouldn't spend all of that.)

>You won't find many success stories that followed your advise.

Do you have evidence that people who are doing this are failing, or do you just mean that I won't find evidence of success?

Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?

#139

Post by marcosdumay »

losteric wrote: post #131
marcosdumay wrote: post #122

Earlier quoted context omitted.

That's not what a shortage looks like. Labor can always ask for a price that's higher than the ROI they would have on many business. That's also true for every cohort of labor. If there's any definition available for "labor shortage", it is what happens when a middle class increases and wealth disparity decreases. But anyway, your point about education stands by itself.

Maybe my terminology is off, correct me if so, but when businesses fold because bigger competitors are buying all the resources needed to stay competitive, that sounds like a shortage to me. On the labor side, getting a $120k+ job out of a 4 year/$14k investment also sounds like a labor shortage.

No, that means some business wasn't competitive.

When machines were created, many clothing companies folded because cotton become more expensive. It was expensive because machines could make clothes cheaper, so people brought more. Is that a shortage?

At any time there's trash on some street that could be picked-up by hand. That's a job in direct competition with yours, yet there's nobody there hand-cleaning the streets. Is that a shortage?

Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?

#140

Post by [deleted] »

snowwrestler wrote: post #104
jazzyk wrote: post #58

Earlier quoted context omitted.

>They can't get enough qualified people... ...for the price they are offering. There, fixed it for ya :-)

The ability to fill an opening by increasing salary does not disprove a skilled labor shortage. Imagine a model economy of 10 companies with openings, and one person with the skills to fill them. All 10 companies can fill their openings by sequentially raising their salary offer to that person. If you don't account for the openings that are created along the way (as the one person sequentially jumps for the higher sa…

[deleted]
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