
Wages Are Finally Rising, 10 Years After the Recession - onetimemanytime
https://www.nytimes.com/2019/05/02/business/economy/wage-growth-economy.html
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Eleopteryx
Is there any value to citing wages as opposed to real wages? It even says "Not
adjusted for inflation" in the chart showing the increase in average hourly
earnings.

Real wages have increased +1.5% March 2018 - March 2019, which the article
would do well to point out. Citing that growth has topped 3% for nine months
is almost in some ways misleading if it turns out that growth doesn't confer a
similar increase in purchasing power.

The BLS tracks real wages which is where I got my 1.5% figure. To further put
things in perspective, from March 2018 through March 2019 average paychecks
increased by about $30 a week. At the same time, real average weekly earnings
only increased by about $5.

I don't get why they would avoid (edit: less so "avoid" more like "miss/omit")
this subject completely.

~~~
joe_the_user
Yeah, the chart is pretty strange. It is the yearly increase rate for wages
not adjusted for inflation. Even if this is somehow a reasonable proxy for
increases in real median wages, it seems unnecessary given that you could just
have a chart of real median wages instead.

I suspect a factor is that actual changes in income have been quite small and
it's nicer to have an image that shows something dramatic instead of the
marginal blip that we've actually seen.

~~~
worik
Possibly. But "inflation" is a slippery concept. It is often published as a
single number but it is not. Prices do not rise in the same way for all
people. Relative costs and prices across the things money is used for. A poor
family is buying different things from a middle class one.

Nominal wages matter a lot. And these days prices are not moving much and it
is recognised that it is very important that they go up, a lot, for those at
the bottom.

~~~
roenxi
Nominal wages are almost completely irrelevant, that is why real wages exist
as a concept.

Inflation is slippery but arguing that nominal wages matter is pushing it too
far. The official inflation rate is a polite fabrication in the sense that
strictly speaking there aren't a lot of people who experience the official
inflation rate in a year. But it is measuring an all too real effect that
needs to be factored in to everything to have a serious debate about what is
happening in the real world. I'm not even sure how to rebut the idea because I
don't know any arguments in favour of using nominal wages over real that
aren't straw man arguments.

> And these days prices are not moving much and it is recognised that it is
> very important that they go up, a lot, for those at the bottom.

I'm not totally sure I'm reading this right, but I assume you mean nominal
prices for people who are poor. If so, this is a horrible idea. Nobody but
nobody should want to raise the real or even nominal cost of living for poor
people. It is obviously a brutal thing to do, and as a social group they don't
command enough money to get a worthwhile effect from squeezing them.

~~~
AnthonyMouse
> But it is measuring an all too real effect that needs to be factored in to
> everything to have a serious debate about what is happening in the real
> world.

Well, sort of. The major thing this doesn't apply to is borrowed money. If
both prices and wages increased by 10% then adjusting for inflation you would
say there has been no gain, but tell that to the person with a mortgage or
student loans who is now paying back the same nominal principal amount while
earning more nominal dollars.

~~~
sjwright
Correct, if the interest rate is fixed. Otherwise the same market forces
captured by the inflation rate is also pressuring the interest rate paid on
loans.

Put simply, if tomorrow’s money is worth less than today’s money, interest
rates must increase correspondingly.

~~~
AnthonyMouse
That's assuming interest rates are set by the market rather than the Fed. In
the latter case it's often the opposite which is true -- the Fed sets a low
interest rate which in principle causes inflation and wage growth as people
borrow money and spend it.

Moreover, the bank doesn't care that much that you're paying back the loan in
less valuable money because they never actually had the money they loaned you
to begin with. Having money in a bank account is you loaning the bank money,
taking out a loan is the bank loaning you money, so as long as the money they
loaned you is still in somebody's bank account they just cancel out. It's the
person holding the cash in their account, not the bank, who is eating the
currency devaluation.

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codingslave
It’s no secret; tight labor markets produce higher wages. The deleterious
effects of labor gluts are felt most profoundly at the bottom: the greater the
number of people seeking unskilled labor, the lower the wages for “those who
need it most”.

Hence, the solution to low wages is to stop importing poor foreigners who
undercut American wages. Couple that with the elimination of corporate taxes,
and there will be no incentive for offshoring or inverting. Become the world's
biggest tax haven, and incomes will skyrocket.

The laws of economics cannot be wished away, and the lesson is clear: cut
taxes, close the borders, and prosperity will result. If we could, now,
substantially cut social spending – with all these people working, it should
be possible to seriously reduce handouts – then we could afford to cut taxes
AND pay for the sort of infrastructure program (exclusively projects of
national importance) while reducing the deficit.

~~~
blfr
This is a completely reasonable comment. Why would you downvote it without a
response?

~~~
542458
The comment was probably poorly received because it presents a lot of things
as economic fact, when in reality the evidence is much less conclusive. Many
studies have shown the the labor market is far from a simple supply/demand
system, and predicting the impact of many policies - looser immigration,
minimum wage - is difficult, and quite often runs contrary to the simpler
models.

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clairity
the article suggests a simple explanation:

> "Perhaps the job market wasn’t as good as the unemployment rate made it
> look."

so basically, the politically expedient version of unemployment, u3, doesn't
have explanatory power in the economy. instead we should use u6, which
includes the underemployed and the discouraged [0].

so the slack of the un-/under- employed has now been eaten up and competition
in the labor force is driving up prices.

