5 ms·

That's because the experience for the American middle class has during this same period been wage stagnation coupled with inflation in food, energy, housing, me

by api 11y ago

That's because the experience for the American middle class has during this same period been wage stagnation coupled with inflation in food, energy, housing, medicine, and tuition. The American middle class finds it difficult to believe things are getting better around the world because for them it's been getting worse since about 1970.

jahnu 11y ago
> wage stagnation coupled with inflation in food, energy, housing, medicine, and tuition Is that wage stagnation not adjusted for inflation?
- api 11y ago
  The numbers I've seen are adjusted for inflation and show that real wages have been largely stagnant since the early 70s. There have been periods of modest gain, usually when the economy is absolutely roaring like the late 90s, but the general trend has been flat to downward. The lower you are on the totem pole the worse it's been: the upper middle has seen some gain, the middle none, and the lower middle has lost ground. I'm also not sure that I fully believe the inflation numbers. It's not necessarily that I think they're fraudulent, but I don't think the methodology for calculating inflation has caught up with reality. The models I've seen assume inflation to be consistent across the economy, which may have been largely true in the 20th century but is true no longer. The problem is that inflation since the early 2000s has been extremely uneven. We've had massive deflation in some areas, like manufactured goods. But necessities -- especially real estate, health care, and college tuition -- have almost hyper-inflated. You can go without gadgets and toys but not without food and a place to live. We've had near-hyperinflation in necessities but it doesn't show in the stats because the stats average those numbers in with the deflationary numbers you get if you look at TV sets, appliances, and computers. Real estate is utterly insane. I cannot even comprehend how it can possibly be so high. How can you have a market for real estate at these prices? Who's buying it and what parallel universe of limitless wealth do they come from? I'm not talking about areas like the Bay Area, which has peculiar circumstances at work, or always-hot areas like Manhattan. There will always be "bubbles" of high prices vs. the rest of the market. If you look across the average of the market, real estate is crazy when compared to wages. I suppose it may be a function of historically cheap money causing larger home loans and jacking up prices, but it's essentially locked anyone out who isn't rich or willing to sign up for a crazy mortgage.
  - eli_gottlieb 11y ago
    >Real estate is utterly insane. I cannot even comprehend how it can possibly be so high. How can you have a market for real estate at these prices? Who's buying it and what parallel universe of limitless wealth do they come from? From what I've read, the wealthy across the globe, especially from corrupt or unstable countries, are parking their money in stable Western real-estate. Some of it they proceed to rent out. Anglo countries are particularly vulnerable since their real-estate taxation regimes hit buildings and improvements so heavily compared to raw land-value.
  - hugh4 11y ago
    >If you look across the average of the market, real estate is crazy when compared to wages. Is it? I've been looking at places that aren't the coast recently and was shocked to find how much house you can still get for $300K in most places. What do middle-class people do with the rest of their money when they can buy a house with $300K?
    - api 11y ago
      Now look into the availability of jobs in those places, and into what those jobs pay.
      - danielweber 11y ago
        They pay pretty well, especially because 28% of your pay won't be going towards rent or mortgage payments. The job hunt is a little harder(going through it now), but not that much harder. https://en.wikipedia.org/wiki/List_of_Metropolitan_Statistical_Areas https://en.wikipedia.org/wiki/List_of_Metropolitan_Statistic... There's lots of nice places in the top 50 of there that aren't crazy expensive.
