10 ms·

The Mystery of the Vanishing Pay Raise

73 points by Futurebot 11y ago

masterleep 11y ago
Since the government has tried as vigorously as possible to make it expensive and legally risky to employ people, there is really no mystery here.
- EdwardDiego 11y ago
  You're kidding, I hope, if not, try visiting some non-US jurisdictions and see how they do it. The US has very weak protection for employees - the "At-will" employment practise being a striking example.
vinceguidry 11y ago
OK, so capitalism is fundamentally about choices. Market players compete to bring products / services to the market that both a) people want to choose, and b) is cheap to provide. Because it is not the case that the most desirable service is the most expensive to provide, that allows for competition. Markets "learn" over time, advantages gained by one firm are copied by others requiring constant innovation. The job market is no different, but the second quality, being cheap to provide, means there is going to be a constant degrading in the monetary compensation offered to workers, while the desired benefits those workers are getting is paradoxically going to increase. You can most clearly see this in companies like Uber where compensation gets slashed every year, but there's no truly mass uprising of drivers taking place. You can treat this as a failure of union outreach, that Uber drivers should unionize and demand relief. But it's not like they can't organize. They were perfectly capable of organizing a march at Uber headquarters. No, most Uber drivers choose to keep driving, the arguments that they're being exploited seem a little thin when you realize that Uber drivers could be doing just about anything else to make more money if they were really truly being exploited. Workers in America have unparalleled ability, compared to other countries, to try out other industries and occupations. What I think is happening, is that the information age has brought unmatched and unmeasurable utility to common people, in the form of free services provided by tech companies, to everyone (take a second to let it sink in just how unprecedented this is, historically, for a hugely valuable service, like Google search, to be provided to anybody with a Internet connection) and the job market is simply adjusting to meet the new status quo. Being poor in America isn't nearly as horrible as it used to be. You don't need to expend unreal amounts of effort to increase your station just to have a more-or-less happy life anymore. Homeless people all can get online somehow. And that access provides them with incalculable value. There's a reason that everywhere you go, you see people buried in their smartphones. They're choosing smartphone interaction over everything else they could be doing right now. So the labor market is adjusting to fit. People can choose to be poorer, and are doing that rather than expending extraordinary efforts to climb ladders that have, all of a sudden, become so much harder to climb. Because with these services, being poor isn't nearly as onerous.
- justinator 11y ago
  Regarding Uber: are the majority of its drivers part time, or full time? If the majority of drivers are part time, I wouldn't suspect there's as much of a chance of a march on Uber Headquarters, as it may not be their main source of income. There's also the problem of geography: the majority of Uber drivers are not close to it. I'm a little shakier commenting on your poor people/homeless ideas. Have you experienced being homeless/poor recently? I hate to think your perspective on this is from, ahem: an ivory tower.
  - vinceguidry 11y ago
    I specifically tried to omit the homeless from my analysis. Americans have largely excluded homeless people from being able to participate meaningfully in the economy, for various reasons. I am in Colombia right now, and homeless people here play critical roles in maintaining city infrastructure. I saw a homeless guy once fixing water piping out in the street. It felt like the street was his home, he had a pride obligation to making sure his home was in good repair. I also see them doing things like trash sorting, things nobody else wants to do at reasonable rates. I think Americans, if they could moderate their sense of social justice, could find win-win solutions with the really hard-up that makes everybody's lives better. But they don't, so industries such as sanitation become hotbeds of corruption instead. But I grew up lower class, white privilege made my life much more palatable than it otherwise would have been. But I am very familiar with the psychological burdens of the working poor. Life is hard, but they are not stupid people. There's a tendency in America to equate lower-class with unintelligent. Just because you don't have an education doesn't make you stupid. Hard life makes you hard, eventually poor people become unable to climb the social ladder. I've met people who willingly chose less affluent environs over more affluent ones because the poorer ones were places they knew. They felt richer because of their knowledge than because of their opportunity.
