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Why Can’t Americans Get a Raise?

195 points by drewrv 9y ago

jandrewrogers 9y ago
Another fundamental issue is that business has never been structured for high wage elasticity. When the market clearing price for wages becomes volatile, which seems to be increasingly the case, it is generally very difficult for business to track the market because their operating models are predicated on the relatively non-volatility of wages. Adjusting to that is generally not easy or quick as it often forces companies to change the way they do business at a pretty fundamental level. I've seen this play out at companies big and small when changes in market wages force them to change the way they think about hiring. Ironically, the replacement strategy is often to eliminate positions from the bottom half of the wage pool and to add a much smaller number of positions in the top half, at least in my experience. (It is increasingly widely believed that this latter strategy is superior in any case and there is evidence to at least suggest this is true.)
- SapphireSun 9y ago
  If a business was structured to deal with wages elastically, that's great for business, but can you imagine working for such a corporation? In theory, the reason we allow business to profit is because we all share in the benefits, but if a significant chunk of the market were structured like this, a large benefit to ordinary people (i.e. the ability to stabilly eat and shelter themselves) would be removed, removing a large chunk of legitimacy from the economic system.
  - chongli 9y ago
    If businesses were structured for high turnover, then we'd have to structure society for it too. This means providing all of the normal benefits to people via government services. Then, all employers would simply bid on workers with piece work or hourly contracts. People would continue having their medical care, food, and housing covered by the government, perhaps from a basic income.
    - SapphireSun 9y ago
      I'm down with that. I just cynically expect that only the part that favors businesses gets delivered and the other stuff gets ground down to nothing over time. Just look at what's happening with the AHCA and Net Neutrality right now.
battlebot 9y ago
I guess the people who wrote the article didn't do much investigative journalism or they would probably figure out that regulatory burden is a major reason why. I also tend to think that everybody who owns a business thinks they deserve to be millionaires for taking the risk. Also, executive pay, doctor and lawyer pay, and politician pay have grown immensely, so I guess the rest of us are just SOL.
USANEEDSHELP 9y ago
1. The money is flowing up and out to the shareholders 2. The profits are being held offshore - probably would cause an issue if that money was sent back into retaining & hiring regular US citizens 2. The jobs have been sent overseas and the trend continues and will not stop ever 3. Many companies, especially in the financial services (too big to fail), are only hiring H1-B positions and/or filling positions with consultants from body shops. They don't bother with looking at US Citizens. This is info is based on my own personal experience Peace.
thatfrenchguy 9y ago
Profits ?
LMYahooTFY 9y ago
A large factor of the answer to this problem is in the second paragraph and the author glosses right over it: "This state of things has left analysts stumped. For nearly a decade, the Federal Reserve has kept interest rates at extraordinarily low levels in order to initiate growth and rising demand, inflation, and ultimately higher wages. But the higher wages have been stubbornly slow to materialize." Interest rates have been dropped into the ground, and it hasn't increased investment(growth). We have the highest savings in the history of capitalism and the lowest level of investment. This is the wheel of capitalism literally coming to a halt because the oligarchs are staring each other down waiting for someone to go first. And I think there is a lot to be said about Wall Street leaching most of the investors' money because it promises better returns than actual investment into actual things with utility. Wall Street is 'supposed' to be the mechanism for recycling profits into investments so that this wheel keeps spinning. Does anyone honestly still believe it's functional?
- toomuchtodo 9y ago
  It's because the real unemployment rate is higher than the "official rate". U-6 is the best indicator. Workers are still being pulled into the labor force, hence why wages have not risen despite the labor market tightening. We still have a long way to go to "full employment", at which point wage inflation would accelerate. Interest rates were held low because the Federal Reserve has limited tools to stoke demand (and heh, who doesn't love a good asset bubble amirite?). It therefore "pushes the string", attempting to use monetary policy when what is really necessary is Congress to act (higher taxes and government spending, or pushing wages up with legislation). Call your representatives.
  - harryh 9y ago
    It's weird to me that there are all kinds of wacky theories in this thread except for you with the obvious answer: the supply of workers exceeds demand so the price (their wage) is not rising. We had a really big recession in 2008-9 folks! You might have read about it? We've been recovering since mid 2010...adding 200k jobs per month or so. But these things take time.
chank 9y ago
They hit the nail on the head right here: "Companies are psychologically and emotionally geared not to raise wages as a matter of course." Our current business culture is basically to maximize profits and minimize expenditures.
- salmonet 9y ago
  For whatever reason, maximizing profits and minimizing expenditures is a popular trend among many successful companies
  - salesguy222 9y ago
    Potential side-effects directly caused by this are also similarly trending underemployment, opioid addiction, crime, suicide, widening wealth gap all come to mind
  - electricEmu 9y ago
    It's popular until a company loses its market. Minimal expenditures mean minimal investment and retainment. That's not healthy in the long-term for a company. If you'd like to discuss further then please provide more than a summarized sentence.
- krapp 9y ago
  >Our current business culture is basically to maximize profits and minimize expenditures. Yep, what the shareholders get is profit, what employees get is an expenditure.
  - liveoneggs 9y ago
    shareholders don't get profits; hardly anyone is paying dividends. Corporations are just hoarding cash.
    - harryh 9y ago
      There is some cash hoarding (mostly overseas for tax reasons), but mostly what companies are doing are share buybacks. These are functionally equivalent to dividends but more tax efficient.
bsder 9y ago
Those employers don't want employees, they want CHEAP employees. If you pay $100/hour, you will get employees. So, the only question is "where is that wage number?" Employers aren't stupid. If they could make more money by hiring employees, they would. What this tells me is that demand isn't high enough for an employer to calculate an increased return from hiring someone. So, what this tells us is that demand is dead. That's what happens when you hollow out the middle class.
- harryh 9y ago
  This is wrong. Employers are adding employees, at a consistent rate of 200k or so per month for 7 years: https://data.bls.gov/timeseries/CES0000000001?output_view=net_1mth https://data.bls.gov/timeseries/CES0000000001?output_view=ne... The issue is that even with all these hires there is still a fairly large pool of people that want to work that don't currently have jobs. This is why wages aren't rising.
  - codexon 9y ago
