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Most Americans’ Wages Have Actually Declined Over the Past Year (nymag.com)
91 points by pulisse 4 months ago | hide | past | web | favorite | 68 comments



I think it would be unusual to see wage gains.

Wage gains at this point would occur when labor pressures / basically existentially threatens capital, and probably nothing else. We don’t see a lot of labor pressure; there is no organized labor movement left anymore.

There has been more and more talk about developers unionizing, although less about money and more about ethics (e.g. the AI stuff with Google).

I say that to suggest we might see other areas unionize, and obviously they will demand more money, and then wages will rise.

Unfortunately, the catalyst for pressure on capital / resurrection of labor power might be a “more-severe-than-2008” style depression. Because even if wages aren’t rising now, things are kind-of-sort-of good / not terrible for a lot of people. I think most people would be scared to risk it if life is bearable.

Such a recession (if it occurs) would undoubtedly strip away any of the defenses of the ruling classes that remained after 2008 (and have slowly been hammered at ever since), so the ppl with the power will be weak and those with the demands will be extraordinarily motivated and with nothing to lose.


https://www.washingtonpost.com/news/wonk/wp/2018/06/13/a-min...

Most minimum wage workers can’t afford a 1br apartment in most of the country. “Kind of sort of not terrible” may actually be a high target to aim for.


One of the surprising things about poverty statistics is that you find that most people classified as living in poverty are families, because your expenses go up drastically.

Many young people - eg those making minimum wage - live with roommates or in studio apartments and don't really feel significantly disadvantaged by the fact that they can't afford a 1br apartment.

I say this not to say that everyone is doing fine, but that the details can matter a lot.

On a different note, for a fixed amount of housing stock, it is a purely positional good, you can't improve the number of people who can afford a 1br by simply paying people more, you have to build more, or enforce strict rent controls which makes it not a problem of income, but one of luck and inevitably corruption.


This is a problem because you often can't just find a room to rent. Instead you have to lease an apartment with other people and be legally responsible for their behavior. It allows landlords to shift risk on to tennants because leases make everyone responsible for everyone else.

If someone loses their job or abondons the property (an almost inevetalbe eventuallity in a group of young people) whoever's left is stuck holding the bag to clean up the mess and pay more rent than they can afford, or get saddled with an eviction or abandonment on their credit so they can't rent again. It's like playing contract chicken. Also, many leases include maximum occupancy and/or charge more for more tennants, such that tennants are not legally allowed to reduce consumption to within their means.

In my hometown (in Alaska) the lowest rent was more then full time minimum wage. Ther was no road out of town, so you couldn't even leave if you couldn't afford a plane ticket to Seattle. Lots of people I know were sleeping on couches and in closets trying not to get caught by the leasor's landlord.

I'm guessing E.B. White was doing this before the Equifax era.


I recall an interview with E.B White who just, incidentally, as part of a larger answer, mentioned he roomed with, I want to say three, other guys when he first graduated college and moved west (to SF if I recall). That he had roommates at that agr seemed to be stated with nonchalance that he would use to set the stage, like, to mention he was eating lunch with friends when something interesting happened.


Is it unusual to have roommates after you graduate university in the USA?

In New Zealand it's considered normal to share a house until you have a long term partner who you move in with, then you find your own house.

I know people in their 30's who still share a house or apartment. It's a social thing as much as a financial thing, your roommates are like platonic partners.


I personally spent the following six months with 2 roommates and the next six months on a ship with 6 roommates in a room slightly larger that my parents' closet.


Since we're comparing stories, I spent 16 months living in backpacker hostels, including 12 months in the same one.

People always ask me how I managed to live like that, but they don't realise that you tend to adapt to your living conditions fairly quickly. If you can manage a couple of months, you can manage a year.

It's actually weird for me to live in a house with only a couple of other people now. I got so used to having people to hang out with practically on tap. There's always somebody to drink with, or watch a movie with, or snuggle up next to. It's strange for me to come home from work to an empty house.


This is common in the US.


Is it normal or expected that a minimum wage worker could afford to live on their own in a 1br apartment?

