
Everything Is Booming Except for Wages - paulpauper
https://www.bloomberg.com/view/articles/2018-02-23/u-s-economic-growth-isn-t-translating-into-bigger-paychecks
======
orev
Unemployment is so low and companies continue to complain that they can’t find
anyone. The unspoken end of that sentence is they can’t find anyone _at the
wage they are offering_. It’s only a matter of time before companies will be
forced to start increasing wages just so they can find people.

~~~
rco8786
> It’s only a matter of time before companies will be forced to start
> increasing wages just so they can find people.

It’s been like 30+ years. When does the trickle begin?

~~~
chibg10
It has begun, just not in America. American unskilled labor isn't competitive
except for jobs that are difficult or impossible to offshore (e.g.
construction, landscaping, agriculture), so American capital trickled into
emerging markets instead. China, for example, has experienced a massive
trickle-down of Western capital.

~~~
jhayward
_China, for example, has experienced a massive trickle-down of Western
capital_

This is not the effect that the term "trickle-down", or "supply-side"
economics refers to. Trickle-down economics is a fallacious concept that says
if you make rich people or corporations even richer, they will in turn re-
invest their riches in things that employ wage-earners. There is no empirical
support for this concept, and much empirical evidence that the reverse is true
- a vibrant economy requires most of the economic activity to be enriching the
lower/middle class wage earners.

The massive flow of capital to e.g. China is simply wage arbitrage combined
with structural disadvantage, e.g., no worker safety protection, environmental
protection, etc costs.

~~~
chibg10
What empirical evidence are you referring to that says rich people aren't
investing their money? And if it is the case that they are indeed investing,
where do you suppose China's investment-centric economy is getting capital
from? Who do you suppose is paying Chinese workers manufacturing goods for
American corporations?

If you leave out unskilled workers (whose share of capital went offshore),
wage growth among skilled American laborers has been very high... which is
also what you'd expect from trickle-down.

~~~
jhayward
> _where do you suppose China 's investment-centric economy is getting capital
> from?_

From the Chinese central bank, which has massively expanded the economy
through low interest rates and easy credit.

Wealthy people are are investing their windfalls, but not in production, but
rather in rent-seeking FIRE assets. Those assets do not create middle- and
lower-class wage jobs, in fact they suck income out of those classes.

> _wage growth among skilled American laborers has been very high_

You will have to support this with more than just an assertion. The wages for
skilled trades, for instance, have not nearly kept up with inflation. Skilled
manufacturing, same. Some of the professional categories, like software
development, have seen some growth - but the outliers in SF/NY are outliers,
not the median nationwide. Doctors net less, lawyers are mostly destitute
unless they are in the 10% who make it in biglaw, and so on and so on.

~~~
nwienert
Can you cite the Chinese low interest rates? The BLR is 4.3% according to
this[0] is there something else going on?

[0] [https://tradingeconomics.com/china/bank-lending-
rate](https://tradingeconomics.com/china/bank-lending-rate)

~~~
jhayward
China started to rein in the massive debt economy earlier this year. Current
rates are not indicative of the past, and official rates don't reflect the
enormous "shadow banking" industry that has been at the heart of the debt
boom.[1]

[1]
[https://www.ft.com/content/45bd8052-59dc-11e8-bdb7-f6677d2e1...](https://www.ft.com/content/45bd8052-59dc-11e8-bdb7-f6677d2e1ce8)

------
prolikewh0a
Why are all of these articles so clueless as to what's actually happening, and
how to solve it? Just ¯\\_(ツ)_/¯ every time.

Unions are the obvious easy fix [1]. Give the workers some real bargaining
power and ability to stand up for themselves.

[https://www.epi.org/news/union-membership-declines-
inequalit...](https://www.epi.org/news/union-membership-declines-inequality-
rises/)

~~~
briandear
A union would deny me the freedom to negotiate my own wages.

~~~
prolikewh0a
For the majority of America there's no such thing as negotiating wages. Do you
think McDonalds or Walmart are going to let you negotiate more than a few
cents here and there? Nope. The union would be more beneficial to them.

~~~
edanm
> For the majority of America there's no such thing as negotiating wages.

What makes you say that?