    Filling cheap/temp jobs doesn't mean demand isn't weak. If companies were truly desperate for people they would offer higher prices or even pay to train people to their standards. I remember in the 90s, someone telling me that tech companies (even established ones like IBM) saying they were hiring anyone with a pulse, and that they were trained on the job instead of being asked for 20 years of experience with X, Y, and Z. If you can afford to be so picky to only hire people that can answer absurd questions like why are manhole covers round or coding a minimum spanning tree operation on a whiteboard with 0 screwups, you do not have a very large demand for people.
    - linkregister 9y ago
      I don't remember hiring being that lax in the 90s. Microsoft used (and still uses) lots of contractors, but those were not secure jobs, nor did they provide much training opportunities. Yes, during the dot-com boom, "HTML programmers" could be hired at startups with a minimum of experience, but this was hardly a long-lived trend.
deleted 9y ago
[deleted]
swifting 9y ago
We need to eliminate the minimum wage and introduce more deregulation. Removing the minimum wage is a very good thing for more investment and job creation. Google economist Walter Williams.
vinceguidry 9y ago
It's really silly to think of labor prices as just being a matter of "people knowing what they're worth." The example given was painting jobs. If you're someone that maybe could offer such a job, there's a price at which it makes more sense for you to do it yourself. That price is a hard limit to the amount you can offer for such a job. If someone demands more, then you can't satisfy them because then you're losing out on the deal. Only growing commercial concerns can afford to hire new employees. The world used to have a way of keeping people who would otherwise be economically impotent engaged, and that is cheap service work, but we've decided as a society that such things are not politically palatable. So instead we just place more and more expectations on the people that participate usefully in society, and less and less on those who can't. The older I get, the less sympathetic I get to this viewpoint, but I suppose that's a quite common moral journey so I won't belabor the point too much.
- kalleboo 9y ago
  > The world used to have a way of keeping people who would otherwise be economically impotent engaged, and that is cheap service work Service work is up over the decades. What we used to have was manual labor/manufacturing jobs. https://cdn.static-economist.com/sites/default/files/images/print-edition/20140118_FBC169.png https://cdn.static-economist.com/sites/default/files/images/... http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/01/waiters%20vs%20mfg%20workers.jpg http://www.zerohedge.com/sites/default/files/images/user5/im...
  - vinceguidry 9y ago
    Manufacturing and the Industrial Revolution is what destroyed cheap service work. Factories had such a big thirst for labor that they outbid families for the same labor that used to go into households and farms. Eventually it got stigmatized. Now most countries' labor laws prevent anything like what used to happen. Probably for good reason, some of these people toiled in horrid conditions, but I don't think re-allowing them is going to recreate those conditions.
    - maxerickson 9y ago
lsiebert 9y ago
Remember, if you do end up quitting your job, be sure to tell your employer that they weren't paying enough. Then when they hire to fill your position, they may be more likely to offer a better wage.
- krapp 9y ago
  More likely, they'll try to offer less to your replacement, given the opportunity to pay less for the same labor. This is why many employers ask potential hires about their salary expectations and prior wage history.
maxxxxx 9y ago
Any ideas for a tax system that makes raising wages attractive?
- cakedoggie 9y ago
  Our current one.
projectileboy 9y ago
Most employers have been giving their workers steady pay increases for years - those pay increases just happen to go to health insurance companies.
mordant 9y ago
One word - immigration.
- c0nducktr 9y ago
  Two words - prove it.
mpweiher 9y ago
Reminds me of an article in Aviation Week recently bemoaning the lack of new pilots coming into the profession and saying how this was completely baffling to the companies involved. A few paragraphs down they mentioned the starting salary at regional airlines: $26000. I think I can solve your mystery When the wage of the person responsible for 40+ lives and millions of dollars worth of equipment isn't enough to feed a family (many pilots are on food stamps) you aren't paying them enough. Never mind that they also have to pay for their own education and that includes several thousand hours of Pilot in Command time. Renting a plane is typically > $100/h. Which is why flight instructors are often cheaper than tennis instructors: the main benefit for the instructor is that the student pays for the plane. And that's one of the main reasons why Sully said he can't recommend the profession to anyone.
- Scaevolus 9y ago
  By comparison, bus drivers in many metro areas start at over $50,000/yr before overtime. With overtime, they can make _significantly_ more. And they get to see their families every day!
- panzer_wyrm 9y ago
  That line of thinking is dangerous. If raising salaries brought more people to a profession this means that H1B is mostly tool for suppression of home wage prices. But that is obviously not the case. /s
- em3rgent0rdr 9y ago
  I think the low price can be justified because flying has been going to automation.
  - dx034 9y ago
    Not really, you still need extensive training. Requirements have rather increased over the past years. The reason why pilot salaries are low nowadays is because the job is so popular. It's a dream job of many so that airlines could access a pool of self-trained pilots (i.e. paid for aviation school with loans) for low salaries. This pool now seems to slowly exhaust so that airlines will have to start training their own pilots again at some point.
Animats 9y ago
Part of the problem is that people are much more reluctant to move for a new job, because job security is now so low. Also, moving to a town with one major non-union employer is like signing up for indentured servitude.
asah 9y ago
This is all temporary - as the fed raises rates, we'll finally get back to 'normal'. This is exactly the fed playbook.
nitwit005 9y ago
My observation in the US is that there is a pretty big gap in perception of how professionals or managers should be paid versus ordinary workers. You'll find people who would never consider paying workers more than minimum wage, and yet consider the bills from lawyers and consultants perfectly reasonable. Part of it seems to be a general belief that some sorts of expensive professionals are better, much like how people assume pricey wine tastes better, but I suspect most of it's just class issues.
- shados 9y ago
  Someone above mentioned it, but basically, for low skill/manual labor, there is a level at which you'll say "I can do it myself", or "I can hire some intern or random kid to do this". And that's the hard cap ofr those jobs. While you can represent yourself in court, it's probably a bad idea (and you can't legally do it for someone else, so you HAVE to cough up t he $$$). On the other hand, I personally have a very high appreciation for high quality manual labor (eg: carpentry) and I'm always looking for the best money can buy in those areas....and it's impossibly hard. Since no one else seem to value it, no one does it. Everyone's optimizing for cost. I had a very difficult carpentry job that needed to be done recently, and I went hunting for the best of the best, offering well over what a lawyer or software engineer would make. Crickets. It took over a year to find someone. Those people no longer exist since there's no market for it.
- deleted 9y ago
  [deleted]
Animats 9y ago
Because Republican state legislatures are keeping minimum wages down.[1] [1] http://www.foxnews.com/us/2017/07/12/minimum-wage-hikes-by-cities-getting-rolled-back-blocked-by-state-lawmakers.html http://www.foxnews.com/us/2017/07/12/minimum-wage-hikes-by-c...
