
U.S. Paychecks Grow at Record-Slow Pace - enraged_camel
http://www.nytimes.com/aponline/2015/07/31/us/politics/ap-us-employments-costs.html
======
carsongross
_Despite a tighter labor market_

Laughable. Any reasonably intelligent person who makes this claim is either
willfully ignorant or dissembling for political reasons. The population
employment ratio is below 60%:

[http://data.bls.gov/generated_files/graphics/latest_numbers_...](http://data.bls.gov/generated_files/graphics/latest_numbers_LNS12300000_1948_2015_all_period_M06_data.gif)

The labor market is not tight and hasn't been this over-supplied since the
early 80s.

~~~
rtpg
that graph's axes can make that graph extremely misleading.

Isn't the reasoning backwards though? An employment ratio of 50% means more
people are looking for work than if the employment ratio is at 60%, right?

I mean if the employment ratio is 100% surely the labor market would be tight
right?

~~~
roymurdock
Labor Force Participation = Labor Force / Working-age Non-institutionalized
Population =

(Unemployed + Employed) / Working-age Non-institutionalized Population =

(People looking for work + People working) / (Anyone who is physically and
legally able to work)

Decline in LFP means that the labor force (people employed and/or looking for
jobs vs. discouraged but otherwise able-bodied workers) is shrinking relative
to overall population.

This is caused by at least 1 of 2 things. (1) A decrease in the numerator:
workers becoming discouraged and leaving the labor force - note that if
workers simply shift from being employed to unemployed, the LFP ratio doesn't
change. (2) An increase in in the denominator: more working-age, non-
institutionalized workers in the overall population.

If the LFP is 100% then everyone who is able to work is either employed or
actively seeking employment.

If the LFP is 50% then 50% of the total population is not actively seeking
employment. With the current unemployment rate of 5.3%, this would mean that
44.7% of the total labor force is employed, 5.3% is unemployed but searching,
and 50% is content to not work/discouraged.

Confusing to say the least, but in the end it's a proxy for the amount of
discouraged workers in the total labor force.

~~~
seanmcdirmid
How would baby boomers effect this? Their is a huge bump in the work force
that is now rapidly retiring.

~~~
roymurdock
Annual Growth Rate of Civilian Labor force By Age (2012-2022) [1]

\---

55-64: 1.4%

65-75: 5.6%

75 & older: 6.4%

\---

16-19: -2.6%

20-24: -1.0%

\---

25-54: 0.2%

The share of older people in the workforce is growing rapidly (not retiring
like they used to), the share of younger people in the workforce is declining,
and the share of middle aged workers remains largely flat.

[1]
[http://www.bls.gov/emp/ep_table_304.htm](http://www.bls.gov/emp/ep_table_304.htm)

------
hew
Global labor arbitrage marches ever onward.

~~~
joelrunyon
I'm not sure why more people don't bring this up. People love to talk about
people outsourcing jobs as if it's "unfair", when it's a growing reality that
we really need to face & look at the consequences (as the global pool of
talent get bigger & more competitive).

~~~
wfo
Because it is unfair -- we require companies to treat their workers like human
beings and ban certain forms of exploitation, abuse, etc. Facing reality and
accepting that if workers can be abused, they will be abused so we might as
well be the abusers is one way to deal with this fact. Another would be, for
example, to ban all imports made under conditions which don't meet U.S. human
rights standards and remove the economic inventive, but instead we go the
opposite direction, the direction of "free trade" which is great for people
who can afford to spend capital and move operations to countries where they
can abuse workers, but not so great for American workers -- we aren't even
allowed the opportunity to be abused and exploited.

~~~
wcummings
The alternative to being "abused and exploitive" is an agrarian economy with
an even lower quality of life. People work in sweatshops because it's their
best option. As their economy develops they'll improve working conditions. How
does sanctioning them help them improve their lot?

~~~
zaccus
I care about other Americans more than I care about Indians, and I don't see
anything wrong with that. Let Indians worry about improving their lot.

We need to get over this White Man's Burden bullshit. It's condescending,
paternalistic, and subtly racist.

~~~
wcummings
Free trade is condescending and racist? The only thing racist here is your
comment.