  - crdoconnor 11y ago
    >I wouldn't suspect there's as much of a chance of a march on Uber Headquarters Didn't that already happen?
- whatshisface 11y ago
bsder 11y ago
It's simpler than they make it out to be: there is no demand uptick. People are already spending at 100%+ of their income so they have no way to increase what they are buying even as the economy improves for some people. So, employers have no reason to hire more or extend hours. This is why we see the minimum wage increases also stimulating the economy where they occur. They result in demand increases.
- yummyfajitas 11y ago
  The entire purpose of a demand uptick is to cause inflation and lower real wages. Google Keynesian economics - its a fix for unemployment and output gaps, not low wages. Given that we are already at the natural rate of unemployment, further demand creation is pointless anyway.
  - yxhuvud 11y ago
    Considering what happened with the ratio of people that participate in the labour market, further demand creation could very well pull some of those people in work though. As for Keynes, it is good to remember that he (later on - Keynes in the 20s hadn't reached these insights yet) didn't believe in a natural rate of unemployment (or well, he believed the equilibrium point was determined by a three dimensional equation rather than the two dimensional one that create a single natural rate).
  - bsder 11y ago
    I would suggest you take your own advice and spend some time on Google. The purpose of stimulating demand is to break a "coordination failure" where falling demand->hiring cutbacks->cutting consumption->falling demand. That's Keynesian (neo-Keynesian actually). As for "natural rate of unemployment", there is no particular evidence that we are at one, and, in fact, there is lots of evidence that there is probably not a single "natural rate of unemployment" and mounting evidence against the concept in general.
    - yummyfajitas 11y ago
      You aren't disagreeing with me - the coordination failure you refer to is nominal rigidities. To disagree with me, demonstrate involuntary unemployment and outout gaps together with flexible wages.
edoloughlin 11y ago
> Federal Reserve officials hoped wages would begin rising at today’s 5.1 percent, but economists are increasingly saying the rate might need to fall to 4.9 percent or lower to push wages higher Whenever I read something like this I have to wonder: do these economists have a server farm running models to backup statements like this or do they just pull it out of their asses?
- polskibus 11y ago
  They pull it out of a simple linear model in Excel . just an educated guess based on my occasional economics study.
  - mtw 11y ago
    I wonder if deep learning could be more accurate for this kind of problem
    - Kliment 11y ago
      Probably but the conversion rate between expert recommendations and policy is already so abysmal it's probably not worth it.
    - thomasahle 11y ago
      From talking to economic grad students, it appears hard to obtain enough data for typical machine learning approaches. Basically all parameters end up being set from "theory" and "intuition"
    - davmre 11y ago
      Deep learning works well when you have a ton of data and don't care about interpreting the parameters of your model. My understanding is this is pretty much the opposite of the typical situation in econ research.
- gaius 11y ago
  Well I don't know about the Fed but this is how we do it in England https://en.m.wikipedia.org/wiki/MONIAC_Computer https://en.m.wikipedia.org/wiki/MONIAC_Computer
briandear 11y ago
If you're on minimum wage with dependents, you made some bad decisions. There are people that have been working minimum wage for 10 years. Those people are stupid. It doesn't take much, other than showing up, to get a raise at McDonalds. All of this Marxist drivel fails to recognize the critical truth: people are responsible for their own failures. We like to blame 'the Man' but ultimately it IS your fault if you're poor. With the entirety of human knowledge at one's fingertips, it's amazing how people who are poor spend so much time on Facebook and so little time learning anything. As a poor person if they've ever took a free online Stanford course. Ask them if they have ever seen dancing with the Stars. Ask them who Bruce Jenner is. As them who the Speaker of the House is. Being poor is not a circumstance: not having money is a circumstance, being poor is a mindset. I've been broke, living in a car for months, but I was never poor. Some people choose to be poor their entire life. I have no use or sympathy for those people for whom ignorance is a choice.
- crdoconnor 11y ago