ge96 9y ago
I'm just glad I have a way out potentially as a developer. Starting to build up client base still far from being able to be self employed but I'm grateful to be aware/know where to look to learn. I'm not a fan of my day job with regard to, regardless of their customer input (say they did a lot of business) I don't get a bump or tip or anything. No incentive to try harder also my day job any kid off the street can do so what can I say.
erikb 9y ago
Getting a raise and bargaining for a starting pay, and offering a default pay for a job, these are three different things, I think. Most people don't ask for raises, or draw no consequences from being mad about not getting a raise. So after a few generations companies adapted and simply don't offer raises anymore as default. People who really want to make more money, still get more money. Just not in the same job. While working less in their current job they start to look for other jobs with better pay, and since they have a current job they can proactively bargain for the pay they want. If they don't get it they just don't switch. And last but not least, but I hope at least here people have noticed that now we have a method called Start-up. That is a way to get a lot of raises in a very short time frame as well. The only requirement is the cruel real life fairness of having a growing marketshare. So we have everything, non-increasing incomes for lazy people, regular raises by job switching from dedicated people, and fast-lane high-risers for people who can really take a risk. And of course we also have a problem. But that problem has nothing to do with any of the three things (raises, job offer bargaining, default pay): We have more and more jobs that are automated and replaced by machines. If you have autopilots in airplanes that do a well enough job, you simply don't really need the pilots any more, for instance. I honestly don't know if we can find a solution for that, or if we are heading for another period like feudalism where only a small percentage of people actually have a good life. But, well, as long as we don't talk about that problem we certainly won't resolve it.
- linkregister 9y ago
  The opportunity to job hop is not as universal as you might think. Until fairly recently I also had the false impression that anyone could do it to achieve a pay raise. There are plenty of occupations and industries that preclude job hopping. 1. Company towns, heavy industries, monopsony; many regions have one large employer or customer offering a variety of jobs to the inhabitants. Think: auto workers, chicken farmers. There is nobody else in the region to buy their labor or product, so unless an individual moves, they cannot change jobs without retraining and/or liquidating their assets. 2. Ultra-specialists. There are many occupations where turnover is low and the total number of people in the field is low. Compensation may be high due to a scarcity of qualified applicants, but the overall number of positions may be low. Changing jobs in a region might be exceptionally difficult since there may only be a total of a dozen jobs for a given region. Example: speech pathologists, radiographers, elevator repairers. 3. Middle management. Once someone enters the ranks of middle management, job hopping can be destructive to a career. Instead, it is expected that a manager will move to different departments. A middle manager or company officer is expected to quantifiably add value to a company. If you look at the successful managers in tech, you will find most have only been managers at 2 or 3 companies in total, with a tenure of at least 5 years at each.
honestoHeminway 9y ago
Its a consequence of all risks on the individual. You get a raise with the implied alternatives you can show up with - and to consider playing this poker game, you need to have no risky cards on your hand. No wife or children that can get sick, etc.
r0brodz 9y ago
We will never move out of this situation until we repeal the de facto currency and go back to real money based on gold. We have had only legal tender since 1933. Lincoln got killed for printing Greenbacks. Kennedy was assassinated for exposing secret socities. We are under the rule of a fictional commercial entity incorporated in a land taken by war and therefor the laws of admiralty are the true rule of this land. The Fed, IRS and US CORP are Vatican/British entities. The world continues to be conquered by the Roman Empire. Lets get rid of US Debt Currency and move into real money. That's the real solution, a true independence. We are nothing more than a subsidiary of the IMF and WorldBank. If the people of US don't realize this basic truth nothing will ever change. The reality is that those who control currency are in power. Before you judge do some research on Puerto Rico and IRS. Also look at the US code itself. The creators use the loopholes (remedies) to remain in control.
- logfromblammo 9y ago
  Buddy, I feel for you. I really do. I caught this kind of crazy about 20 years ago. But then I got over it. Yes, a great many people are essentially ruled by the lies told by the rich and powerful. But ferreting out and exposing those lies won't do you a bit of good. The bullshit you are repeating here is likely to be spread and encouraged by those who stand to profit by increased consumer demand for gold, and for disaster preparation supplies. You took the red pill, and now you think Zion is the real world. It isn't. It's the pressure release valve--the special program loaded to house "problem" residents of the Matrix. You're in an oubliette made of your own thoughts. It just doesn't matter if the world has a secret emperor supported by a cabal of Illuminati. If you want to survive in it, you get a job or start a business that transacts in the commonly accepted currency, and you pay your taxes--not because they are just, but because you will get beaten, caged, or killed if you don't. If you truly believe that those who threaten the system are assassinated by it, then who are you to escape that fate? You can play the game by the rules defined for it, even if they are not fair, or you can flip the game board off the table and get dogpiled into a bloody pulp by all the players who thought they had a chance at winning. You're not going to get anywhere by spending your whole turn whining about changing the rules. You'll just piss off the other players as the gamemaster waits you out. The world is not fair. Knowing it is not fair does not make it more fair. Going back will not move you forward. The unethical asses of this world already know about gold, and have planned ahead to negate it as a threat to their influence. You would be far better off tossing out all the conspiracy theory, and trying to puzzle out some Etherium smart contracts that would obviate the kind of power one may wield by exerting private control over fiat money. Good luck.
Shivetya 9y ago
so what are the chances that a significant portion of the population was being paid more than they are worth? Whether because of skill set or simply the industries are adversely affected by more competition? there are certainly people getting raises, so is this limited to specific industries, regions, or other category? Is there a break out where raises are occurring versus where they are lacking? anecdotally, personally I have no friends in my circle who made mention of no raises. poor raises sure, but that is always relative to expectations
randomdata 9y ago