Maybe it's a cultural thing, but in New Zealand it would be expected that in that situation you share a house/apartment with other people.


> There is essentially no evidence that the president’s tax cuts (his sole piece of major economic legislation) did anything to significantly improve America’s macroeconomic performance.

This is probably true. But there's also no evidence to support that it hurt either. It's quite disingenuous and misleading to make such claims when there hasn't even been a single year of tax filings since the new tax policies have taken effect. Policies, especially tax policies, have long lag effects.

Also, there are so many variables and other factors to consider that it is impossible to think so 1-dimensionally.


The short term impacts aren't that difficult to calculate because a lot of tax receipts come in throughout the year, as do reports on real wage growth, unemployment, and corporate investment activity. The federal deficit for May was $146.80B, 66% greater than May '17.

There are times for the federal government to run a deficit and inject money into the economy, but when it's done largely as a corporate tax cut in a time of full employment and record corporate profits (both indicating that businesses don't see many opportunities to reinvest in themselves), you'd expect to see that money go out as stock buybacks and dividends. And that's exactly what we've been seeing. There's no need to wait for long term lag effects if the short term investments that are the only plausible story for those effects materializing simply haven't happened.

Yes, the stock market has been propped up, but it's with fool's gold; there are no gains in either productivity or national capital stocks (public or private). Meanwhile, increase in debt service as a percentage of the federal budget has been guaranteed. The burden of proof is on the tax cut authors to prove the short term growth that justifies it.


Most economists would also say that rising interest rates discourage investment, incentivize saving, and reducing debt. So who can say really? That's kind of my point. So many interrelated factors. Impossible to isolate it to any 1 policy or event.


What economists say that increasing interest rates reduce either existing debt or public debt? The cost of borrowing is increased, so obviously there's less new private debt issued, but the cost of debt service for both private debt and, crucially, public debt increase, which means greater budget shortfalls and more (compounding) public borrowing.

If your point is "well, the economy is a very complicated system", that's an argument for avoiding a large drastic action done to that system against the vast majority of expert economic advice, not for it. This tax cut wasn't even the typical "We need to do something. This is something!" fallacy, it was "We don't need to do anything. This is something!".


I'm not sure what economist your listening to that is telling you these things, but I suggest you stop listening to them post haste. You can't simultaneously discourage investment and increase savings. They are the same thing in economic parlance.


How are they the same? Building up savings and paying down your credit cards are the exact opposite of investing.

If you have to pay more on your mortgage and credit cards then that's less you can put into the stock market and invest in other things.


I think "Savings Rate" here is meant in the technical sense, not in the sense of household finances. It's an accounting identity in macroeconomics:

https://en.wikipedia.org/wiki/Savings_identity


"But there's also no evidence to support that it hurt either."

If the tax cuts didn't vastly improve performance then they hurt a lot. They increased an already large deficit even more for which future generations will have to the pay the price.


> If the tax cuts didn't vastly improve performance then they hurt a lot.

The timescale for the determination is not left up to months. I don't personally think they were good, but to assert that you can tell right away, is disingenuous. The debt is already so large that this barely affects the momentum.


> The debt is already so large that this barely affects the momentum.

The idea that a 66% increase in the deficit "barely affects the momentum" is absurd reflects either your ignorance or your bad faith. Apply that logic to your personal spending and see how long it takes before you're bankrupt.


A 66% increase in the monthly deficit, in this case, amounts to about a 0.4% increase in national debt, by my back of the napkin math. I agree that it’s a dumb move, but I don’t think GP was wrong to say that it barely affects the momentum.

You’re free to disagree, but it will help the discussion if you can find a way to do so without the ad hominems.


You understand that deficits are cumulative, right?


Yyyyeeesss... that’s rather my point, that we’ve accumulated so much debt at this point that this doesn’t really move the needle as much as it sounds like when you ignore that accumulation and look only at a single month.

Again, I’m not arguing that it’s a good idea. It is irresponsible, for sure. But the scale of it is akin to somebody with $10k in credit card debt opting to go out for dinner once.


It seems unlikely to me that the national debt will ever be paid.