According to the first report I found via Google [1], workers who earn minimum
wage make up about 2.3% of the labor force. Wouldn't that imply that almost
all employees have at least _some_ bargaining power?

Note: the report seems to only talk about workers paid hourly, I assume the
statistic is no worse for full-time employees.

[1]: [https://www.bls.gov/opub/reports/minimum-
wage/2017/home.htm](https://www.bls.gov/opub/reports/minimum-
wage/2017/home.htm)

~~~
noobermin
That's the federal minimum wage...a lot of states and cities have minimum
wages above the federal minimum wage.

------
ntnn
Jesus christ, bloomberg does not fuck around.

    
    
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~~~
paulie_a
Call them up and tell them you will not be changing your browser
configuration.

Additionally I would probably add "shove your tos where the sun doesn't shine"

~~~
scarejunba
Why? Value your time.

------
paulpauper
I think the most parsimonious explanation is too much supply of labor and not
enough demand, so this means employers still have the upper hand. Low
unemployment hides the low labor force participation rate. A lot of middle-
aged and older men want to work but cannot. Many low and medium skill jobs
still have too many applicants relative to open slots.

~~~
jhayward
There is no reason to think that's the simplest explanation.

An equally simple explanation is that for the majority of jobs there is
essentially a wage monopoly/cartel keeping wages low, and workers have
significant barriers to moving to different areas. [1][2][3][4]

[1] [https://www.vox.com/the-big-idea/2018/4/6/17204808/wages-
emp...](https://www.vox.com/the-big-idea/2018/4/6/17204808/wages-employers-
workers-monopsony-growth-stagnation-inequality)

[2] [https://www.thenation.com/article/does-monopoly-power-
explai...](https://www.thenation.com/article/does-monopoly-power-explain-
workers-stagnant-wages/)

[3] [https://ilsr.org/monopsony-labor-blp-
episode-42/](https://ilsr.org/monopsony-labor-blp-episode-42/)

[4] [https://www.epi.org/publication/its-not-just-monopoly-and-
mo...](https://www.epi.org/publication/its-not-just-monopoly-and-monopsony-
how-market-power-has-affected-american-wages/)

------
jandrewrogers
Wages are _always_ booming -- if you have the right skills. Generic "wage
booms" aren't a thing that exists in a normal economy. There are a number of
fields right now where there is an absolute shortage i.e. the number of
qualified people at any price point is smaller than the number of jobs.

The point people often overlook is that, by and large, people cannot be easily
trained into most kinds of roles that are experiencing strong wage growth.
There is no easy way to satisfy a labor shortage that requires several years
of training and experience to gain competency. But that is the reality.

Consequently, you have large numbers of $300k jobs that no one can fill and
large numbers of people that can't find a job at $50k. These are separate
markets.

~~~
noobermin
There are probably a couple of orders of magnitude less $300K jobs than $50K
jobs. A "there exists" quantifier is useless when talking about the health of
the entire US economy.

EDIT: thanks for the correction.

~~~
chucksmash
Are you saying the number of $300k jobs is not only greater than the number of
$50k jobs but that there are several orders of magnitude more $300k jobs than
$50k jobs? If you've accidentally reversed your numbers here then I totally
agree with you.

------
coldtea
Increasing the size of the pie doesn't mean anything unless you also increase
the sizes of the slices people get.

Current inequality involves a larger pie, but with an ever smaller number of
people getting the majority of the cake, so that others get the same old
portions or less (despite working even harder than a company-man or union
worker in the 50s and 60s).

------
JulianMorrison
Join a union. Join the IWW if you can't find one. America has a massively
tilted playing field towards bosses and it needs to be tilted back.

------
Bytopia
Roughly 11-12% of the working age population is veterans (Using google for the
rough figures and math)

It is far more fruitful to game the disability system than to pursue an actual
productive career. \- Anecdote: 2 personal fitness instructors with 100%
disability. That is $3000 non-taxable dollars a month. For life. \-- It is far
more fruitful to game a bureaucratic machine than to put your mind and
imagination towards fruitful work ~ This is not the same as saying "Throw them
out in the street and let God sort 'em out". This is saying that a great and
fruitful strategy for future vets is to rape the VA's disability system

: Temporary observations on dynamics that could be gamed to sustainability and
ruin by over 10% of the possible working population ~ This is not a mere case
of the ruin of commons. This is (at least) partially a manipulation by war
planners to grossly underestimate the costs of constant war and constant
operations. The costs of the VA are either not calculated in or are grossly
distorted/underestimated by planners. It is not an organization for vets. It
is an organization to cover the DoD's ass by bribing the living casualties of
bureaucratic malfeasance and the normal living casualties in even the most
competently executed wars.