[0]
[https://en.wikipedia.org/wiki/Unemployment#cite_ref-47](https://en.wikipedia.org/wiki/Unemployment#cite_ref-47)

~~~
tootie
U1 through U6 all move in absolute lock step with each other.

[https://upload.wikimedia.org/wikipedia/commons/thumb/9/9b/US...](https://upload.wikimedia.org/wikipedia/commons/thumb/9/9b/US_Unemployment_measures.svg/220px-
US_Unemployment_measures.svg.png)

~~~
strken
Perhaps there's a magic number which is the unemployment rate in a healthy
economy[0], and when you get close to that magic number then competition has a
much greater effect. If you think the magic number is very small, say 2%, then
the choice between U1, U3, and U6 obviously affects whether you've hit it or
not.

[0] perhaps mean_time_to_find_job / (mean_time_to_find_job + mean_job_duration
+ mean_time_not_working), or something

~~~
tootie
It's a well-studied area of economics. The term is "Full Employment"

[https://en.wikipedia.org/wiki/Full_employment](https://en.wikipedia.org/wiki/Full_employment)

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lostphilosopher
Why is the focus always on "closing the border" or other actions taken on the
immigrants themselves and not on cracking down - hard - on the companies that
illegally employee and abuse them?

Trying to stop or even slow down immigration without addressing the incentives
that drive them to leave home and come to the US seems like a doomed and
inefficient game of whack a mole...

~~~
basetop
Politically expediency. Neither the democrats nor the republicans want to go
after the elites. So naturally they take turns attacking illegal immigrants.
But it's all lipservice. Neither the republicans nor democrats want to stop
illegal immigration. They want to use it to get votes.

Stopping immigration isn't an inefficient game of whack a mole. It's been done
before through american history. And it's been done in most countries around
the world. If the political and business elites wanted to end illegal
immigration today, we'd end it easily. It's really not difficult to stop
illegal immigration if we wanted to.

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skookumchuck
"a result of a tightening labor market that is forcing employers to raise pay
even for workers at the bottom of the earnings ladder."

I.e. Supply & Demand

(It's the law!)

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imtringued
>It appears as if that is exactly what is happening. In recent months, more
than 70 percent of people getting jobs had not been counted as unemployed the
previous month. That is well above historical levels, and a sign that the
strong labor market is drawing people off the sidelines.

Interesting. If you run the numbers you will basically see that if someone
isn't counted as looking for jobs and then gets a job they barely shift the
unemployment figures at all compared to someone who declares himself as
unemployed but is counted as looking for jobs.

The idealized scenario with a 10% unemployment rate and 100 workers would look
like this. 90/100 -> 1 worker who "seeks job" gets a job -> 91/100 ->
unemployment down to 9% (-1% change)

But reality looks closer to this. 90/100 -> 1 worker who "stopped looking for
jobs" gets a job -> 91/101 -> unemployment down to 9.9% (-0.1% change)

In other words you have to be insane to base any political decisions on this
number.

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RickJWagner
Wages are rising, unemployment is low, the stock market is near an all-time
high.

It's probably smart to consider the broad economic landscape and make
appropriate moves in the personal finance arena. In a while we'll probably
consider these to be very good times, economically. (But they won't last
forever.)

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srndh
10 Yrs back, a can of coke was 1, now the same is 2.50.

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fatjokes
I guess Trump is getting 4 more years.

~~~
TAForObvReasons
> The faster growth at the bottom is probably being fueled in part by recent
> minimum-wage increases in cities and states across the country ... wages for
> low-wage workers rose 13 percent in states that raised their minimum wages,
> compared with 8.4 percent in states that did not

"Blue states" saw a much bigger bump

~~~
kortilla
Setting the price does not set demand. The only thing that makes min wage
bumps sustainable is a strong economy.

Additionally, it’s easy to increase the average by eliminating people on the
lower end.

If a min wage increase results in a 50% loss of jobs in that range, it’s still
an average wage increase for the workers that survived. There’s just a higher
unemployed pool that isn’t counted in the average.

~~~
jellicle
Luckily, all the evidence is that minimum wage increases don't cause any job
losses.

~~~
skookumchuck
McDonald's has eliminated a number of jobs, replacing them with kiosks. When I
visit the hardware store, and others, there are noticeably fewer employees
there.

~~~
fucking_tragedy
They were doing this well before minimum wage increases.

~~~
drak0n1c
Yes, but a higher minimum wage (effectively a carbon tax on labor) isn't
helping.

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faissaloo
But for who.

~~~
timbit42
whom.

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NTDF9
It only took a bunch of billionaires to earn multi-billions for a few years
and sabotage the debt situation to FINALLY trickle the wealth down.

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bsder
Is this because minimum wage increases are finally kicking in in the blue
states?

I read something recently like 70% of all jobs added were in California. And
the vast majority of the rest was all in solid blue territory.

The real question is where is Texas on this? It's pretty much the only "red"
state that ever posts job growth.

~~~
sl1ck731
I'd like to see where that 70% of job growth being from California comes from.
Not that I'm trying to be argumentative, but seems to be wildly unlikely.

The top "growth" in terms of average number of employed increase doesn't seem
to back that up:

[https://www.governing.com/topics/mgmt/gov-states-
strongest-j...](https://www.governing.com/topics/mgmt/gov-states-strongest-
job-growth-in-2018.html)

In terms of raw job additions it looks like it goes: Washington, California,
Texas with all similar raw numbers.

[https://www.deptofnumbers.com/employment/states/](https://www.deptofnumbers.com/employment/states/)