The most obvious answer seems to be that the workforce keeps growing relative to the demand for that work. Wage stagnation began at the same time the number of women in the workplace started to grow. While a corresponding increase in demand with the supply of workers would have kept incomes moving upward, women were actually already consumers. They had to eat, be sheltered and clothed, etc. even when men made up the vast majority of the workforce. The rate of the growing female workforce itself started to stagnant around the 90s and 2000s, but a new worker had fully emerged on the scene by that point: The robot. It's a slight misconception that robots eliminate jobs. In reality, they compete for them just like people do. They are another worker in the supply of workers. And while robots bring new demand, as they didn't exist before, it is not proportional to what they can create like with humans. And so, increasing supply over the rate of what increases to demand exist, and you get downward price pressure.
- geezerjay 9y ago
  > The most obvious answer seems to be that the workforce keeps growing relative to the demand for that work. Interesting, and very plausible as well. Please don't get me wrong, but you happen to have any source that supports that hypothesis? I don't doubt any of what you've said and I do believe you're on to something, but I would like to read more on the subject.
  - saint_fiasco 9y ago
    A popular book on the subject is The Two-Income Trap, by Elizabeth Warren.
    - PaulHoule 9y ago
      It's a very interesting book, but I think it is more about changes that happened in the 1950-2000 time frame more than later than that. The core idea is that a two income family is less financially resilient than a one income family because (a) the extra money goes to bid up housing prices (education, healthcare, etc.), and (b) if either partner has a setback, the family is at risk of bankruptcy. Impacts of "women entering the workforce" have been relatively unexamined; one of them is that it frees up employers to practice other kinds of discrimination. For instance, many believe that black men held service jobs that got taken over by white women. You will get a woman on the Supreme Court but she will have been educated at Harvard. Pointedly, the supply of "people from high-class families" is doubled, so any bias towards hiring them can be indulged more freely. --- Some of these ideas have gotten traction in unexpected places. I was talking to a conservative friend the other day and he told me that "the gains of paying workers more would be eaten up by cost increases in housing, education and health care", which he didn't know was classic Elizabeth Warren!
YPCrumble 9y ago
Sales is a science. The writer is doing a great job of categorizing "objections" to the sale. That's terminology that any trained salesperson should understand. This categorization helps the salesperson do two things: - De-prioritize leads whose objections they're unlikely to overcome - Craft responses to objections they are likely to overcome and prioritize these leads In this particular case they're unlikely to convince a soon-to-retire or luddite vet -- they should de-prioritize these, maybe put them in the CRM to ping in six months to see if anything has changed. They should also be aware that their target market doesn't include these vets, so if the proportion is high enough they might want to find a different market. For the others, it seems they're already crafting responses to the objections - presumably they'll get a sale fairly soon if the market is big enough.
- nulagrithom 9y ago
  Wrong article?
MrFantastic 9y ago
When healthcare premiums are rising double digits annually, there is no money to increase salary. We have to decide a basic level of healthcare every Citizen is entitled too and if you want more, the individual pays for it. Cutting taxes on the already wealthy isn't a stimulus, but putting $18k ( avg annual HC premium ) back into pockets the middles classes will stimulate the economy because they will spend it all. Cutting taxes on the wealthy just slows the Velocity of Money.
- djrogers 9y ago
  That sounds great on the surface (putting $18k “back” into middle class pockets), but where will that money come from? Every example of universal healthcare I’ve seen so far pays for it with huge payroll and income taxes. Payroll taxes have a direct and demonstrable effect on wages and hiring, and income taxes would just wipe out the benefit. The problem with your idea is that it doesn’t actually do anything to contain healthcare insurance costs. Those costs have risen dramatically faster under the ACA than before, and they were already going up quickly. I’m not opposed to universal healthcare at all, but you can’t just hand-wave and make it ‘free’, and with those costs I don’t think you’ll see the benefits to wages you’re looking for.
  - jdavis703 9y ago
    You could try to implement a Piketty-style tax on capital. Of course, this would mean that the middle class gets lower retirement savings, but if we're living healthier and longer we can keep working longer. This, of course, assumes the bulk of the middle class wants to live healthier and longer, even if it means having to work harder.
  - wfo 9y ago
    Sure there are subtle implementation details, but let's not put the cart before the horse. The political and moral will to do it comes first, the details of how to work it out happens later. If we get to the point where the actual ruling class (not just the vast majority of Americans when polled) is willing to give in to the citizenry and give them universal healthcare and starts saying healthcare should be provided as a right to all Americans, there will be no issue getting the financial details worked out. They have an easy job; it's inherently more efficient (larger risk pool, no middleman), implementing even the expensive policies being proposed right now lead to savings of trillions. Though those savings are concentrated among the poor and middle class for whom health costs are huge and taxes are smaller, not senior vice presidents of health insurance companies . As it turns out in aggregate, it's not only already "free", it saves money.
tmaly 9y ago
You have to also consider the money supply and creation of commercial credit in the system. If the currency was a true stable store of value, the savers would be rewarded. Over time, the value of their money would purchase more due to innovation and reductions in price. Historically, before the Gold Reserve Act of 1933, the one ounce double eagle gold coins were valued at $20. You could buy a good suit with just one of those coins. Fast forward to the present, if you take a current double eagle one ounce gold coin that is produced today, you can still buy a good suit with it.
- djrogers 9y ago
  I don’t know what kind of suit you could buy but I 1933 for $20, but I know that today 1200 is far more than you’d need for a ‘nice suit’ due to price reduction and globalization.
  - tmaly 9y ago
    my point was that you could buy a suit for the $20 prior to 1933 and with the same coin today still buy a suit. The currency was stable, so it protected a person's savings. You hear all these horrible stories of elderly people having to choose between food and medicine. Prices keep escalating, and these elderly people live on fixed incomes.
louprado 9y ago
Perhaps the phrase "six-figure salary" has caused wage stagnation. Once a manager, for example, hits their personal goal of "six-figures", they feel they have hit an important milestone. So they are content year after year to privately make $100,001 but publicly/subconsciously use the misleading phrase of "six-figures". A manager's salary is implicitly the upper bound of their subordinates' pay so the whole work-force suffers. If the goal is inspire a higher paid workforce, let's stop with the "six-figures" vagueness and use concrete income milestones (e.g., $250k a year, $10k a week, etc.) instead.
- jdavis703 9y ago
  I don't know anyone who's content to just make the same amount of money (at least those earning say less than $200k). That money usually starts going to things like a bigger house, fancier vacations, better schools for the children, nicer cars etc.
- wfo 9y ago
  I've never heard of a manager who is content with $100,000 and does not immediately wish for the position a couple rungs up up on the ladder where they can make $150,000 or $200,000. Nobody is content with stagnant wages, management or labor, especially when costs are constantly increasing.