~~~
neffy
Think of it as a form of positive income.

------
bluedino
Doesn't help when the public is practically excited to perform tasks like
getting groceries and picking up dry cleaning for $7/hr.

------
rossdavidh
So, many possible reasons, and one way or another it's the relative power of
employer vs. labor, but one possible factor: the longer the downturn/slowdown,
the longer after it ends before wages go up. The recovery from the Great
Recession was by far the slowest in living memory, so it takes longer before
employers stop thinking "people will take this job soon, I just know it", and
instead think "I'd better raise the pay or I'll lose the people I've got". And
maybe they think that, because it's true, and you have to have a good labor
market for a longer period of time before people start to hop jobs more, if
they experienced a longer wait before they got the job they have.

------
dev_dull
Too much supply (employees) is a problem we should examine. Part of the reason
why this is he case is because small business are having an increasingly
difficult time competing with the resources of larger companies. Why have 6
accounts each at a small business of their own when a company 6 times the size
can get by with 2?

I think part of the blame is the regulation around employees. It’s hard to run
a small business. Even trying to do something like offer reasonable health
insurance can destroy huge amounts of profit. You need to make _a lot_ per
employee for it to work.

------
zakum1
This article is many months old. More recent data is showing solid wage
growth. Nevertheless, many of the comments on underlying economic challenges
for workers are still valid.

------
dijit
On a related note:

How do you negotiate for a pay increase when the pay increase is controlled
centrally? Every year my increase is not negotiable because it has been handed
down to my boss from central HR 5-6 layers of management away.

This has to be a common issue; and the solution is not to simply change
companies.

~~~
alain94040
You misunderstand the fundamental reason why you are getting a 2% salary
increase every year. Because when you joined the company, 5 years ago, you
were happy with $XX,000. You were ok with that salary one year ago. What
changed? Why would you suddenly want a lot more?

PS: the answer is "because the market has moved and values me at that higher
price now", which needs to be backed up with something such as a job offer
(dangerous), or better, evidence (my friends with similar resumes are getting
offers at that price).

~~~
AstralStorm
The evidence gets you nothing. Only an actual job offer could work, anything
else is unsafe in the extreme and might get you big unwanted notice. Trying to
negotiate from weak no fallback position is bad.

(In other words, it can get you shortlisted and potentially flagged as a
troublemaker. Say bye to references. Employers talk sometimes.)

------
danieltillett
I am going to take a contrary position and say this is a positive. The reason
why is employers are responding by bring in more of the marginal into the
workforce. If wages start to rise the underclass will remain unemployed and
excluded.

~~~
snackbugs
This kind of argument is less of a rationalization and more of public
relations spin. It ignores the increase in consumer spending that comes with
raising wages. In fact, it completely depends on skating over that fact.

~~~
danieltillett
It is neither a rationalisation nor PR spin. Until everyone who wants a job
has a job then wages rises will limited the participation of the marginal in
the job market. It is a value call if greater participation or greater income
of those who already have a job is more important.

What is more of an issue is that the fed will kill the economy to ensure wages
don't rise. As soon as there is the slightest sign that wages are rising
interest rates will be jacked up - it is only inflation when wages rise, not
asset prices.

------
x0AC77B2
The problem seems to be that people are willing to work for low wages. At the
last company I worked for, college graduate engineers were paid about $75k
starting and they had an incredibly hard time hiring. So they raised the
amount that they offered. But in low wage industries people take any job they
can get at whatever wage is offered.

~~~
CapacitorSet
How is the problem that _workers_ accept lower wages, rather than _employers_
proposing them?

~~~
hayksaakian
Because if workers did not accept those wages their companies would not
function

That's what strikes and things like that are for

~~~
moorhosj
If workers didn’t accept those wages they would be destitute. Companies
(capital) hold all of the power in our current economic system, it hasn’t
always been like this in the US and isn’t in many other countries.