  >If you're on minimum wage with dependents, you made some bad decisions. Maybe 15 years ago. These days bad luck is all you need.
- EdwardDiego 11y ago
  > I have no use or sympathy for those people for whom ignorance is a choice. He said, without irony, to end a rather ignorant rant.
  - drumdance 11y ago
    There's a Dickens quote that escapes me now, but it was something along the lines of "He was one of those people who thought poor and ignorant people liked being poor and ignorant, and so wanted nothing to do with them."
- marincounty 11y ago
  Do you really think people seek out minimum wage jobs? For a lot of Americans it's minimum wage, or nothing. Most employers will pay just what they have to in order to fill that position. It's like landlords. Have you ever had a landlord lower the rent? No--they get the maximum amount they can weasel out of a tenant, at least in my godless part of the world--The Bay Area. As to taking a few online courses, I wish it was that easy. I have worked with some highly intelligent minimum wage workers. I have worked with idiots who have Bachelor's, and even Master's degrees. I have met Mensa Society members who became homeless, and one who's in jail. I have a feeling by your writing you are young. Come back to your post in ten/twenty years; and I bet you will have change your mind? (I used to think a bit like you before I had a nervous breakdown. The world is not black, white--it's grey. Yea, you strive to improve yourself, but that's only a small part of success equation. It's a supportive family. It's an in demand degree, at a reputable college. It's networking--which I always found nauseating. It's being a risk taker, that very few poor buys can even think about. See the rich boys can fail, and while they don't tell people; a family member seems to always be there giving them a second chance. Poor kids seem to get one, or two chances at pulling themselfs out of minimum wage. When I was younger my ticket was getting into a good Union. I was poor, but did well on a test, and it didn't hurt that my father was in the same Union. Yea, it's called nepotism, or in my case white privilege.. It still exists. I don't want to argue, and I wish it was a cut and dry as you think.
pm24601 11y ago
Seems like the solution to this problem is to keep raising the minimum wage until Google, Apple, etc. who have BILLIONS locked up away from the economy start spending it. But companies with vast savings are sucking the growth out of the economy. Same a high tax rate sucks economic power out of the economy.
ThomPete 11y ago
I have one word. Technology. Think about technology as outsourcing and you realize what the problem is because you are realizing the trend; Technology will compete with higher and higher levels of abstraction and so you either have to be really skilled in an increasingly competitive space or you need to accept taking jobs at wages that are as low as they are because of the increased competition from technology. And until economist stop treating technology as an externality they wont understand whats going on and we will keep debating this as if its a political problem. In my opinion its not. http://www.technologyreview.com/sites/default/files/images/destroying.jobs_.chart1x910_0.jpg http://www.technologyreview.com/sites/default/files/images/d...
- collyw 11y ago
  We have had continous improveents in technology up to the recession.
  - ThomPete 11y ago
    Job creation in the US have gone down decade after decade since WWII. https://plot.ly/~BethS/8/job-growth-by-decade-in-the-united-states/ https://plot.ly/~BethS/8/job-growth-by-decade-in-the-united-... There comes a point where technology starts to compete not just with our muscle but with our brains. And even though there of course are going to be some jobs you can make a living off. Digitalization and automation is disrupting at an ever increasing speed. You need to look at the trend not the current scenario to understand this.
- msellout 11y ago
  Not sure why you think economists treat technology as externality. I've seen many macroeconomic models that specifically are attempting to model change in technology.
  - ThomPete 11y ago
    Because they mostly do. Especially the economist that advice countries. And you can see it on the way they basically forecast and use various tools to stimulate the economy. You would see far more politicians propose a Unconditional Basic Income solution if technology were factored into the models regardless of whether you think UBI works or not. Problem is that technology is now moving at a pace where it will eat up most attempt to stimulate the economy whether it's Keyness philosophy or Austerity philosophy.
ryanackley 11y ago
