8 ms·
U.S. Paychecks Grow at Record-Slow Pace
- hew 11y agoGlobal labor arbitrage marches ever onward.
- joelrunyon 11y agoI'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).
- davesque 11y agoTrue, though there need to be controls on this sort of change. That's why we have things like tariffs. If you just open the flood gates on cheap imported labor, you'll decimate the domestic economy and then everyone loses. It's like over-cutting wood for fuel. If you impose restrictions, then forests have time to recover and you have more wood in the long run. If you don't, then forests die out and no one gets any wood. The "wood", in this case, is the money large companies are taking from domestic workers and giving to foreign workers (which they then go and spend in foreign economies i.e. the money is not spent in the economy that supports the large company and said arbitrage bites them in the butt).
- crdoconnor 11y agoIf this specific attack on the power of labor were matched with a corresponding attack on the power of capital, it wouldn't be such a problem. Unfortunately, intellectual property rights are only getting stronger. Land rights are only getting stronger. Taxes on wealth and unearned income are only getting lower. Employee and union rights are only getting weaker. Thus the effect of immigration on the downward pressure on wages is magnified.
- wfo 11y agoBecause 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.
- chronic40 11y agoNo one said life (or laws) had to be fair.
- mc32 11y agoI think you have a point with > "Another would be, for example, to ban all imports made under conditions which don't meet U.S. human rights standards" but it can be interpreted as a "trade barrier, if it's unilateral --you'd need a global enforceable framework, for it to work. Still, even with that, there'd be offshoring just because cost of living can be much cheaper... And people in third world economies still deserve to have a job. If the fist world monopolized good jobs, we would not bee seeing the record reductions in abject poverty world-wide. Yes, a side effect is the first world will see some loss in income but not as much as gained by the third world economies. Without some of this offshoring, first world economies would see much larger waves of economic refugees.
- wcummings 11y agoThe 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 11y ago
- stalcottsmith 11y agoMore attention to production and productive activity rather than consumption would help. Industry and thrift is what lifts people's fortunes. Not consumption and debt. The U.S. has many factors contributing to economic competitiveness but also some serious drags: difficulty accumulating capital savings among the middle and lower classes, inefficient cities and suburbs, housing that is too extravagant and expensive for people of modest means, mortgages still underwater, high cost education and a very expensive health care system riddled with fraud. Most of these are due to unwise policies anchored on the public and private accumulation of debt. All of them are solvable with a proper understanding of the issues. The complaints about the 1% or 0.1 or 0.01% largely can be traced to the architecture of this system which is anything but a free market. It guarantees large cash flows for favored groups who naturally support it. Refactoring all this will require a great deal of capital spending, internal migration and a shift in incomes away from sectors that have been supported by policy such as finance, gov, education, entitlements, war, retail and healthcare in favor of redesigning the American lifestyle along leaner, more competitive lines. Think smaller homes closer to work and more sharing. Yes it will look more like other more competitive parts of the world do today. It may be called a depression 20-30 years from now but it's better to think of it as cleanup and refactoring-- a clearing out and reckoning of all the bad decisions and policy driven malinvestments of decades. The biggest thing many people really have control over is their own lifestyle expectations and location. Naturally young people sense this and are cutting back accordingly. Not sure how many are willing to relocate for opportunity. For average joes in the U.S. the high water mark was probably the 70s and 80s. The stuff that led to America #1 occurred between 1870 and 1960. We've been coasting for a while pretending we still have a beast under the hood and gas in the tank. It's just now becoming ever more difficult to paper over the situation with more debt. The U.S. still has amazing positive attributes and strengths. Labor force mobility, the most efficient system for consumer goods distribution in the world, generally high quality building and housing stock (albeit inefficiently spread out), generally high knowledge and expectations of service and quality, etc. The list is actually long and the cultures ability to adapt and reinvent itself is a strong reason not to bet against the U.S. We could opt for a basic income but not at anywhere near the levels of currently expected individual prosperity. We'd have to redefine poverty to something more along the lines of what the rest of the world considers poverty and say, we can help you avoid that. America is not presently designed to support a "middle class" life at $10-20 a day. Some other counties are.