  - danielweber 11y ago
    Some real estate is a positional good, which has the price set by how much money the richest people have. There is no way around this. If everyone wants to live as close to (say) Times Square as possible, that land will be expensive. But you don't have to enter that zero-sum rat race. There are lots of places to live that aren't the only places the very rich want to live. They still enjoy decent schools and low crime. Some college education is positional, too. If you want "Ivy League Education" for your kid, well, there are just about as many slots as there were 30 years, but a lot more rich people, so the price will get bid up to infinity. Here the real shame is that the non-gold-star educational system is still getting more and more expensive, for many many reasons.
- dredmorbius 11y ago
  Wage stagnation would be expressed in constant (inflation-adjusted) dollars, but it's also quite possible that not all products are subject to the same rates of inlfation. Energy, food, and housing costs have increased. Electronics, especially on a capabilities-based scale, have become profoundly less expensive, though when factored into the end-use impacts (communications, information, entertainment), the cost reductions are far less substantial. Healthcare is another area in which exceptional inflation has lead to only modest improvements in overall outcomes, particularly life expectancy for those already receiving good results: white females and males. Much of the improvement in health outcomes in the US since 1970 has been focused on bringing minority populations' standard of care and health closer to that of privileged majority populations. Not that this isn't a good thing, but it's different from saying that the _overall_ improvements in delivery have been evenly distributed. How to lie with statistics and all that.
hackuser 11y ago
There's also the conservative rhetoric of alarmism and pessimism, which supports cutting back and doing nothing.
- happyscrappy 11y ago
  A lot of people do not want to admit that the world is getting better because then they have no excuse for being a useless fuckup.
  - theworstshill 11y ago
    Upvoted this. Vast majority of people on "the street" are not your typical software devs/engineers who continuously use their brains to get ahead and have an analytical perspective on things.
- crystalmeph 11y ago
  Don't pretend the other side is blameless for this widespread misconception. The liberal rhetoric that paints a picture of a world full of poor people being sacrificed so that the rich can buy more private jets also contributes.
ef4 11y ago
Yes. And the two facts are not disconnected. We are seeing global inequality fall to unprecedented lows. If you're in the top 5% (which the American middle class definitely is), then less inequality feels bad to you. Global wages growth is quite high, it's just happening in places that need it way more than rich westerners do, as much as that sucks for rich westerners.
- danielweber 11y ago
  One of the biggest lags on wage growth for the bottom half of Americans is the fact that the rest of the world is now competing with them for jobs, and able to do so via price. This won't last forever, because as those places get richer their wages go up, and "low wages" is their primary competitive advantage.
ZenoArrow 11y ago
Some would argue that the two are linked... wealth from the middle classes being transferred to the extremely poor. The wealth of the rich doesn't seem to be shrinking.
- spikels 11y ago
  Correct! Because of increased trade low skill workers in rich and poor countries more and more compete for the same work. This raises the value of low skilled workers in poor countries where their incomes gone way up but lowers their value in rich countries where their incomes have stagnated. In my opinion this is a clearly a good thing as their are many more low skilled people in poor countries and they are much much poorer. So a few hundred million forego raises to lift more than a billion out of abject poverty. Seems like good deal.