I suspect this might have something to do with the rising cost of health insurance. This is not a criticism of Obamacare. This problem has been building for years. Most people in the USA don't realize how much of their total compensation is health insurance since you don't typically see this cost as a line item on your paycheck. The last time I checked, an employer sponsored health plan for a family of 3 from Aetna was close to $2000/month
- drumdance 11y ago
  Several years ago some economists in the Bush administration researched the issue and concluded that pretty much all of the "wage growth" in his two terms came in the form of health coverage.
- ThomPete 11y ago
  This problem exist outside the US too even in Denmark were health care is free. The reason why it's not so obvious is that countries like Denmark redistributes wealth much more and have fairly high wages. Denmark doesn't have a minimum wage but instead it's based on negotiations between unions and employers (and sometimes the government if they cant agree). The model is know as Flexicurity[1]. The problem is that that model keeps a lot of people outside the working market because their skills simply aren't worth the salaries they would have to get because of this model. And so in Denmark the problem instead is that companies just move the production out or take in cheap east european labour. The problem isn't about any specific political prioritization but about something more underlying (my claim is technology). [1]https://en.wikipedia.org/wiki/Flexicurity https://en.wikipedia.org/wiki/Flexicurity
  - goodJobWalrus 11y ago
    > The problem is that that model keeps a lot of people outside the working market because their skills simply aren't worth the salaries they would have to get because of this model. I'm not sure what you mean by "a lot of people", but Denmark has one of the highest employment rates among OECD countries, so it's actually doing great at keeping people in employment (comparably). http://www.stats.govt.nz/browse_for_stats/income-and-work/employment_and_unemployment/employment-rate-article.aspx http://www.stats.govt.nz/browse_for_stats/income-and-work/em...
tqtthrowaway1 11y ago
Whenever there's an article about the lack of jobs or pay for the middle class, the first thing I do is hit Ctrl+F and start typing "immigration". This being the New York Times, it doesn't show up, for a variety of partisan and ownership-related reasons. Supply and demand applies just as much to labor markets as it does to any other. The "vanishing pay raise" makes a lot more sense when you consider the deliberate increase in labor supply for the explicit purposes of lining the pockets of crooked billionaires like Mark Zuckerberg and Carlos Slim.
- gaius 11y ago
  It is nothing to do with immigration really, since the H1B is explicitly not an immigration visa.
Chinjut 11y ago
"I suspect this might have something to do with the rising cost of health insurance" "Whenever there's an article about the lack of jobs or pay for the middle class, the first thing I do is hit Ctrl+F and start typing 'immigration'." "I have one word. Technology." "It's simpler than they make it out to be: there is no demand uptick." An awful lot of theories and certainty here on Hacker News...
- ThomPete 11y ago
  Yeah they are called perspectives which is one of the things I love about HN :) The discussions on here are mostly of very high quality even when people disagree furiously.
  - Chinjut 11y ago
    I'm not complaining. Just amused.
  - RodericDay 11y ago
    He's pointing out that every other poster is cocksure with their pithy silver-bullet explanations.
    - ThomPete 11y ago
      I know what he is doing but he doesn't know about how sure anyone is just based on what they write and even how they write it. Also people are talking about different aspects and so to even compare them as they are all trying to answer the same question is well an interesting perspective but hardly fair.
danmaz74 11y ago
> although some fear that inflation will climb if the jobless rate is that low AFAIK the reason why inflation climbs when the jobless rate is very low is because with few jobless the cost of labor usually increases, and THEN prices increase to reflect higher costs. But if there are no wage increases, there is no reason for a low jobless rate to increase inflation...
compostor42 11y ago
The enormous amount of immigrants (both legal and illegal) to the US is definitely a huge factor. They say the current population won't do the unpleasant jobs that immigrants do because the pay is too low. It seems no one has stopped to consider that those jobs pay so low because there is a seemingly endless supply of cheap immigrant workers to do them. It drives wages down and provides little incentive for automation. The ancient Greeks invented the steam engine but never really used it because they had no shortage of slave labor. There was no incentive to further develop that technology.
hwstar 11y ago
Over the long term, wages in first world countries will remain flat or decline and meet the third world countries in the middle.