- yummyfajitas 11y agoThe consequences are a massive drop in poverty. http://ourworldindata.org/data/growth-and-distribution-of-prosperity/world-poverty/ http://ourworldindata.org/data/growth-and-distribution-of-pr... Also a massive drop in inequality, if that's the sort of thing you care about. http://www.maxroser.com/economic-world-history-in-one-chart/ http://www.maxroser.com/economic-world-history-in-one-chart/
- crdoconnor 11y agoHarvard School of Economics kindly requests that you blame it on robots rather than trade pacts made by their friends.
- FD3SA 11y agoWhy does it have to be either/or?
- crdoconnor 11y agoThere has been steady progress in automation since the industrial revolution. It both created and destroyed jobs. The overall level of unemployment has never been dictated by automation, only by aggregate demand. When wealth pools at the top, demand is kept artificially low.
- keithnoizu 11y agoThere has been steady progress in our ability to offshore work traditionally constrained to localized locations. Chickens being shipped to china for butchering and then shipped back to the states for sale being an example of a job not historically offshore-able. FD3SA has a point. There are multiple factors involved in changes to labor supply and demand.
- marincounty 11y agoWe can argue about automation, and the cheapest way to make process a product, but there's a limit. America crossed that line awhile ago--in my world. It's time for tariffs, and making it a little harder for Americans to do business overseas? And visa versa? (If you're not an American citizen; you shouldn't be able to buy real-estate here--period--put this into effect today?). What do we gave to lose at this point? The 1 percenter's have a lot to fear if we came to our senses? I happen to know a few multimillionaire's who have exploited labor/materials/environment of developing countries for the last 20 years; I guarantee you couldn't stomach just what they do with the money they saved by being Greedy. I am tempted to call them out? One day maybe? I know this; their kids usually end up despising mommy, and daddy once they figure out just how they ended up so wealthy. (Shipping chickens overseas to save on processing costs sounds like a myth? I really hope it's not true?)
- jpatokal 11y agoGood. Every $1 paid to an Indian worker instead of an American one reduces global income equality and goes a much longer way there (3x or so, according to most PPP measures of India vs US).
- davesque 11y agoThat may be true in the short run, but it's a more complex question in the long run. What if uncapped arbitrage has an adverse effect on the American economy? Then there won't be as much money left to export to India.
- chii 11y agoOr, by off shoring, goods become cheaper, and now you can have more goods and services for the same price. At least that's the promise.
- jimmaswell 11y agoDid you mean inequality?
- daodedickinson 11y agoWith all the mandated economic inefficiency increases, I don't know how / if any growth is happening? Why should we want it to?
- ArkyBeagle 11y agoBecause otherwise debt doesn't make any sense and people hoard cash. Then the general economy slows.
- daodedickinson 11y agoI'm not sure debt makes sense to many people today. A friend of mine was well into at least 5 figures of debt for pre-law and law schooling. He told me he wasn't worried about such a huge debt because he could just declare bankruptcy (this is premeditated theft). I told him that student loan debt isn't allowed to be discharged by bankruptcy. This was news to the legal scholar. I got into the #1 ranked (by US News and World Report) graduate school in my major. I decided I did not want $180,000 of debt. My parents thought I should go and, in a mistake, I accepted their offer to pay for the first semester so I could try it. The quality of instruction was a bizarre joke. The buildings were beautiful but the equipment students were allowed to access was so out of date as to be useless, so I had to procure my own. Many things that were free or cheaper at cheaper schools were more expensive. One professor flat out told us that he did not read the papers he assigned us to write. As long as we sent him an email with a Word doc attached, we got full credit (and no feedback). What was of very high quality? A few famous professors, but mostly the other students, who had also come because of that advertisement in US News and World Report. One of my fellow students was heavily involved in the local Occupy group. He is full-on and consciously Cloward-Piven. With no intention of ever paying back his six figures in loans (if he had the money, he might not pay it back because of his principles, and the lack of sufficiently fearsome use of force) he lives off of taxpayer money and channels it into activism against the interests of those taxpayers forced to let him suckle. What's was his real, stated, conscious plan for dealing with his student loan debt? To get Elizabeth Warren elected president. He believed she would discharge it all in a Ecclesiazusaen jubilee and thereby further fuck over people like me who were price responsive and avoided debt, attending less prestigious institutions that already have to deal with unmerited and statistically documented discrimination. I don't know what he's doing now that Warren isn't running. Probably supporting Sanders. And probably supporting loan forgiveness, but also, simultaneously, and outrageously, continuing to support these loan programs because it redistributes wealth to his favorites. His university program provided no information about student outcomes in terms of employment or income. If the school even cared to gather the information, it was kept secret. My parents' retirement plan is to never retire. They had some savings, but, after the stock market crash, the Affordable Care Act has tripled the cost of their insurance. I am worried about ever getting a job with the Masters in CS I am pursuing at a school I can afford with savings from the three years I worked after leaving that disaster of a school after the single semester trial. I am so worried about helping my parents, who have paid for other peoples' kids to go to more prestigious schools even as the government seems to be taking no steps against school prestige discrimination. Sorry for blabbering on.