At least they should not increase it without showing clear benefit. Next time a big recession comes they will have nothing left for stimulus because they already maxed it out during good times.


That doesn't mean it should climb to no end.


> But there's also no evidence to support that it hurt either.

Yes, there is. People seem to forget that a tax cut is actually a government subsidy. Coupled with increased spending, if the assumption is that if the macroeconomic performance hasn't been improved that means it hasn't been hurt, then it remained constant despite the 'cuts' + 'increased spending'. Which means that it could have grown/improved if the tax cuts were not in place.


> People seem to forget that a tax cut is actually a government subsidy.

Do you also believe that reducing drag on a moving object is actually increasing the force to move it?


Net force, sure.


A tax cut is not actually a government subsidy though. That is an oversimplification.

A government subsidy is when public money is SPENT on a good or service to artificially encourage investment in it (or someone just has good lobbyists).

An income tax cut is reducing the burden businesses and individuals must incur from producing economic value.

While taxes and subsidies can both be used by government to encourage selective behavior, they are not the same. They are different instruments and operate differently.

You're making the assumption that everything has an immediate effect. Some things incur a cost in the present for a payout in the future.

If you go to college for 6 months (the amount of time the tax bill has been in place) and still don't have a degree or job, does that imply that going to college doesn't work?

You're also making the assumption that this is a controlled experiment with no other variables. Which is not the case. There are many other things in play.


“a tax cut is actually a government subsidy” - only if you believe that all money earned by residents of a country is actually the property of the government, for them to distribute as they see fit.


Government provides services. Services cost money. That may sound like a complicated and largely unbelievable concept but it’s true.


That’s not a coherent rationale to say a tax cut is a subsidy.

Let me guess, cutting welfare payments is stealing?


https://www.investopedia.com/terms/s/subsidy.asp

And yes, cutting welfare payments while welfare payouts are constant/growing will be taking money from other sources to keep the balance. So depending on one's definition of stealing, it can be.


You mean welfare taxes and welfare payouts?

All of this seems like gross oversimplification and it worries me that it is so common.

Words have definitions and meanings and when you conflate them you reduce your ability to understand and reason about the world.

I see why people think not doing something is equivalent of its opposite but this is not the case.

Not taxing someone is not the same things as subsidizing them for the same reason that not expressing hate is not the same thing as expressing love. Not attacking someone is not the same as healing them. Hospitals can't heal people by simply not attacking them.

Police reduce violent crime but it would be inaccurate to say that police are the same as hospitals because they both reduce personal injury.

Not doing harmful drugs and studying both make you smarter, but not doing drugs is not the same as studying.


[flagged]


We've banned this account. If you'd like to be unbanned, please email us at hn@ycombinator.com.

https://news.ycombinator.com/newsguidelines.html


Letting people keep more of the money they earned is a subsidy?

That’s not how it works.


https://www.investopedia.com/terms/s/subsidy.asp

That's literally one form of subsidy. Also, did you know that inflation is a form of taxation? And it is indeed rising. So no, it's not actually letting people keep more of the money, especially if it's cash.


And they literally changed the definition of literally to mean the exact opposite of literally. ;)

When a word gets used incorrectly or conflated enough even official dictionaries will change.

What's important is to understand the distinctions.

There's something called Sapir-Whorf theory and one of the important concepts is that the more precision your definitions the more capable you are at cognition and understanding and interacting with the world.

It's been said that Eskimos have 37 words for snow. This means that each different type of snow has different properties. They can more effectively operate in that environment compared to someone who thinks all snow is the same.

Some would say that ice and water are the same, and in many ways they are correct, they are the exact same molecules, but if you are going to jump 3 stories off of a diving board onto solid ice instead of water you are going to learn that subtle distinction real fast.

Similarly, conflating taxes and subsidizes reduces your ability to understand the distinctions and their different consequences. And when it comes to implementing policies can have similar effects as mistaking ice for water.

It's important to understand things precisely and not conflate things. Even more so when your votes and actions have a consequence on other people's lives as well.

We understand why you think they are the same, and in many contexts they can safely be conflated, but in many others it is dangerous to assume they are the same.