shams93 9y ago
A lot of employers try to offer so little for unskilled jobs that it costs more to commute to the job than you could make. Those jobs will go unfilled because no rational human is going to pay someone to be their employee even if they dropped out of high school most people can do enough basic math to know whether a job will cost more to commute to than they can make.
- matt_wulfeck 9y ago
  That may explain unskilled labor, but what about "skilled" labor, such as plumbers and electricians? Huge shortage of these workers and they pay very well.
prostoalex 9y ago
They track "average hourly earnings" which leaves out a number of non-monetary benefits, such as * health + dental + vision insurance * 401(k) matching * ESPP * other stock-based compensation, such as options * number and flexibility of vacation days (i.e. if someone didn't get a raise, but got 5 extra vacation days, it certainly has value for them) * free food, massage, yoga on premises, etc. Tracking average hourly earnings also means that $1 annual salary CEOs such as Mark Zuckerberg or Larry Page are dragging down averages quite a bit. Every startup that pays sub-market salary in exchange for a generous options package is also dragging such average down.
- s73ver 9y ago
  The vast majority of startups paying sub-market salaries are either going to fail, or be acquired in such a way that the workers don't see anything meaningful from their "generous options package". And this article is about the broader labor market in general. Not just startups. And a lot of workers won't see any of those benefits that you listed.
davidf18 9y ago
The author has a degree in history. Perhaps it would be helpful to have an economist write an article about economics. I am not one, but at least have training in jobs that require analysis and not dogma. 1. Wages are just part of the overall benefit package per worker. Healthcare costs to firms have been rising dramatically and these higher healthcare costs (even as employers are having workers pay more out-of-pocket) have resulted in a flat overall wage payout. 2. What should be focused on is overall standard of living and not wages. In cities such as my own, NYC, but also SF, LA, SD, Boston, DC, the price of housing and commercial real estate (an increasing cost to businesses which can result in lower wages paid out) is caused because of "rent-seeking" that causes an artificial scarcity of land through politics that limit zoning density with the resultant higher proportion of income going towards housing costs. The rent-seeking benefits special interests which in this case are wealthy landlords such as Donald Trump. 3. Importing illegal immigrants holds down wage costs among the working class. Except for Trump, almost all Democratic and Republican Presidential candidates wanted to import illegal immigrants. 4. Exporting factory jobs to China and Mexico have also kept wage rates low. 5. The abuse of H1-B Visas have helped to keep wages lower among STEM workers. H1-B Visas are supposed to be used only in the case where there is no American with the skill set to fill the job. Many Democrats and some Republicans actually want to increase the number of H1-B Visas to further depress STEM wages. Trump campaigned against H1-B Visa abuse and spoke against Disney replacing 250 American IT workers with H1-B from India, a clear abuse of H1-B. Clinton did not speak out against H1-B Visa abuse. 6. Raising minimum wage by law to $15 per hour as the author suggested demonstrates to me that he wants to take this simplistic solution which ends up with higher costs to poor people who have to buy goods and services. In summary, instead of focusing on wages alone, focus on standard of living much of which is poor because of rent-seeking which benefits wealthy landlords to the cost of everyone else. When focusing on wages, deal with the structural issues which are 1) increasing costs of healthcare and other benefits 2) increasing real-estate costs to businesses, 3) eliminating illegal immigrants 4) eliminating H1-B Visa abuse and decreasing the number of H1-B Visas. Raising the minimum wage through law simply lowers the standard of living to the poor such as retirees on fixed incomes as the grocery store costs and other costs increase.
- Terr_ 9y ago
jernfrost 9y ago
I think this is part of the equation about illegal immigrants which nobody in the US seem to talk about. They dont talk about all the companies exploiting illegal workers. We had a situation in Norway with exploited Polish workers. It was when Norwegian unions started targetting polish workers when things turned around. With polish info about workers rights, salaries and conditions improved. If you get unions more actively involved in the US you might not need big walls. Businesses are not going to hire mexicans if they cant pay them shitty salaries. If salaries and conditions are better americans are going to take those jobs instead.
Mankhool 9y ago
Not just America. In Canada too salaries have been flat forever. I work at one of our big three telcos and we were told last year that nobody is getting a raise for at least the next 3 years. Like, none of my costs of living are going to go up in the next three years either? http://globalnews.ca/news/3531614/average-hourly-wage-canada-stagnant/?utm_source=GlobalNews&utm_medium=Facebook http://globalnews.ca/news/3531614/average-hourly-wage-canada...
philcyr 9y ago
In the industry I work in it's a skills gap. I work for an Industrial Electrical Contractor. We cannot find enough skilled electricians out there. The good ones have jobs and don't seem to look to change. We've had to start our own 5 year apprentice program because of lack of qualified candidates. A real problem is too many school counselors and society in general tell people you can't make a living doing skilled blue collar work.
- TheAdamAndChe 9y ago
  Well given the fact that many of those skilled blue collar jobs have either been outsourced or supplanted by illegal immigrants, and given the fact that their wages have either been stagnant or on the decline since the 70's, it makes sense that the schools would push the kids into careers resistant to those forces.
flatfilefan 9y ago
No new markets where to expand. Since Russia got re-grouped with Putin, the Russian (and former USSR) markets started to close for US exports. Chinese had their own dynamics. The labor participation rate is at the 70-ties rate again. Go for the maiximal time period here to see the dynamics. https://tradingeconomics.com/united-states/labor-force-participation-rate https://tradingeconomics.com/united-states/labor-force-parti... Also check who's getting all the gold recently https://tradingeconomics.com/russia/gold-reserves https://tradingeconomics.com/russia/gold-reserves
randyrand 9y ago
wow and slate has no understanding of basic economics. take a macro class sometime.
Im_back_4_U 9y ago
At what point do we address the elephant in the room? People forget, are selfish, and nobody is in control. EVERY MAN FOR HIMSELF DOES NOT WORK. The system has to be designed so people are allowed to be all they can be, with power making sure they act more than their animalistic instincts will ensure. That's the point of having power you fucking fools.
justforFranz 9y ago
Labor has no pricing power in the USA and it's partially responsible for the candidacy of Donald Trump & Bernie Sanders - for what it's worth. All the spigots for cheap labor in the USA are turned on full blast and have been increasingly so since the late 1970's when labor power was at its zenith. Those spigots are: free-trade agreements with other countries, automation, anti-union actions, flow of illegal labor, flow of legal immigrant labor, globalization. It's the cause of social turmoil, but that's not much of a concern (in fact it's something to be harnessed and consumed) for the ruling (and chattering) classes.