73 points by Futurebot 11y ago

Since the government has tried as vigorously as possible to make it expensive and legally risky to employ people, there is really no mystery here.

EdwardDiego 11y ago
You're kidding, I hope, if not, try visiting some non-US jurisdictions and see how they do it. The US has very weak protection for employees - the "At-will" employment practise being a striking example.

vinceguidry 11y ago

OK, so capitalism is fundamentally about choices. Market players compete to bring products / services to the market that both a) people want to choose, and b) is cheap to provide. Because it is not the case that the most desirable service is the most expensive to provide, that allows for competition. Markets "learn" over time, advantages gained by one firm are copied by others requiring constant innovation. The job market is no different, but the second quality, being cheap to provide, means there is going to be a constant degrading in the monetary compensation offered to workers, while the desired benefits those workers are getting is paradoxically going to increase. You can most clearly see this in companies like Uber where compensation gets slashed every year, but there's no truly mass uprising of drivers taking place. You can treat this as a failure of union outreach, that Uber drivers should unionize and demand relief. But it's not like they can't organize. They were perfectly capable of organizing a march at Uber headquarters. No, most Uber drivers choose to keep driving, the arguments that they're being exploited seem a little thin when you realize that Uber drivers could be doing just about anything else to make more money if they were really truly being exploited. Workers in America have unparalleled ability, compared to other countries, to try out other industries and occupations. What I think is happening, is that the information age has brought unmatched and unmeasurable utility to common people, in the form of free services provided by tech companies, to everyone (take a second to let it sink in just how unprecedented this is, historically, for a hugely valuable service, like Google search, to be provided to anybody with a Internet connection) and the job market is simply adjusting to meet the new status quo. Being poor in America isn't nearly as horrible as it used to be. You don't need to expend unreal amounts of effort to increase your station just to have a more-or-less happy life anymore. Homeless people all can get online somehow. And that access provides them with incalculable value. There's a reason that everywhere you go, you see people buried in their smartphones. They're choosing smartphone interaction over everything else they could be doing right now. So the labor market is adjusting to fit. People can choose to be poorer, and are doing that rather than expending extraordinary efforts to climb ladders that have, all of a sudden, become so much harder to climb. Because with these services, being poor isn't nearly as onerous.

justinator 11y ago
Regarding Uber: are the majority of its drivers part time, or full time? If the majority of drivers are part time, I wouldn't suspect there's as much of a chance of a march on Uber Headquarters, as it may not be their main source of income. There's also the problem of geography: the majority of Uber drivers are not close to it. I'm a little shakier commenting on your poor people/homeless ideas. Have you experienced being homeless/poor recently? I hate to think your perspective on this is from, ahem: an ivory tower.
- vinceguidry 11y ago
  I specifically tried to omit the homeless from my analysis. Americans have largely excluded homeless people from being able to participate meaningfully in the economy, for various reasons. I am in Colombia right now, and homeless people here play critical roles in maintaining city infrastructure. I saw a homeless guy once fixing water piping out in the street. It felt like the street was his home, he had a pride obligation to making sure his home was in good repair. I also see them doing things like trash sorting, things nobody else wants to do at reasonable rates. I think Americans, if they could moderate their sense of social justice, could find win-win solutions with the really hard-up that makes everybody's lives better. But they don't, so industries such as sanitation become hotbeds of corruption instead. But I grew up lower class, white privilege made my life much more palatable than it otherwise would have been. But I am very familiar with the psychological burdens of the working poor. Life is hard, but they are not stupid people. There's a tendency in America to equate lower-class with unintelligent. Just because you don't have an education doesn't make you stupid. Hard life makes you hard, eventually poor people become unable to climb the social ladder. I've met people who willingly chose less affluent environs over more affluent ones because the poorer ones were places they knew. They felt richer because of their knowledge than because of their opportunity.
- crdoconnor 11y ago
  >I wouldn't suspect there's as much of a chance of a march on Uber Headquarters Didn't that already happen?
whatshisface 11y ago

bsder 11y ago

It's simpler than they make it out to be: there is no demand uptick. People are already spending at 100%+ of their income so they have no way to increase what they are buying even as the economy improves for some people. So, employers have no reason to hire more or extend hours. This is why we see the minimum wage increases also stimulating the economy where they occur. They result in demand increases.