~~~
zaccus
Nope, your assumption that Indians need us to save them is the racist bit.

------
stuaxo
I'm sure it's growing at a record rate for the 0.1% though.

~~~
LunateSigma
The 0.1% don't need paychecks.

~~~
davesque
Paychecks are for chumps when you're pulling in returns on a large stock
portfolio.

------
roymurdock
What really worries me about the terribly slow income growth is its inevitable
effect on the housing market. There is a huge disparity between median income
growth and median house prices.

Check out this FRED graph comparing median income growth and new housing price
growth:
[https://research.stlouisfed.org/fred2/graph/?g=1yY7](https://research.stlouisfed.org/fred2/graph/?g=1yY7)
We see that median income growth is flat at 1.8% while price growth of new
housing has picked up dramatically from 1.3% in 2011 to 9.9% YoY growth in
2013.

In nominal terms median income has grown $6,000 over the past decade while the
price of a new house has jumped up by approximately $70,000. In real terms
(adjusted for inflation) real median income has dropped -$4,000 while new
house prices have increased by $2,000. [1] I'll leave the calculation of the
10-year % change of real median values as an exercise for the reader.

As a recent grad with a decent job, there is still no way in hell I'm going to
be able to afford a mortgage on any decent, middle-class house in a semi-urban
area for a very, very long time, unless I want to move to Detroit or a
similarly bankrupt/developing part of the US. I'm also speaking from a debt-
free perspective: if I had come out of school with $100k+ in student loans,
forget about it.

The only kind of jobs that are going to pay for good houses in the future are
banking/tech/fortune 500, which have median salaries of ~60k right out of
school and a well-compensated track to climb. These jobs are becoming
increasingly scarce and hard to obtain, especially with competition from out
of country talent.

I wouldn't be surprised at all to see my generation (I'm 22) having an
extremely low & delayed demand for purchasing housing, and to eventually see
what is happening in Detroit (houses abandoned, rotting away [2]) happen on a
smaller scale across the country where there is too much housing supply for
too little demand.

And no, prices will not equalize to accommodate lower salaries because real
estate always appreciates in the long run...right? The Chinese, Canadians,
Mexicans, Indians, and British seem to think so: foreign investments in US
real estate totaled $108bn over the past year, or 8% of total existing home-
sales dollar volume. Unsurprisingly, they are "spending more money on fewer
homes," aka they are driving real estate bubbles in major cities such as NYC
and SF. [3]

So we'll see a bunch of late 20, early 30 something's living together,
splitting the rent in what would have once been a 4-6 person family house in
order to make ends meet/be close to work. Maybe they'll even drive for Uber on
the weekends. Welcome to the sharing economy.

[1] The median sales price of a new house in June 2005 was $226,100, which
would be $279,000 in 2015 dollars. As of June 2015 the median sales price is
$281,800. I used this inflation calculator because FRED didn't have an
inflation-adjusted real median sales price graph:
[http://www.saving.org/inflation/inflation.php?amount=226,100...](http://www.saving.org/inflation/inflation.php?amount=226,100&year=2005)

[2] [http://www.motherjones.com/photoessays/2010/10/detroit-
house...](http://www.motherjones.com/photoessays/2010/10/detroit-houses-
photos/01af10m6025803tonedjpg)

[3] [http://realtormag.realtor.org/daily-
news/2015/06/18/foreign-...](http://realtormag.realtor.org/daily-
news/2015/06/18/foreign-buyers-spend-more-us-real-estate)

~~~
ChuckMcM
On the one hand there isn't any arguing with the numbers, but the if the
foreclosure crisis has shown us anything, it is that house prices don't "only"
go up. When there is no one to buy them, or people who are living in them
can't afford them any more, the price goes down. Sometimes significantly.

So it is impossible for house prices to rise so high that "nobody" can afford
them, although the job categories that can afford them might change.

The question I ask is, what is the next transition? Do programmers buy all the
future houses?