195 points by drewrv 9y ago

Another fundamental issue is that business has never been structured for high wage elasticity. When the market clearing price for wages becomes volatile, which seems to be increasingly the case, it is generally very difficult for business to track the market because their operating models are predicated on the relatively non-volatility of wages. Adjusting to that is generally not easy or quick as it often forces companies to change the way they do business at a pretty fundamental level. I've seen this play out at companies big and small when changes in market wages force them to change the way they think about hiring. Ironically, the replacement strategy is often to eliminate positions from the bottom half of the wage pool and to add a much smaller number of positions in the top half, at least in my experience. (It is increasingly widely believed that this latter strategy is superior in any case and there is evidence to at least suggest this is true.)

SapphireSun 9y ago
If a business was structured to deal with wages elastically, that's great for business, but can you imagine working for such a corporation? In theory, the reason we allow business to profit is because we all share in the benefits, but if a significant chunk of the market were structured like this, a large benefit to ordinary people (i.e. the ability to stabilly eat and shelter themselves) would be removed, removing a large chunk of legitimacy from the economic system.
- chongli 9y ago
  If businesses were structured for high turnover, then we'd have to structure society for it too. This means providing all of the normal benefits to people via government services. Then, all employers would simply bid on workers with piece work or hourly contracts. People would continue having their medical care, food, and housing covered by the government, perhaps from a basic income.
  - SapphireSun 9y ago
    I'm down with that. I just cynically expect that only the part that favors businesses gets delivered and the other stuff gets ground down to nothing over time. Just look at what's happening with the AHCA and Net Neutrality right now.

battlebot 9y ago

I guess the people who wrote the article didn't do much investigative journalism or they would probably figure out that regulatory burden is a major reason why. I also tend to think that everybody who owns a business thinks they deserve to be millionaires for taking the risk. Also, executive pay, doctor and lawyer pay, and politician pay have grown immensely, so I guess the rest of us are just SOL.

USANEEDSHELP 9y ago

1. The money is flowing up and out to the shareholders 2. The profits are being held offshore - probably would cause an issue if that money was sent back into retaining & hiring regular US citizens 2. The jobs have been sent overseas and the trend continues and will not stop ever 3. Many companies, especially in the financial services (too big to fail), are only hiring H1-B positions and/or filling positions with consultants from body shops. They don't bother with looking at US Citizens. This is info is based on my own personal experience Peace.

thatfrenchguy 9y ago

Profits ?

LMYahooTFY 9y ago

A large factor of the answer to this problem is in the second paragraph and the author glosses right over it: "This state of things has left analysts stumped. For nearly a decade, the Federal Reserve has kept interest rates at extraordinarily low levels in order to initiate growth and rising demand, inflation, and ultimately higher wages. But the higher wages have been stubbornly slow to materialize." Interest rates have been dropped into the ground, and it hasn't increased investment(growth). We have the highest savings in the history of capitalism and the lowest level of investment. This is the wheel of capitalism literally coming to a halt because the oligarchs are staring each other down waiting for someone to go first. And I think there is a lot to be said about Wall Street leaching most of the investors' money because it promises better returns than actual investment into actual things with utility. Wall Street is 'supposed' to be the mechanism for recycling profits into investments so that this wheel keeps spinning. Does anyone honestly still believe it's functional?

toomuchtodo 9y ago
It's because the real unemployment rate is higher than the "official rate". U-6 is the best indicator. Workers are still being pulled into the labor force, hence why wages have not risen despite the labor market tightening. We still have a long way to go to "full employment", at which point wage inflation would accelerate. Interest rates were held low because the Federal Reserve has limited tools to stoke demand (and heh, who doesn't love a good asset bubble amirite?). It therefore "pushes the string", attempting to use monetary policy when what is really necessary is Congress to act (higher taxes and government spending, or pushing wages up with legislation). Call your representatives.
- harryh 9y ago
  It's weird to me that there are all kinds of wacky theories in this thread except for you with the obvious answer: the supply of workers exceeds demand so the price (their wage) is not rising. We had a really big recession in 2008-9 folks! You might have read about it? We've been recovering since mid 2010...adding 200k jobs per month or so. But these things take time.

chank 9y ago

They hit the nail on the head right here: "Companies are psychologically and emotionally geared not to raise wages as a matter of course." Our current business culture is basically to maximize profits and minimize expenditures.

salmonet 9y ago
For whatever reason, maximizing profits and minimizing expenditures is a popular trend among many successful companies
- salesguy222 9y ago
  Potential side-effects directly caused by this are also similarly trending underemployment, opioid addiction, crime, suicide, widening wealth gap all come to mind
- electricEmu 9y ago
  It's popular until a company loses its market. Minimal expenditures mean minimal investment and retainment. That's not healthy in the long-term for a company. If you'd like to discuss further then please provide more than a summarized sentence.
krapp 9y ago
>Our current business culture is basically to maximize profits and minimize expenditures. Yep, what the shareholders get is profit, what employees get is an expenditure.
- liveoneggs 9y ago
  shareholders don't get profits; hardly anyone is paying dividends. Corporations are just hoarding cash.
  - harryh 9y ago
    There is some cash hoarding (mostly overseas for tax reasons), but mostly what companies are doing are share buybacks. These are functionally equivalent to dividends but more tax efficient.

bsder 9y ago

Those employers don't want employees, they want CHEAP employees. If you pay $100/hour, you will get employees. So, the only question is "where is that wage number?" Employers aren't stupid. If they could make more money by hiring employees, they would. What this tells me is that demand isn't high enough for an employer to calculate an increased return from hiring someone. So, what this tells us is that demand is dead. That's what happens when you hollow out the middle class.

