
U.S. Wage Growth Is 'Higher Than We Think,' Fed Researchers Say - howard941
https://www.industryweek.com/talent/us-wage-growth-higher-we-think-fed-researchers-say
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svachalek
In arguing that we should take a simple average, this seems to be trying to
make wage growth seem better by putting more emphasis on the top ranks that
have seen most of the growth over the past few decades. However the wording
seems to imply the problem is that higher earners have slower growth because
they're later in their careers. Are they talking about a different thing or
just being weaselly?

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munk-a
It's being weaselly, I believe the article is saying that the current record
keeping means that if high earner growth slowed down in relation to low earner
growth it would be (all other things equal) recorded as a decrease in growth
(or absolute value even).

But it doesn't offer numbers about an unweighted average because the
unweighted average is -worse-. Tech workers' mid & high level salaries have
been keeping a good pace with inflation (even after adjusting to the CoL
effects in areas like silicon valley) it's low income workers who have been
hit the worst by our modern economy with their hourly wages well behind simple
inflation adjusted figures from three decades ago.

This is just... a terribly written article sadly. It's like if you were to say
"Global warming is going to be 2-3 deg C" and I argued "No, you're wrong, your
numbers are highly suspect and thus I deny climate change (because I am
getting figures closer to 4.5 deg C)"... can we classify this type of article
as "kicking over the other's kids toys"?

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JMTQp8lwXL
On the first read, I didn't understand the article. On a second read, I feel
that they have a good point. However, let's not miss the forest for the trees:
"higher than we think" doesn't mean wage growth is high enough for a healthy,
prospering middle class-- especially in an era where housing, education, and
health care continually exceed inflation, coupled with the fact that most
workers get a 1-2% raise (if any) per year.

~~~
deogeo
I didn't understand it even on the third read. What are they measuring? An
individuals wage growth through their career, or the growth of the US mean or
median wage over time? And what of the mentioned weighting - other than that
it's 'different' between the two methods, I'm utterly confused as to what it
actually _is_ , or why there is weighting at all.

~~~
JMTQp8lwXL
How I understood it: the measure everyone thinks is wage growth (when we look
at published economic data), is assumed to weight all workers equally: making
it an unweighted average.

What people are actually citing is a metric that gives greater weight to
higher earners than lower earners-- that metric is called Average Hourly
Earnings (AHE). The name is confusing: it implies an unweighted average
(because the word 'average' alone implies adding up all data points, then
dividing by the number of points), but in actuality it's weighted.

If you calculate wage growth the way people assume it to be (an unweighted
average), that growth number is greater.

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rbkillea
Now subtract 3 (or 6) percent to account for what money does under inflation
(or market growth). If you don't _geometric average_ a growth that outpaces at
least 3%, you are working for less than you were when you started. If it's
between 3% and 6%, you are being outpaced by institutional investors because
your capacity for savings are extremely limited in comparison.

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fucking_tragedy
This is the only sane way to look at it. If you compare it with historical
correlations between compensation and productivity[1], then things look pretty
bleak.

Over the last decade, engineer pay certainly hasn't kept up with increases in
cost of living expenses, especially in places like SF or NYC.

[1]
[https://thumbor.forbes.com/thumbor/960x0/https%3A%2F%2Fblogs...](https://thumbor.forbes.com/thumbor/960x0/https%3A%2F%2Fblogs-
images.forbes.com%2Ftimworstall%2Ffiles%2F2016%2F10%2Fwagescompensation-1200x1093.jpg)

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primitivesuave
It's hard to get anything from this article. Does this factor in the Uber
drivers making over 100k a year but paying for gas/insurance/health out of
pocket? I'd be interested to see data on real income or percentage of income
that is put into savings/investments. Other data sources paint a far less
optimistic picture of the current state of affairs
([https://datausa.io/profile/geo/01000US/#economy](https://datausa.io/profile/geo/01000US/#economy))

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joe_the_user
This not news and doesn't merit being called research.

This is a statistical effect that has always existed and is fairly well known.
Yes, the average worker experiences more wage growth than the statistical
value of "growth in average wages" because the average workers starts at the
lowest salary in their and gradually progresses higher. That's how individuals
experience things but that does not in any way mean that median wages and
growth median wages is a flawed statistic. It's reminder for anyone looking
multiple measures of income and wealth to look carefully (I've seen economic
professors incompetent enough to ignore these but that's a different issue).

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witcherchaos
It makes sense that US wage is growing if you look at the macroeconomic
environment. Money is flowing into US at an unprecedented rate due to:

a.) Fed raising interest rates to a normal level. Government bonds are now
earning close to some of the faster developing countries, without the risks.

b.) Brexit impacting the growth of EU. Germany narrowly avoids
recession....for now. But grew only 1.5% in 2018. There's still the matter of
a possible US tariff on EU automobiles. And Italy/Greece/Spain debts are still
a thing.

c.) Chinese economy is crumbling. GM dropped crashed 15% in China in 2018.
Ford dropped 36%. iPhone sales dropped 13%. Louis Vuitton dropped 20%. Overall
car sales dropped 13%. Stock market dropped 22%. Real estate sales in January
2019 dropped 44%.

d.) Asian countries impacted by China's fall. South Korea's export to China
dropped 14% in 2018. Japan dropped 8%. Taiwan dropped 10%. Singapore dropped
8%.

e.) Uncertainties and high debt ratio in developing countries, prompting money
to seek safe harbor. Tariff and protectionism impacts.

f.) lastly, US is growing at a healthy 3% in 2018

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JMTQp8lwXL
I don't know how C) fits in the narrative. I think we could flush this out a
little more.

Global economies are linked. If China isn't doing well, there's a risk that
could spill over into other countries (point D), and that includes the US.

Are we saying that the US is doing well, but China is doing poorly because,
all else equal, if the China-US trade discussions do not end well, it harms
China more than it harms the US? It would certainly hurt both economies. Costs
for goods would rise in the US. US Consumers buy less, consumer confidence
slides, 70% of economic activity is consumer spending, etc.

~~~
witcherchaos
It fits the narrative of US doing better than everyone else, thus money is
flowing in.

There was a study done (can't find the link atm) regarding the impact of the
tariffs on US consumer goods, and what they found was that the impact on US
goods were negligible. The Chinese suppliers usually ate the tariff cost,
which cuts into their margin. This in turn either bankrupts the company -
because the private enterprise in China has been suffering from massive debt
and government preferences for state owned enterprises - or it prompts the
company to move the factories to Vietnam or other places.

~~~
JMTQp8lwXL
To state my point in other words:

> Chinese economy is crumbling. GM dropped crashed 15% in China in 2018. Ford
> dropped 36%. iPhone sales dropped 13%. Louis Vuitton dropped 20%.

Doing better than a "crumbling economy" doesn't mean you're doing stellar.
That's setting the bar very low, and then saying "see, we beat it". It isn't
necessarily confidence-inducing, even it is better than the others.

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etaty
related to previous discussion:
[https://news.ycombinator.com/item?id=19253364](https://news.ycombinator.com/item?id=19253364)

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joncrane
Does anyone have a version without intrusive popups?

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scarface74
It’s 2019. How can you stand the web without an ad blocker?

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appsonify
US is doing just fine. It's countries like China that is now facing a
combination of subprime mortgage of sorts, except it is not limited to only
residential real estate but entire state owned corporations which can no
longer just be bailed out as before.