~~~
CamperBob2
_So it is impossible for house prices to rise so high that "nobody" can afford
them, although the job categories that can afford them might change._

500 million not-so-Red Chinese looking for a place to park their new money beg
to differ...

~~~
scarmig
Unfair--there aren't nearly that many princelings.

It's more like 5 million of China's elite are engaged in a mass theft from 1
billion other Chinese, and after expropriating as much wealth as possible and
destroying as much of the environment as possible they want a nice hideout so
that when the revolution comes they're not the first up against the wall.

------
refurb
_Yet another measure of pay, compiled by the Federal Reserve Bank of Atlanta,
shows wages are accelerating. Hourly pay for a typical employee rose 3.2
percent in June from 12 months earlier, according to the Atlanta Fed._

Wow, this is what passes for journalism? Write an article about slow wage grow
(notably only this last quarter, it grew the quarters before that). Then,
finish up the article with another wage growth metric that is actually looking
pretty good.

Ugh.....

~~~
fweespeech
> Yet another measure of pay, compiled by the Federal Reserve Bank of Atlanta,
> shows wages are accelerating. Hourly pay for a typical employee rose 3.2
> percent in June from 12 months earlier, according to the Atlanta Fed. While
> that is double the annual pace of 1.6 percent in February 2010, it is still
> below the pre-recession levels of about 4 percent.

Eh. Its still below the norm.

------
benhamner
The surprising thing here is that the NYTimes left out a graph and a direct
link to source data in this article.

------
rebootthesystem
Just wait until minimum wage reaches the $15 per hour utopia. That huge
sucking sound you'll hear are more jobs leaving the country.

The cynic in me thinks some politicians actually want more disparity, poverty
and suffering. Why? Because those are the people who vote for them and keep
them in office.

The only people who are nearly always OK despite wars, recessions, poverty and
national disasters are the political class. They exist in virtual isolation
from reality.

It's a really sick feedback loop: In order to stay in power you need people
who are UNHAPPY with their lives, not happy. The unhappy masses will vote for
whoever promises to improve their standing. Their "champion", if you will.
Therefore, as a politician, you talk about doing things for them and after
elections you drop them on their heads, pretend to do a few things when, in
reality, you didn't make it better for anyone except yourself.

There are great examples of this in South American politics. They've been
suffering from this problem for decades on end. This is like a virus that is
hard to eradicate. Why? Because it is hard to make the masses vote for anyone
but the person who tells them they are going to solve their problems and give
them things. In other words, people don't make logical long-term decisions and
continue in an endless loop despite the fact that things never get better for
them.

I mean, pick a country and look at their "war on poverty". Not just the US.
Everyone has a version of this. And the poor never get richer. It's pure
pandering and manipulation. It's sick, really.

~~~
FD3SA
Democracy has been gamed since its invention. Unfortunately, the poor were
extremely valuable as a servant class for the rich throughout our pre-
industrial history.

Nowadays however, with automation, the rich are becoming quite independent of
serfs as capital increasingly substitutes for labor at a rapid pace.

This does not bode well for the majority of the world's population of non-
wealthy laborers.

------
randomname2
According to BLS statistics wage growth has actually been quite good for
"supervisory" employees, it's "non supervisory and production employees" (82%
of the labor force) who have seen pitiful wage growth.

------
daodedickinson
With all the mandated economic inefficiency increases, I don't know how / if
any growth is happening? Why should we want it to?

