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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

#561

Post by dionidium »

Gareth321 wrote: post #250

Real wages have been flat since the 1970s ( https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us... ). "Okay, so people's living standards are about the same since 1970?" Not even close. The problem with inflation is that its calculation is fraught with all kinds of selective weighting, bias, and politics. Take a look at the relative differences between the things which have decreased and increased in cost in…

> Except, that doesn't tell the story for the majority of Americans. Housing costs are WAY up in cities as Americans migrate to where the jobs are, while housing costs are down in all the areas where jobs are disappearing. In practise, housing costs are actually significantly up for most Americans, but because the CPI is calculated across the entire nation, the government can claim inflation is low.

I think this is basically wrong in that it's only true for a minority of Americans -- the kind that are overrepresented on this forum. If you're in tech or finance or law, then there are big payoffs to moving to San Francisco or New York, but this actually isn't the case for the typical American. When you compare cost of living it's clear pretty quickly that the median American is still doing just fine in the vast middle of the country.

The median household income in the NYC metro is $83,160 and the typical home costs $571,556. In St. Louis, say, the median household income is $66,417 and the typical home is $222,076. For the average American, the second option is a much better deal. Sure, you make $16k more in NYC, but does anybody believe that the entire cost difference between the two metros is $16k per year? It's not even close. The median American is much better off in St. Louis.

A lot of people reading this are in households that make many times the median household income and they have understandably concluded that their best options are in a few costal cities. But it simply isn't true for the typical American.

There's kind of a dual (seemingly contradictory) error here in that people both under- and over-estimate how wealthy the U.S. is. They overestimate in that they forget that the majority of Americans are living on much less than the average software engineer, but they underestimate in that they forget that our poorest states are still much wealthier than than the average European country.

See here: https://www.aei.org/carpe-diem/us-gdp-per-capita-by-state-vs...

Re: Worker pay isn’t keeping up with inflation

#562

Post by montblanc »

NoGravitas wrote: post #529
montblanc wrote: post #434

Earlier quoted context omitted.

> Maps, and the ability to read them. You basically need another passenger with you otherwise you'll have to do a lot of stops. I'd even say its a bit risky to drive like that. > Phones, you know good old land lines So you are saying having a high def video call with my brother living across the world, for free, is just like calling him in the 60s? It used to be crazy expensive to call abroad. And you couldn't see! >…

So many misunderstandings in here, probably because you're too young to have done any of these things. (Source: I am pushing 50.) Driving with maps doesn't require another passenger or a lot of stops, generally. You plan your route with the map before starting out, and if necessary write the turns on a piece of note paper. You may need to stop and consult the map if you miss a turn. I'll grant that GPS is more conven…

> I learned C from a couple of textbooks, and C++ (such as it was in 1993) from a book published by the company that sold me the compiler.

You ignored that part of my argument about only the rich world having high quality libraries. What if you'r from India or Africa or even rural America? Now even a poor Indian can solve Hackerrank challenges on his phone. It's not as easy or as convenient but it's much better than his prospects 30 years ago.

Re: Worker pay isn’t keeping up with inflation

#563

Post by SuoDuanDao »

abeppu wrote: post #549
Gareth321 wrote: post #250

Real wages have been flat since the 1970s ( https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us... ). "Okay, so people's living standards are about the same since 1970?" Not even close. The problem with inflation is that its calculation is fraught with all kinds of selective weighting, bias, and politics. Take a look at the relative differences between the things which have decreased and increased in cost in…

A number of responses to this are arguing over whether real wages were really flat since the 1970s or how one would judge given the differences in the things we spend money on (larger houses, new tech, etc). But for any choice of how to calculate inflation which makes worker's wages go up over time, doesn't that imply that the total growth since the 1970s is also larger, and the absolute value captured by the capital…

I'm having trouble parsing your last sentence, 'an opportunity to argue for'? I suspect the rich often got that way by being able to capitalise on crises, but I'm not sure how that relates to arguing for such opportunity. It might be relevant that Picketty also points out how severe crises are about the only times in recent history that wealth inequality decreased.

I generally like Picketty's analysis, but I wonder whether it might be worthwhile to do a similar analysis and include the portion that goes to co-ordination costs. It might be irrelevant in france for cultural reasons but I suspect it's an important piece of the puzzle in the Americas.

Re: Worker pay isn’t keeping up with inflation

#564

Post by rocgf »

nickpp wrote: post #384
rocgf wrote: post #377

Earlier quoted context omitted.

You want to compare the richest country in history with Moldova? I'm not sure I see the point. My point was very simple. Out of all of the world's developed countries, the USA is the one with the most expensive healthcare, despite less regulations. My point was that regulation by the government does not lead to "incredibly more expensive healthcare", as you have have stated. From there, comparing the USA to Bulgaria…

And my point was just as simple: those developed countries enjoy the benefit of cheap, educated doctors from Eastern Europe. Without them, their health care would be much more expensive.

So, in the end, you're accepting that regulation is not the determining factor then.

Not even sure what exactly you think the proportion of foreign-born medical staff is in Europe. As far as I can find, the maximum is ~30% in the UK, while in Germany is 7%. But either way, to think that this is somehow the reason why Americans pay way more than anyone else for basic stuff like insulin and medical bills is ridiculous in my eyes.