harryh 9y ago
This is wrong. Employers are adding employees, at a consistent rate of 200k or so per month for 7 years: https://data.bls.gov/timeseries/CES0000000001?output_view=net_1mth https://data.bls.gov/timeseries/CES0000000001?output_view=ne... The issue is that even with all these hires there is still a fairly large pool of people that want to work that don't currently have jobs. This is why wages aren't rising.
- codexon 9y ago
  Filling cheap/temp jobs doesn't mean demand isn't weak. If companies were truly desperate for people they would offer higher prices or even pay to train people to their standards. I remember in the 90s, someone telling me that tech companies (even established ones like IBM) saying they were hiring anyone with a pulse, and that they were trained on the job instead of being asked for 20 years of experience with X, Y, and Z. If you can afford to be so picky to only hire people that can answer absurd questions like why are manhole covers round or coding a minimum spanning tree operation on a whiteboard with 0 screwups, you do not have a very large demand for people.
  - linkregister 9y ago
    I don't remember hiring being that lax in the 90s. Microsoft used (and still uses) lots of contractors, but those were not secure jobs, nor did they provide much training opportunities. Yes, during the dot-com boom, "HTML programmers" could be hired at startups with a minimum of experience, but this was hardly a long-lived trend.

deleted 9y ago

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swifting 9y ago

We need to eliminate the minimum wage and introduce more deregulation. Removing the minimum wage is a very good thing for more investment and job creation. Google economist Walter Williams.

vinceguidry 9y ago

It's really silly to think of labor prices as just being a matter of "people knowing what they're worth." The example given was painting jobs. If you're someone that maybe could offer such a job, there's a price at which it makes more sense for you to do it yourself. That price is a hard limit to the amount you can offer for such a job. If someone demands more, then you can't satisfy them because then you're losing out on the deal. Only growing commercial concerns can afford to hire new employees. The world used to have a way of keeping people who would otherwise be economically impotent engaged, and that is cheap service work, but we've decided as a society that such things are not politically palatable. So instead we just place more and more expectations on the people that participate usefully in society, and less and less on those who can't. The older I get, the less sympathetic I get to this viewpoint, but I suppose that's a quite common moral journey so I won't belabor the point too much.

kalleboo 9y ago
> The world used to have a way of keeping people who would otherwise be economically impotent engaged, and that is cheap service work Service work is up over the decades. What we used to have was manual labor/manufacturing jobs. https://cdn.static-economist.com/sites/default/files/images/print-edition/20140118_FBC169.png https://cdn.static-economist.com/sites/default/files/images/... http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/01/waiters%20vs%20mfg%20workers.jpg http://www.zerohedge.com/sites/default/files/images/user5/im...
- vinceguidry 9y ago
  Manufacturing and the Industrial Revolution is what destroyed cheap service work. Factories had such a big thirst for labor that they outbid families for the same labor that used to go into households and farms. Eventually it got stigmatized. Now most countries' labor laws prevent anything like what used to happen. Probably for good reason, some of these people toiled in horrid conditions, but I don't think re-allowing them is going to recreate those conditions.
  - maxerickson 9y ago

lsiebert 9y ago

Remember, if you do end up quitting your job, be sure to tell your employer that they weren't paying enough. Then when they hire to fill your position, they may be more likely to offer a better wage.

krapp 9y ago
More likely, they'll try to offer less to your replacement, given the opportunity to pay less for the same labor. This is why many employers ask potential hires about their salary expectations and prior wage history.

maxxxxx 9y ago

Any ideas for a tax system that makes raising wages attractive?

cakedoggie 9y ago
Our current one.

projectileboy 9y ago

Most employers have been giving their workers steady pay increases for years - those pay increases just happen to go to health insurance companies.

mordant 9y ago

One word - immigration.

c0nducktr 9y ago
Two words - prove it.

mpweiher 9y ago

Reminds me of an article in Aviation Week recently bemoaning the lack of new pilots coming into the profession and saying how this was completely baffling to the companies involved. A few paragraphs down they mentioned the starting salary at regional airlines: $26000. I think I can solve your mystery When the wage of the person responsible for 40+ lives and millions of dollars worth of equipment isn't enough to feed a family (many pilots are on food stamps) you aren't paying them enough. Never mind that they also have to pay for their own education and that includes several thousand hours of Pilot in Command time. Renting a plane is typically > $100/h. Which is why flight instructors are often cheaper than tennis instructors: the main benefit for the instructor is that the student pays for the plane. And that's one of the main reasons why Sully said he can't recommend the profession to anyone.

Scaevolus 9y ago
By comparison, bus drivers in many metro areas start at over $50,000/yr before overtime. With overtime, they can make _significantly_ more. And they get to see their families every day!
panzer_wyrm 9y ago
That line of thinking is dangerous. If raising salaries brought more people to a profession this means that H1B is mostly tool for suppression of home wage prices. But that is obviously not the case. /s
em3rgent0rdr 9y ago
I think the low price can be justified because flying has been going to automation.
- dx034 9y ago
  Not really, you still need extensive training. Requirements have rather increased over the past years. The reason why pilot salaries are low nowadays is because the job is so popular. It's a dream job of many so that airlines could access a pool of self-trained pilots (i.e. paid for aviation school with loans) for low salaries. This pool now seems to slowly exhaust so that airlines will have to start training their own pilots again at some point.

Animats 9y ago

Part of the problem is that people are much more reluctant to move for a new job, because job security is now so low. Also, moving to a town with one major non-union employer is like signing up for indentured servitude.

asah 9y ago

This is all temporary - as the fed raises rates, we'll finally get back to 'normal'. This is exactly the fed playbook.

nitwit005 9y ago

My observation in the US is that there is a pretty big gap in perception of how professionals or managers should be paid versus ordinary workers. You'll find people who would never consider paying workers more than minimum wage, and yet consider the bills from lawyers and consultants perfectly reasonable. Part of it seems to be a general belief that some sorts of expensive professionals are better, much like how people assume pricey wine tastes better, but I suspect most of it's just class issues.

shados 9y ago
Someone above mentioned it, but basically, for low skill/manual labor, there is a level at which you'll say "I can do it myself", or "I can hire some intern or random kid to do this". And that's the hard cap ofr those jobs. While you can represent yourself in court, it's probably a bad idea (and you can't legally do it for someone else, so you HAVE to cough up t he $$$). On the other hand, I personally have a very high appreciation for high quality manual labor (eg: carpentry) and I'm always looking for the best money can buy in those areas....and it's impossibly hard. Since no one else seem to value it, no one does it. Everyone's optimizing for cost. I had a very difficult carpentry job that needed to be done recently, and I went hunting for the best of the best, offering well over what a lawyer or software engineer would make. Crickets. It took over a year to find someone. Those people no longer exist since there's no market for it.
deleted 9y ago
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Animats 9y ago