yummyfajitas 11y ago
The entire purpose of a demand uptick is to cause inflation and lower real wages. Google Keynesian economics - its a fix for unemployment and output gaps, not low wages. Given that we are already at the natural rate of unemployment, further demand creation is pointless anyway.
- yxhuvud 11y ago
  Considering what happened with the ratio of people that participate in the labour market, further demand creation could very well pull some of those people in work though. As for Keynes, it is good to remember that he (later on - Keynes in the 20s hadn't reached these insights yet) didn't believe in a natural rate of unemployment (or well, he believed the equilibrium point was determined by a three dimensional equation rather than the two dimensional one that create a single natural rate).
- bsder 11y ago
  I would suggest you take your own advice and spend some time on Google. The purpose of stimulating demand is to break a "coordination failure" where falling demand->hiring cutbacks->cutting consumption->falling demand. That's Keynesian (neo-Keynesian actually). As for "natural rate of unemployment", there is no particular evidence that we are at one, and, in fact, there is lots of evidence that there is probably not a single "natural rate of unemployment" and mounting evidence against the concept in general.
  - yummyfajitas 11y ago
    You aren't disagreeing with me - the coordination failure you refer to is nominal rigidities. To disagree with me, demonstrate involuntary unemployment and outout gaps together with flexible wages.

edoloughlin 11y ago

> Federal Reserve officials hoped wages would begin rising at today’s 5.1 percent, but economists are increasingly saying the rate might need to fall to 4.9 percent or lower to push wages higher Whenever I read something like this I have to wonder: do these economists have a server farm running models to backup statements like this or do they just pull it out of their asses?

polskibus 11y ago
They pull it out of a simple linear model in Excel . just an educated guess based on my occasional economics study.
- mtw 11y ago
  I wonder if deep learning could be more accurate for this kind of problem
  - Kliment 11y ago
    Probably but the conversion rate between expert recommendations and policy is already so abysmal it's probably not worth it.
  - thomasahle 11y ago
    From talking to economic grad students, it appears hard to obtain enough data for typical machine learning approaches. Basically all parameters end up being set from "theory" and "intuition"
  - davmre 11y ago
    Deep learning works well when you have a ton of data and don't care about interpreting the parameters of your model. My understanding is this is pretty much the opposite of the typical situation in econ research.
gaius 11y ago
Well I don't know about the Fed but this is how we do it in England https://en.m.wikipedia.org/wiki/MONIAC_Computer https://en.m.wikipedia.org/wiki/MONIAC_Computer

briandear 11y ago

If you're on minimum wage with dependents, you made some bad decisions. There are people that have been working minimum wage for 10 years. Those people are stupid. It doesn't take much, other than showing up, to get a raise at McDonalds. All of this Marxist drivel fails to recognize the critical truth: people are responsible for their own failures. We like to blame 'the Man' but ultimately it IS your fault if you're poor. With the entirety of human knowledge at one's fingertips, it's amazing how people who are poor spend so much time on Facebook and so little time learning anything. As a poor person if they've ever took a free online Stanford course. Ask them if they have ever seen dancing with the Stars. Ask them who Bruce Jenner is. As them who the Speaker of the House is. Being poor is not a circumstance: not having money is a circumstance, being poor is a mindset. I've been broke, living in a car for months, but I was never poor. Some people choose to be poor their entire life. I have no use or sympathy for those people for whom ignorance is a choice.