Even if what you say is true for Western Europe, there are other countries (pretty much all) with highly-regulated healthcare and they all pay less than the US. But I'm sure there's some niche reason for why that would never work in the US.

Re: Worker pay isn’t keeping up with inflation

#565

Post by walls »

neuroma wrote: post #126
nicoco wrote: post #56

Earlier quoted context omitted.

I think you're missing the point. With a 6% inflation, a 6% raise means the employees are worth the same as before , not more.

It's worse. Many people could see their fractional tax burden increasing as their nominal wage rises and crosses higher tax bandings. Inflating is a slow theft, and the description of "financial oppression" is apt.

You definitely don't know how progressive tax brackets work.

Re: Worker pay isn’t keeping up with inflation

#566

Post by kelseyfrog »

gentleman11 wrote: post #168
kelseyfrog wrote: post #142

Earlier quoted context omitted.

A work stoppage is more realistic than direct combat. What are they going to do? Force us to work? For example, with the way supply chains are right now, how much leverage do transportation/logistics workers have to force a change?

Strikes are illegal in many industries. So, literally, the answer is yes

Fascinating! Any more info on which industries and by which means people would be forced to work?

Re: Worker pay isn’t keeping up with inflation

#567

Post by sokoloff »

PickledHotdog wrote: post #495
sokoloff wrote: post #401

Earlier quoted context omitted.

Is it reasonable to expect that a minimum wage earner should be able to afford to buy a house and a newish car? Were minimum wage earners doing that in 1970?

Yes they were

The minimum wage went up to $1.45/hr in Feb, 1970. 2000 hours of that would be $2900. I used the following assumptions: 7.5% fixed-30, median house $17K, down payment of 20%. That was unaffordable by a factor of almost 2x.

The house that seemed affordable with no car payment was a little over $9K (down payment of $1800). Adding in a $50/mo car payment took the affordable house down to a little over $8K, less than half the price of the median home in 1970.

Was there a minimum wage worker sometime in 1970 who bought a house and a newish car? I'm sure there was. Was it typical to do so? I don't think so.

Refs: http://www.freddiemac.com/pmms/pmms30.html , https://news.ycombinator.com/item?id=29590190 , https://www.bankrate.com/calculators/mortgages/new-house-cal... (I used a 10x multiplier, so I modeled in the calculator someone making $14.50/hr, a median house of $170K rather than $17K, etc, and then divided them by 10 to cite the figures above.)

Re: Worker pay isn’t keeping up with inflation

#568

Post by ghaff »

vermilingua wrote: post #432
unyttigfjelltol wrote: post #416

Earlier quoted context omitted.

Cars are much more reliable now than they were in the 1970s, and they can drive more miles. They have to because services are distributed and it's super expensive and disruptive to sell an owned-residence.

Do you have any sources for that claim? Anecdotally I believe that to be entirely false, but if there are studies you’ve read that back you up I’d love to read them.

Here is one JD Power survey although you'd probably have to dig to find numbers over a longer period of time.

In my experience, it's clearly true overall. In the 1970s, say, you're probably looking at a car in the snow belt lasting 5 years because of rust and 100,000 miles was generally considered very high mileage.

Re: Worker pay isn’t keeping up with inflation

#569

Post by gravypod »

nly wrote: post #329
oDot wrote: post #313

Earlier quoted context omitted.

Yep. "Peter Schiff vs Warren Buffett; The Middle Class in the 50's, and Now" https://www.youtube.com/watch?v=byxd7dTnlXU

While Peters point of view may be seen as dated and chauvinistic, I do feel like the absolute necessity of dual income living today, especially in the city, has had a huge negative impact on quality of family life. I don't even have kids and I recognize what he's talking about. By the time me and my partner are home (7pm) and have prepped, cooked and cleaned up from dinner, there's no time or energy left to do anythi…

> While Peters point of view may be seen as dated and chauvinistic

A way to un-chauvinistic this point: I'm a male and I'd love it if I could get married to a women and have their income alone support a lifestyle with a house, kids, car, etc and leave me to do house work + cooking. Sprinkle in access to a computer which would let me do some programming and potentially generate extra income and it I'd be extremely happy.

Re: Worker pay isn’t keeping up with inflation

#570

Post by dnautics »

commandlinefan wrote: post #544
dnautics wrote: post #39

If it does, inflation has failed as a policy: https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... "in the long run, it’s really, really hard to cut nominal wages. Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sus…

So Krugman's wrong, again. Has he ever been right?

Honestly, I am profoundly in disagreement with Krugman about everything, but that's because he's right about everything, but in wrong ways, usually due to a huge, huge, blind spot at the root. And it's frustrating that he can take people in with his analysis because it's easy to accept his arguments thinking "just hard enough" (which is catnip for lazy intellectuals).

Like for example with the Babysitter's coop. His analysis IS correct, but his remedy is presented as the absolute solution while being oblivious to the fact that the monetary system is based on a total fiction -- that hours are fungible, (e.g. one hour on christmas is equivalent to one hour on September 19, or even that on hour at midnight on a boring day is equilvalent to one hour at 7pm on a boring day). In general, all monetary and social systems are based on fictions, and they will eventually leak their bad abstractions. But I am not sure that Krugman would accept that iron statement.

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