by api 11y ago

jahnu 11y ago

> wage stagnation coupled with inflation in food, energy, housing, medicine, and tuition Is that wage stagnation not adjusted for inflation?

api 11y ago
The numbers I've seen are adjusted for inflation and show that real wages have been largely stagnant since the early 70s. There have been periods of modest gain, usually when the economy is absolutely roaring like the late 90s, but the general trend has been flat to downward. The lower you are on the totem pole the worse it's been: the upper middle has seen some gain, the middle none, and the lower middle has lost ground. I'm also not sure that I fully believe the inflation numbers. It's not necessarily that I think they're fraudulent, but I don't think the methodology for calculating inflation has caught up with reality. The models I've seen assume inflation to be consistent across the economy, which may have been largely true in the 20th century but is true no longer. The problem is that inflation since the early 2000s has been extremely uneven. We've had massive deflation in some areas, like manufactured goods. But necessities -- especially real estate, health care, and college tuition -- have almost hyper-inflated. You can go without gadgets and toys but not without food and a place to live. We've had near-hyperinflation in necessities but it doesn't show in the stats because the stats average those numbers in with the deflationary numbers you get if you look at TV sets, appliances, and computers. Real estate is utterly insane. I cannot even comprehend how it can possibly be so high. How can you have a market for real estate at these prices? Who's buying it and what parallel universe of limitless wealth do they come from? I'm not talking about areas like the Bay Area, which has peculiar circumstances at work, or always-hot areas like Manhattan. There will always be "bubbles" of high prices vs. the rest of the market. If you look across the average of the market, real estate is crazy when compared to wages. I suppose it may be a function of historically cheap money causing larger home loans and jacking up prices, but it's essentially locked anyone out who isn't rich or willing to sign up for a crazy mortgage.
- eli_gottlieb 11y ago
  >Real estate is utterly insane. I cannot even comprehend how it can possibly be so high. How can you have a market for real estate at these prices? Who's buying it and what parallel universe of limitless wealth do they come from? From what I've read, the wealthy across the globe, especially from corrupt or unstable countries, are parking their money in stable Western real-estate. Some of it they proceed to rent out. Anglo countries are particularly vulnerable since their real-estate taxation regimes hit buildings and improvements so heavily compared to raw land-value.
- hugh4 11y ago
  >If you look across the average of the market, real estate is crazy when compared to wages. Is it? I've been looking at places that aren't the coast recently and was shocked to find how much house you can still get for $300K in most places. What do middle-class people do with the rest of their money when they can buy a house with $300K?
  - api 11y ago
    Now look into the availability of jobs in those places, and into what those jobs pay.
    - danielweber 11y ago
      They pay pretty well, especially because 28% of your pay won't be going towards rent or mortgage payments. The job hunt is a little harder(going through it now), but not that much harder. https://en.wikipedia.org/wiki/List_of_Metropolitan_Statistical_Areas https://en.wikipedia.org/wiki/List_of_Metropolitan_Statistic... There's lots of nice places in the top 50 of there that aren't crazy expensive.
- danielweber 11y ago
  Some real estate is a positional good, which has the price set by how much money the richest people have. There is no way around this. If everyone wants to live as close to (say) Times Square as possible, that land will be expensive. But you don't have to enter that zero-sum rat race. There are lots of places to live that aren't the only places the very rich want to live. They still enjoy decent schools and low crime. Some college education is positional, too. If you want "Ivy League Education" for your kid, well, there are just about as many slots as there were 30 years, but a lot more rich people, so the price will get bid up to infinity. Here the real shame is that the non-gold-star educational system is still getting more and more expensive, for many many reasons.
dredmorbius 11y ago
Wage stagnation would be expressed in constant (inflation-adjusted) dollars, but it's also quite possible that not all products are subject to the same rates of inlfation. Energy, food, and housing costs have increased. Electronics, especially on a capabilities-based scale, have become profoundly less expensive, though when factored into the end-use impacts (communications, information, entertainment), the cost reductions are far less substantial. Healthcare is another area in which exceptional inflation has lead to only modest improvements in overall outcomes, particularly life expectancy for those already receiving good results: white females and males. Much of the improvement in health outcomes in the US since 1970 has been focused on bringing minority populations' standard of care and health closer to that of privileged majority populations. Not that this isn't a good thing, but it's different from saying that the _overall_ improvements in delivery have been evenly distributed. How to lie with statistics and all that.

hackuser 11y ago

There's also the conservative rhetoric of alarmism and pessimism, which supports cutting back and doing nothing.

happyscrappy 11y ago
A lot of people do not want to admit that the world is getting better because then they have no excuse for being a useless fuckup.
- theworstshill 11y ago
  Upvoted this. Vast majority of people on "the street" are not your typical software devs/engineers who continuously use their brains to get ahead and have an analytical perspective on things.
crystalmeph 11y ago
Don't pretend the other side is blameless for this widespread misconception. The liberal rhetoric that paints a picture of a world full of poor people being sacrificed so that the rich can buy more private jets also contributes.

ef4 11y ago

Yes. And the two facts are not disconnected. We are seeing global inequality fall to unprecedented lows. If you're in the top 5% (which the American middle class definitely is), then less inequality feels bad to you. Global wages growth is quite high, it's just happening in places that need it way more than rich westerners do, as much as that sucks for rich westerners.

danielweber 11y ago
One of the biggest lags on wage growth for the bottom half of Americans is the fact that the rest of the world is now competing with them for jobs, and able to do so via price. This won't last forever, because as those places get richer their wages go up, and "low wages" is their primary competitive advantage.

ZenoArrow 11y ago

Some would argue that the two are linked... wealth from the middle classes being transferred to the extremely poor. The wealth of the rich doesn't seem to be shrinking.

spikels 11y ago
Correct! Because of increased trade low skill workers in rich and poor countries more and more compete for the same work. This raises the value of low skilled workers in poor countries where their incomes gone way up but lowers their value in rich countries where their incomes have stagnated. In my opinion this is a clearly a good thing as their are many more low skilled people in poor countries and they are much much poorer. So a few hundred million forego raises to lift more than a billion out of abject poverty. Seems like good deal.