Wow, that's some grade A patronizing, I have much to learn from you. We can debate semantics all day long but that does not disprove my initial point, in this particular context.


> Policies, especially tax policies, have long lag effects.

Which would imply that any gains (or losses) now would have to do with policy changes during the prior administration, supporting the author's point.

So, alright, what's misleading the implication that they could have any significant effect by now.


Or the prior prior administration, or the prior prior prior administration. Or the result of economic policies from other nations, or any other countless factors.


The key variable is Trump's total failure to implement his stated policies on immigration.

https://www.numbersusa.com/news/more-400000-asylum-seekers-o...

Wages would be going way up if Trump were actually delivering in terms of deportations and the cessation of guest worker programs.


I was just complaining about articles like this. If you are discussing a trend, you have to show a time series graph that demonstrates the trend you are claiming. Anything else is blather.

There are three graphs, none of which are about wages.

Call me crazy, but I would like to see a graph of, you know, "most Americans' wages" over the last few years if we are talking about the trend in most Americans' wages.


The problem with articles like these is that they leave out the fact that non-wage benefits are consuming more and more of the compensation growth that may have otherwise gone into wages.

Particularly healthcare costs… largely accelerated since the ACA, which NYMag supports wholeheartedly and is IMO a glaring omission in an article like this.


You'll have to cite evidence the ACA is accelerating it especially when the majority of health care economists disagree with that.


That and most wage workers are not part of the public insurance pool and are therefore mostly insulated from the ACA. Any increased costs due to insurance requirements or regulations should be stabilized by now for employer plans.


There is a feeling among some economists that some key data like inflation, wages and unemployment are fudged by government departments to make them look good.

Things like the definition of "unemployment" have changed. If you work 1 hour a month you are employed. If you have been unemployed for longer than 3 months, you are no longer among the unemployed. The reasons cited by the officials always sound rational, but their net effect is to make government statistics look a lot better than they actually are.

There is a discussion of this here http://www.shadowstats.com/alternate_data/unemployment-chart... or here https://www.sprottmoney.com/Blog/big-mac-index-suggests-amer...


These were labor and manufacturing jobs that were created and actually the retail jobs took a hit according to this: https://www.marketwatch.com/story/half-of-new-jobs-were-crea...

If I read that article in combination with the one we're discussing it looks like there is a race to the bottom whether its temp jobs or contractors. For instance here in Florida we employ lots of people in the hospitality industry and in the outskirts of those bigger cities (Tampa Bay for example) average wages are so low its shocking. Just take a look some time, whether this is good or bad is up for you to decide. For me I think unless we subsidize education more and do it fast that will be the new crisis.


Wishing for a version of this article for those who don't care about Trump or the debunking thereof.


Yikes, what happened to impartial (or at least the apperance of it) reporting? This thing reads like a straight up hit piece on Trump. It's impossible to take something like this seriously when it's so obviously slanted. Sad to see it on the front page of HN.


This article mentions the Koch Brothers, as if they are allied with Donald Trump. They are not. Donald Trump actually hates the Koch brothers (or at least his base does), and there is deep hatred for them on the comments section of Breitbart. Steve Bannon ha basically accused the Koch’s of treason.

One way of viewing Trump’s actions might be in terms of “crisis theory”, or the idea in the 70’s to destroy the welfare system by overpopulating its sign-ups, thus forcing the creation of something new.

He pouring gasoline on the economy to ignite and bring about its ruin. If you’re poor right now, you can probably live in some very creative ways. The wealthy are not very good at dealing with large declines in income, as evidenced by the German billionaire who killed him self in 2009 after his net worth dropped from $8 billion to $5 billion: https://www.reuters.com/article/us-merckle-newsmaker-sb-idUS...

The opposite goal of this is the elites of the world who want to run a steady, slow-mo bubble ala Japan of the last 25 years. It definitely would be stable and work, but it would preserve the status quo and not really offer anything new to the working class.


Sounds like accelerationism, which is a Marxist theory of destroying capitalism by helping it reach excesses that cause a systemic collapse. Perhaps the far right and the far left and not so different in matters of eschatology.