crdoconnor 11y ago
>If you're on minimum wage with dependents, you made some bad decisions. Maybe 15 years ago. These days bad luck is all you need.
EdwardDiego 11y ago
> I have no use or sympathy for those people for whom ignorance is a choice. He said, without irony, to end a rather ignorant rant.
- drumdance 11y ago
  There's a Dickens quote that escapes me now, but it was something along the lines of "He was one of those people who thought poor and ignorant people liked being poor and ignorant, and so wanted nothing to do with them."
marincounty 11y ago
Do you really think people seek out minimum wage jobs? For a lot of Americans it's minimum wage, or nothing. Most employers will pay just what they have to in order to fill that position. It's like landlords. Have you ever had a landlord lower the rent? No--they get the maximum amount they can weasel out of a tenant, at least in my godless part of the world--The Bay Area. As to taking a few online courses, I wish it was that easy. I have worked with some highly intelligent minimum wage workers. I have worked with idiots who have Bachelor's, and even Master's degrees. I have met Mensa Society members who became homeless, and one who's in jail. I have a feeling by your writing you are young. Come back to your post in ten/twenty years; and I bet you will have change your mind? (I used to think a bit like you before I had a nervous breakdown. The world is not black, white--it's grey. Yea, you strive to improve yourself, but that's only a small part of success equation. It's a supportive family. It's an in demand degree, at a reputable college. It's networking--which I always found nauseating. It's being a risk taker, that very few poor buys can even think about. See the rich boys can fail, and while they don't tell people; a family member seems to always be there giving them a second chance. Poor kids seem to get one, or two chances at pulling themselfs out of minimum wage. When I was younger my ticket was getting into a good Union. I was poor, but did well on a test, and it didn't hurt that my father was in the same Union. Yea, it's called nepotism, or in my case white privilege.. It still exists. I don't want to argue, and I wish it was a cut and dry as you think.

pm24601 11y ago

Seems like the solution to this problem is to keep raising the minimum wage until Google, Apple, etc. who have BILLIONS locked up away from the economy start spending it. But companies with vast savings are sucking the growth out of the economy. Same a high tax rate sucks economic power out of the economy.

ThomPete 11y ago

I have one word. Technology. Think about technology as outsourcing and you realize what the problem is because you are realizing the trend; Technology will compete with higher and higher levels of abstraction and so you either have to be really skilled in an increasingly competitive space or you need to accept taking jobs at wages that are as low as they are because of the increased competition from technology. And until economist stop treating technology as an externality they wont understand whats going on and we will keep debating this as if its a political problem. In my opinion its not. http://www.technologyreview.com/sites/default/files/images/destroying.jobs_.chart1x910_0.jpg http://www.technologyreview.com/sites/default/files/images/d...

collyw 11y ago
We have had continous improveents in technology up to the recession.
- ThomPete 11y ago
  Job creation in the US have gone down decade after decade since WWII. https://plot.ly/~BethS/8/job-growth-by-decade-in-the-united-states/ https://plot.ly/~BethS/8/job-growth-by-decade-in-the-united-... There comes a point where technology starts to compete not just with our muscle but with our brains. And even though there of course are going to be some jobs you can make a living off. Digitalization and automation is disrupting at an ever increasing speed. You need to look at the trend not the current scenario to understand this.
msellout 11y ago
Not sure why you think economists treat technology as externality. I've seen many macroeconomic models that specifically are attempting to model change in technology.
- ThomPete 11y ago
  Because they mostly do. Especially the economist that advice countries. And you can see it on the way they basically forecast and use various tools to stimulate the economy. You would see far more politicians propose a Unconditional Basic Income solution if technology were factored into the models regardless of whether you think UBI works or not. Problem is that technology is now moving at a pace where it will eat up most attempt to stimulate the economy whether it's Keyness philosophy or Austerity philosophy.