- cenal 11y agoThe cost of hiring people is very high. People are changing jobs more frequently than ever before. I have seen stats that show it costs a company $26k to hire someone for $80k/year. This is why I'm launching a platform to lower the cost of hiring on August 30th.
- mullingitover 11y agoWhat's so special about August 30th that that is the day to reduce the cost of hiring people? What about the rest of the year?
- Vendan 11y agopretty sure he's saying he's launching a platform on the 30th, and that that platform is designed to reduce the cost of hiring people
- stuaxo 11y agoI'm sure it's growing at a record rate for the 0.1% though.
- LunateSigma 11y agoThe 0.1% don't need paychecks.
- davesque 11y agoPaychecks are for chumps when you're pulling in returns on a large stock portfolio.
- roymurdock 11y agoWhat 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&year=2005 http://www.saving.org/inflation/inflation.php?amount=226,100... [2] http://www.motherjones.com/photoessays/2010/10/detroit-houses-photos/01af10m6025803tonedjpg http://www.motherjones.com/photoessays/2010/10/detroit-house... [3] http://realtormag.realtor.org/daily-news/2015/06/18/foreign-buyers-spend-more-us-real-estate http://realtormag.realtor.org/daily-news/2015/06/18/foreign-...
- refurb 11y agoYet 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 11y ago> 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.
- verelo 11y agoBut 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 11y ago>best time to expect everything to line up perfectly When is, if not today. Certainly not... tomorrow.
- codecamper 11y agoI 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.
- deciplex 11y agoIf that were true then you'd expect GDP to lag as well, which it isn't. It's not that more wealth isn't being created by the nation, it's that the wealth that is being created is mostly being hoarded by capitalists.
- jvm 11y agoAnd interestingly the capitalists in question appear to be homeowners: http://www.newgeography.com/content/004888-pikettys-wealth-driven-inequality-virtually-all-housing http://www.newgeography.com/content/004888-pikettys-wealth-d...
- platz 11y agoI enjoyed this video in which Yanis Varoufakis explains some geopolitical macro economics during the post WWII and cold war era, why the crash/recovery of 2008 is mutating into different forms. https://www.youtube.com/watch?v=MEUWxNifJJ8 https://www.youtube.com/watch?v=MEUWxNifJJ8 The U.S. had to be very creative in order maintain power when they no longer had any economic surpluses (surpluses which greatly diminished from wars like Vietnam).
- yummyfajitas 11y agoWe 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.
- 11y ago
- benhamner 11y agoThe surprising thing here is that the NYTimes left out a graph and a direct link to source data in this article.
- carsongross 11y agoDespite 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_LNS12300000_1948_2015_all_period_M06_data.gif http://data.bls.gov/generated_files/graphics/latest_numbers_... The labor market is not tight and hasn't been this over-supplied since the early 80s.
- rtpg 11y agothat 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 11y agoLabor 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.
- 11y ago
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- rebootthesystem 11y agoJust 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 11y agoDemocracy 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 11y agoAccording 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.