Accelerationism could be advocated by anybody who wants radical change that the majority of the public are not on board with, under the belief that the present course will bring more people to agree with them. If it makes sense to the Marxists, it probably makes sense to the far right as well. Of course if they miscalculate, they just end up working against their own interests.


What about it do you think is slanted? It's data-driven and presents both good ("The overall unemployment rate is the lowest it’s been in decades; the African-American unemployment rate is the lowest in recorded history") and bad ("Americans are deeply indebted, many are stuck with part-time jobs, and wage gains have been so disappointing, their weakness has challenged fundamental premises of mainstream economics") about the economy and Trump's contribution to it.


I don’t think it’s slanted as much as it’s just a shallow analysis.

Obviously there are the surface indicators of truth (a statistic here, a fact there, a nice quote from somebody), but big picture, the issue is not “is this Trump guy a good tinkerer economist/engineer of the US stock market”, but how the bipartisan monopoly of power in Washington has stabbed the working class in the back at every turn.

The big clue that the author would never understand this was his conflating of Koch and Trump. That would be like saying Shite and Sunni Muslims are the same. It’s an incredible cultural oversight.

A good example of btw of this “stab you in the back” elite is Madeline Albright, Bill Clinton’s Secretary of State. For all her work promoting freedom and women’s rights, the network marketing scam company Herbalife paid her $6 million to promote increased legalization of its products. It’s a scam company that preys on the poor.

http://mlmtheamericandreammadenightmare.blogspot.com/2018/04...


I don't want to get into a political grudge match here, but I wouldn't say that Trump and Koch are polar opposites by any means. Trump's tax bill was a Cato (Koch funded) Institute special. If it turned out David Koch himself wrote it, I wouldn't be surprised.

The ALEC club may not like Trump's views on immigration or tariffs, but they're in perfect sync when it comes to more or less every other economic issue. And the administration's energy policy is another massive win for them as well.


[flagged]


Could you please not post unsubstantively like this? We can't learn anything from it and that's what we're here for.

https://news.ycombinator.com/newsguidelines.html


So whatever happened to the people here who doxed me, and threaten to burn down my house with a forest fire, and was up voted to the top? You guys did nothing when I complained. Somebody did start a forest fire near my house we were at level 2 evacuation for months.


I'm sorry but I don't know anything about that. The best way to reach us is hn@ycombinator.com. We don't see everything on the site.


Truth on such matters gets you downvotes!


I get upset when my comments aren't downvoted here because of that


https://www.bloomberg.com/news/articles/2018-06-12/u-s-infla...

> A separate Labor Department report on Tuesday illustrated how higher prices are pinching wallets: average hourly wages, adjusted for inflation, were unchanged in May from a year earlier, even as nominal pay accelerated to a 2.7 percent annual gain from 2.6 percent in April. For production and nonsupervisory workers, real average hourly earnings fell 0.1 percent from a year earlier.

The article I linked is an impartial example but it is not better.

The simple truth is the underlying numbers haven't really improved since the GOP took the reigns. We are in a sideways holding pattern of 0% real wage growth and 2% of the working-age population has stopped looking for work since 2000[1].

The effects of the outgoing administration's economic policy last ~1 year after they leave office since the government doesn't really turn on a dime. The trends, honestly, are the same as they were under Obama and the GOP has done nothing but claim "Well we did it! Everything is fine now" despite the fact nothing of any real substance has changed since they took control of all 3 branches of government.

[1] https://fred.stlouisfed.org/series/LNS12300060


Unemployment sinks to record levels, is this celebrated?

Not at this 'news' source. Here the argument is twisted to be about tangential issues. Odd, there was none of this a few years ago...


Or, and this may just be a crazy thing to think, unemployment is at historic lows so why aren't real wages rising is a valid question to be asking and explaining.


Maybe jobs are being created at the bottom. That reduces both unemployment and the average wage.

Exciting new-economy opportunities, like delivering for Doordash or recharging Bird scooters, pay very poorly.


There was plenty of this a few years ago. It's been pretty constant for the last decade at least.


Wages are most certainly not a 'tangential issue'.




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