ryanackley 11y ago

I suspect this might have something to do with the rising cost of health insurance. This is not a criticism of Obamacare. This problem has been building for years. Most people in the USA don't realize how much of their total compensation is health insurance since you don't typically see this cost as a line item on your paycheck. The last time I checked, an employer sponsored health plan for a family of 3 from Aetna was close to $2000/month

drumdance 11y ago
Several years ago some economists in the Bush administration researched the issue and concluded that pretty much all of the "wage growth" in his two terms came in the form of health coverage.
ThomPete 11y ago
This problem exist outside the US too even in Denmark were health care is free. The reason why it's not so obvious is that countries like Denmark redistributes wealth much more and have fairly high wages. Denmark doesn't have a minimum wage but instead it's based on negotiations between unions and employers (and sometimes the government if they cant agree). The model is know as Flexicurity[1]. The problem is that that model keeps a lot of people outside the working market because their skills simply aren't worth the salaries they would have to get because of this model. And so in Denmark the problem instead is that companies just move the production out or take in cheap east european labour. The problem isn't about any specific political prioritization but about something more underlying (my claim is technology). [1]https://en.wikipedia.org/wiki/Flexicurity https://en.wikipedia.org/wiki/Flexicurity
- goodJobWalrus 11y ago
  > The problem is that that model keeps a lot of people outside the working market because their skills simply aren't worth the salaries they would have to get because of this model. I'm not sure what you mean by "a lot of people", but Denmark has one of the highest employment rates among OECD countries, so it's actually doing great at keeping people in employment (comparably). http://www.stats.govt.nz/browse_for_stats/income-and-work/employment_and_unemployment/employment-rate-article.aspx http://www.stats.govt.nz/browse_for_stats/income-and-work/em...

tqtthrowaway1 11y ago

Whenever there's an article about the lack of jobs or pay for the middle class, the first thing I do is hit Ctrl+F and start typing "immigration". This being the New York Times, it doesn't show up, for a variety of partisan and ownership-related reasons. Supply and demand applies just as much to labor markets as it does to any other. The "vanishing pay raise" makes a lot more sense when you consider the deliberate increase in labor supply for the explicit purposes of lining the pockets of crooked billionaires like Mark Zuckerberg and Carlos Slim.

gaius 11y ago
It is nothing to do with immigration really, since the H1B is explicitly not an immigration visa.

Chinjut 11y ago

"I suspect this might have something to do with the rising cost of health insurance" "Whenever there's an article about the lack of jobs or pay for the middle class, the first thing I do is hit Ctrl+F and start typing 'immigration'." "I have one word. Technology." "It's simpler than they make it out to be: there is no demand uptick." An awful lot of theories and certainty here on Hacker News...

ThomPete 11y ago
Yeah they are called perspectives which is one of the things I love about HN :) The discussions on here are mostly of very high quality even when people disagree furiously.
- Chinjut 11y ago
  I'm not complaining. Just amused.
- RodericDay 11y ago
  He's pointing out that every other poster is cocksure with their pithy silver-bullet explanations.
  - ThomPete 11y ago
    I know what he is doing but he doesn't know about how sure anyone is just based on what they write and even how they write it. Also people are talking about different aspects and so to even compare them as they are all trying to answer the same question is well an interesting perspective but hardly fair.

danmaz74 11y ago

> although some fear that inflation will climb if the jobless rate is that low AFAIK the reason why inflation climbs when the jobless rate is very low is because with few jobless the cost of labor usually increases, and THEN prices increase to reflect higher costs. But if there are no wage increases, there is no reason for a low jobless rate to increase inflation...

compostor42 11y ago

The enormous amount of immigrants (both legal and illegal) to the US is definitely a huge factor. They say the current population won't do the unpleasant jobs that immigrants do because the pay is too low. It seems no one has stopped to consider that those jobs pay so low because there is a seemingly endless supply of cheap immigrant workers to do them. It drives wages down and provides little incentive for automation. The ancient Greeks invented the steam engine but never really used it because they had no shortage of slave labor. There was no incentive to further develop that technology.

hwstar 11y ago

Over the long term, wages in first world countries will remain flat or decline and meet the third world countries in the middle.