~~~
x0AC77B2
If I could only find work at $8/hr that is my fault. I could get a student
loan and go to a trade school or study CS and make $80k+ in 3 years. Any adult
that requires to care for a family and chooses to work for $8/hr is harming
themselves.

~~~
moorhosj
Unless you already have a family to care for, or can't afford to stop working
for 3 years to take classes, or can't afford health insurance, or any of a
million other reasons that life may not be as simple as you make it out.

If everyone joined the trades, the supply of trade workers would increase and
their hourly wages would go down.

------
matchagaucho
Purchasing power through consumer debt is at an all-time high.

Whereas workers needed wage increases to buy TVs, cars, and homes... today
just about everything can be financed.

The long-term impact of this is lower savings and delayed retirement (if
retiring at all).

~~~
meguest
Isn't the lack of wage growth the reason that most large purchases are
financed?

~~~
matchagaucho
The Internet and IT skills have greatly optimized the credit scoring and
underwriting process.

It was not possible 20 years to get instantly approved for most credit lines.

------
laser
This article is from February—could a fourth possible reason be that local
variance is a normal phenomenon and this is not indicative of a wider trend? I
say this because the sudden and drastic dip in median weekly earnings in the
last quarter of last year has already recovered 75% in the first two quarters
this year according to
[https://www.bls.gov/news.release/wkyeng.t01.htm](https://www.bls.gov/news.release/wkyeng.t01.htm)

Went from $353 -> $345 -> $351 at end of second quarter this year.

The overall trend is still very much up. That being said, even if wages do
continue to increase, the fact that only half of real growth is making it to
workers is still problematic and could be related to other reasons mentioned
in the article.

~~~
jhayward
It is a 30-year trend. Here's [1] the chart since 2000.

[1]
[https://econographics.files.wordpress.com/2013/03/corporate-...](https://econographics.files.wordpress.com/2013/03/corporate-
profits-and-wages.jpg)

~~~
laser
Right, but that's the trend of capital becoming more valuable than labor,
which is related, but not the same thing as looking at real-wage growth.
Workers portion of total production can be going down yet still be gaining an
overall increase in real wages and purchasing power if it's made-up for by
overall growth.

From the perspective of creating a better society, that long term trend of
capital increasingly consolidating and rentiering is still dangerous and
likely has a breaking point, but so long as real-wages rise for people, it's
not as immediately or obviously devastating. Yet, the evidence presented in
the article seemed to be pointing to real-wages not increasing, and I'm not
sure that's true.

------
unixhero
So... Buy real estate, buy equity...?

~~~
patrickthebold
Just don't make your money by working.

~~~
DoreenMichele
"Work" \-- clearly, a dirty four letter word.

------
xentronium
1\. CPI is a wrong deflator to use when comparing to GDP growth

2\. Wages != Compensation

------
polskibus
Is this change happening despite Trump's tariffs or because of them?

~~~
stevenicr
considering the article and data is from February neither.

------
zxcvvcxz
Why would you expect any different in 2018?

Now that low hanging economic fruit has been picked, and almost all land has
been found and developed to some level, it's technology that drives growth.

Technology is developed by a small minority of the population with special
skills and high intelligence. The median human is not developing technology,
and therefore not significantly contributing to growth. You can only capture
some amount of the new value that you are creating.

EDIT - why the downvotes? This isn't a political statement, it's an
observation.

~~~
prolikewh0a
>The median human is not developing technology, and therefore not
significantly contributing to growth.

Those jobs __still need to be done __. Someone needs to stock your shelves,
someone still needs to pick up your garbage, someone still needs to flip your
burgers.

~~~
zxcvvcxz
Sure. But why should the wages of these tasks grow, when they are not
providing more or differentiated value as opposed to say 40 years ago?

~~~
jstarfish
To keep the knives of the poor away from your throat.

~~~
zxcvvcxz
Real mature and practical there buddy.

What's more likely is the continued political push towards socialism that
we're seeing in North America. Whether or not it will alleviate the situation
as I see it, I can't say.

~~~
jnbiche
> Real mature and practical there buddy.

You think that's a joke? Or trolling?

History says no, time and time again.

