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Worker pay isn’t keeping up with inflation

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Re: Worker pay isn’t keeping up with inflation

#41

Post by Supermancho »

baron816 wrote: post #24
ralph84 wrote: post #11

It never does. This is just accelerating the pandemic-era wealth transfer that started with the rich getting trillions to prop up their assets while everyone else got $600.

> It never does. The first thing in the article is a graph where 7 our of the 11 years shown have positive real wage growth. If worker pay never kept up with inflation, the country would be among the world’s poorest.

How does that math work?

> If worker pay never kept up with inflation, the country would be among the world’s poorest.

That is flat wrong. Even if you were still making 23$ an hour as you did in the 70's:

https://www.weforum.org/agenda/2019/04/50-years-of-us-wages-... https://www.factcheck.org/2019/06/are-wages-rising-or-flat/

...you'd still be among the top 20% of earners across the earth. Let's take another step down to simple minimum wage. over 7$/hr in the US puts you at... https://en.wikipedia.org/wiki/List_of_countries_by_minimum_w... - in the top 20, which doesn't even include countries without a minimum wage.

Your statement about "among the world's poorest" requires revision.

Re: Worker pay isn’t keeping up with inflation

#42

Post by simonh »

ars wrote: post #17

Is this inflation due to expansion of the money base? Or inflation due to rising costs? If the second one, there where is all that money going? Who is that "cost" that is benefiting?

To the first question, both. Many developed countries that did not practice QE are also seeing rising inflation. Having said that inflation in the US is particularly high, but then again there’s historical precedent for that. So it’s a messy picture, but a large chunk of current inflation seems global and systemic.

As for where is the money going? The rising costs are due to increasing demand and simultaneous reductions in supply. A lot of pent up demand deferred by the pandemic has been released. Meanwhile suppliers have lost capacity due to shutting down factories, slimming down work forces and not maintaining or replacing equipment.

A lot of the money from increased costs is invested in ramping up production again. This is pulling people back into employment and kickstarting businesses that were suffering in the lockdowns. It’s funding necessary work. But some of it is being taken by suppliers who find they can ramp up prices and people will still pay.

Re: Worker pay isn’t keeping up with inflation

#43

Post by cissou »

Is it not rather that the inflation of the past 6-12 months has taken everyone by surprise, including employers, and the wages haven’t had time to adapt yet? What we don’t see in the article’s graph is that inflation used to be somewhat consistent but has risen sharply starting in March 2021: https://tradingeconomics.com/united-states/inflation-cpi

Re: Worker pay isn’t keeping up with inflation

#44

Post by noja »

paxys wrote: post #28
ralph84 wrote: post #11

It never does. This is just accelerating the pandemic-era wealth transfer that started with the rich getting trillions to prop up their assets while everyone else got $600.

> It never does Except in 10 of the last 12 years, as you can clearly see in the same chart

The chart excludes housing. It's pointless.

Re: Worker pay isn’t keeping up with inflation

#45

Post by neilwilson »

ars wrote: post #17

Is this inflation due to expansion of the money base? Or inflation due to rising costs? If the second one, there where is all that money going? Who is that "cost" that is benefiting?

The current price changes are due to a lack of supply, which the market is rationing.

Remember firms will always try to charge a fortune for their stuff. It's only competition that stops that happening. Competition is excess supply, or at least excess supply capacity.

When competition stops being effective, prices go up.

Re: Worker pay isn’t keeping up with inflation

#46

Post by dnautics »

paxys wrote: post #19

Looking at the chart it's pretty obvious that wages aren't pegged to inflation in any way. You will always be paid based on the conditions of the labor market, not the price of an arbitrary basket of goods. Heck you can see that wage growth outpaced inflation in ~10 of the last 12 years. Isn't that a good thing?

growth of what? Purchase of shoddy goods that are made by countries that imprison minorities and political dissidents and force them to work for state-run companies?

Re: Worker pay isn’t keeping up with inflation

#48

Post by bjourne »

paxys wrote: post #19

Looking at the chart it's pretty obvious that wages aren't pegged to inflation in any way. You will always be paid based on the conditions of the labor market, not the price of an arbitrary basket of goods. Heck you can see that wage growth outpaced inflation in ~10 of the last 12 years. Isn't that a good thing?

That's a good thing. But it would have been better if wages kept up with productivity growth too, which they haven't.

Re: Worker pay isn’t keeping up with inflation

#50

Post by lottin »

paxys wrote: post #19

Looking at the chart it's pretty obvious that wages aren't pegged to inflation in any way. You will always be paid based on the conditions of the labor market, not the price of an arbitrary basket of goods. Heck you can see that wage growth outpaced inflation in ~10 of the last 12 years. Isn't that a good thing?

In general, prices are not pegged to inflation. Inflation is a change in the price level, but prices also change for reasons that have nothing to do with changes in the price level, e.g. in the case of wages, the supply and demand for labour.
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