~~~
littletimmy
Without growth, inequality will become a lot less tolerable. The economy must
grow or collapse.

~~~
daodedickinson
On the whole, this may be true but there are available diverse methods of
making inequality more tolerable, many rather independent of growth. If growth
soothes covetousness, it is only in a way subject to hedonic treadmill
effects. But, education, meditation, medication, censorship and many other
tactics could lessen such effects in ways not necessarily subject to
diminishing returns.

For example, one can look at these photos in many different ways:

[http://www.huffingtonpost.com/entry/income-inequality-los-
an...](http://www.huffingtonpost.com/entry/income-inequality-los-angeles-
jeffrey-milstein_55c0c7d7e4b0b23e3ce3f8a4?utm_hp_ref=income-
inequality&kvcommref=mostpopular)

From such a distance, a trailer like the one I was born in does not seem much
smaller than a mansion. None of this was around in the year 1491. If I had the
only building, say, a trailer, in the state of Wyoming, and then someone
builds a mansion that I can see, it does NOT necessarily follow that I suffer
more. Besides, never forget, growth is always what creates inequality in the
first place. Before the seeds sprout, bean plants are of equal height, and it
is nigh impossible to keep them equal in height, although with sophisticated
bioengineering or grafting techniques it may be possible.

Cognitive processes, possibly exacerbated by the consumption of deleterious
media, can induce suffering in humans at any level of wealth; many are brought
to deepest anguish because they cannot live forever, they can believe that
"reality is broken" because they maladapt their motivation systems to video
games (I'm talking about me here), etc.

Income is becoming more and more equal; some people are upset because this is
happening across national borders and think they deserve more pay for the same
work because of their birthplace, but I think this is ultimately untenable—it
is natural that we are in anguish because our cost-of-living is higher, but it
is getting harder and harder to starve. Once we have our daily bread,
toleration of life is somewhat up to us.

I think the starkest problem with inequality is the often subconscious worry
about attracting a mate, even in those with no intention of procreation.
Perhaps this downward pressure on birth rates is unavoidable as carrying
capacity is met or exceeded.

As for the fear that the economy must grow or collapse, many economies have
shrunk before. Surely, I must admit one could define collapse so as to make
"The economy must grow or collapse" a true statement.

------
verelo
But we have good unemployment numbers right? I cant help but think that right
now might not be the best time to expect everything to line up perfectly.

~~~
wavefunction
>best time to expect everything to line up perfectly

When is, if not today. Certainly not... tomorrow.

------
codecamper
I think it is as simple as... we used to make stuff & the economy was great.
Then the rest of the world made stuff. And there are way more of them living
with way less money. So the balance shifted & now they make stuff. We don't
make anything. Which was nice for a while, but after a while, if you aren't
making stuff then you aren't getting paid.

~~~
yummyfajitas
We make more stuff than ever before.

[https://research.stlouisfed.org/fred2/series/INDPRO/](https://research.stlouisfed.org/fred2/series/INDPRO/)

[https://research.stlouisfed.org/fred2/series/IPMAN](https://research.stlouisfed.org/fred2/series/IPMAN)

The rest of the world also makes more stuff than ever before, which just means
that we all have more stuff.

~~~
hiou
You do realize you can't buy food or housing with "stuff" that is cheaper or
more advanced than it was 10-20 years ago, right?

~~~
yummyfajitas
Food production is up, and our waistlines indicate consumption is as well.

[https://en.wikipedia.org/wiki/Food_security#/media/File:Food...](https://en.wikipedia.org/wiki/Food_security#/media/File:Food_production_per_capita_1961-2005.png)

House sizes have also been increasing, even as # of people living in a house
has been dropping.

[https://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf](https://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf)

We simply have more of everything.

~~~
hiou
So then why is food and housing more expensive than it was 20 years ago?

[https://research.stlouisfed.org/fred2/graph/?g=8l2](https://research.stlouisfed.org/fred2/graph/?g=8l2)

[https://us.spindices.com/indices/real-estate/sp-case-
shiller...](https://us.spindices.com/indices/real-estate/sp-case-
shiller-20-city-composite-home-price-index)

I'm not saying there isn't "more of everything", I'm saying there is less to
pay for the most important everthings.

~~~
yummyfajitas
Wages have increased more rapidly than food CPI.

[https://research.stlouisfed.org/fred2/graph/?g=1yYT](https://research.stlouisfed.org/fred2/graph/?g=1yYT)

Case-Shiller is an investment index, not a consumption one. You might as well
say "look, S&P has gone up, everything is more expensive!"

In fact, wages have increased relative to the cost of housing (i.e., rent or
owner equivalent rent) also.

[https://research.stlouisfed.org/fred2/graph/?g=1yYW](https://research.stlouisfed.org/fred2/graph/?g=1yYW)