Because Republican state legislatures are keeping minimum wages down.[1] [1] http://www.foxnews.com/us/2017/07/12/minimum-wage-hikes-by-cities-getting-rolled-back-blocked-by-state-lawmakers.html http://www.foxnews.com/us/2017/07/12/minimum-wage-hikes-by-c...

ge96 9y ago

I'm just glad I have a way out potentially as a developer. Starting to build up client base still far from being able to be self employed but I'm grateful to be aware/know where to look to learn. I'm not a fan of my day job with regard to, regardless of their customer input (say they did a lot of business) I don't get a bump or tip or anything. No incentive to try harder also my day job any kid off the street can do so what can I say.

erikb 9y ago

Getting a raise and bargaining for a starting pay, and offering a default pay for a job, these are three different things, I think. Most people don't ask for raises, or draw no consequences from being mad about not getting a raise. So after a few generations companies adapted and simply don't offer raises anymore as default. People who really want to make more money, still get more money. Just not in the same job. While working less in their current job they start to look for other jobs with better pay, and since they have a current job they can proactively bargain for the pay they want. If they don't get it they just don't switch. And last but not least, but I hope at least here people have noticed that now we have a method called Start-up. That is a way to get a lot of raises in a very short time frame as well. The only requirement is the cruel real life fairness of having a growing marketshare. So we have everything, non-increasing incomes for lazy people, regular raises by job switching from dedicated people, and fast-lane high-risers for people who can really take a risk. And of course we also have a problem. But that problem has nothing to do with any of the three things (raises, job offer bargaining, default pay): We have more and more jobs that are automated and replaced by machines. If you have autopilots in airplanes that do a well enough job, you simply don't really need the pilots any more, for instance. I honestly don't know if we can find a solution for that, or if we are heading for another period like feudalism where only a small percentage of people actually have a good life. But, well, as long as we don't talk about that problem we certainly won't resolve it.

linkregister 9y ago
The opportunity to job hop is not as universal as you might think. Until fairly recently I also had the false impression that anyone could do it to achieve a pay raise. There are plenty of occupations and industries that preclude job hopping. 1. Company towns, heavy industries, monopsony; many regions have one large employer or customer offering a variety of jobs to the inhabitants. Think: auto workers, chicken farmers. There is nobody else in the region to buy their labor or product, so unless an individual moves, they cannot change jobs without retraining and/or liquidating their assets. 2. Ultra-specialists. There are many occupations where turnover is low and the total number of people in the field is low. Compensation may be high due to a scarcity of qualified applicants, but the overall number of positions may be low. Changing jobs in a region might be exceptionally difficult since there may only be a total of a dozen jobs for a given region. Example: speech pathologists, radiographers, elevator repairers. 3. Middle management. Once someone enters the ranks of middle management, job hopping can be destructive to a career. Instead, it is expected that a manager will move to different departments. A middle manager or company officer is expected to quantifiably add value to a company. If you look at the successful managers in tech, you will find most have only been managers at 2 or 3 companies in total, with a tenure of at least 5 years at each.

honestoHeminway 9y ago

Its a consequence of all risks on the individual. You get a raise with the implied alternatives you can show up with - and to consider playing this poker game, you need to have no risky cards on your hand. No wife or children that can get sick, etc.

r0brodz 9y ago

We will never move out of this situation until we repeal the de facto currency and go back to real money based on gold. We have had only legal tender since 1933. Lincoln got killed for printing Greenbacks. Kennedy was assassinated for exposing secret socities. We are under the rule of a fictional commercial entity incorporated in a land taken by war and therefor the laws of admiralty are the true rule of this land. The Fed, IRS and US CORP are Vatican/British entities. The world continues to be conquered by the Roman Empire. Lets get rid of US Debt Currency and move into real money. That's the real solution, a true independence. We are nothing more than a subsidiary of the IMF and WorldBank. If the people of US don't realize this basic truth nothing will ever change. The reality is that those who control currency are in power. Before you judge do some research on Puerto Rico and IRS. Also look at the US code itself. The creators use the loopholes (remedies) to remain in control.

logfromblammo 9y ago
Buddy, I feel for you. I really do. I caught this kind of crazy about 20 years ago. But then I got over it. Yes, a great many people are essentially ruled by the lies told by the rich and powerful. But ferreting out and exposing those lies won't do you a bit of good. The bullshit you are repeating here is likely to be spread and encouraged by those who stand to profit by increased consumer demand for gold, and for disaster preparation supplies. You took the red pill, and now you think Zion is the real world. It isn't. It's the pressure release valve--the special program loaded to house "problem" residents of the Matrix. You're in an oubliette made of your own thoughts. It just doesn't matter if the world has a secret emperor supported by a cabal of Illuminati. If you want to survive in it, you get a job or start a business that transacts in the commonly accepted currency, and you pay your taxes--not because they are just, but because you will get beaten, caged, or killed if you don't. If you truly believe that those who threaten the system are assassinated by it, then who are you to escape that fate? You can play the game by the rules defined for it, even if they are not fair, or you can flip the game board off the table and get dogpiled into a bloody pulp by all the players who thought they had a chance at winning. You're not going to get anywhere by spending your whole turn whining about changing the rules. You'll just piss off the other players as the gamemaster waits you out. The world is not fair. Knowing it is not fair does not make it more fair. Going back will not move you forward. The unethical asses of this world already know about gold, and have planned ahead to negate it as a threat to their influence. You would be far better off tossing out all the conspiracy theory, and trying to puzzle out some Etherium smart contracts that would obviate the kind of power one may wield by exerting private control over fiat money. Good luck.

Shivetya 9y ago

so what are the chances that a significant portion of the population was being paid more than they are worth? Whether because of skill set or simply the industries are adversely affected by more competition? there are certainly people getting raises, so is this limited to specific industries, regions, or other category? Is there a break out where raises are occurring versus where they are lacking? anecdotally, personally I have no friends in my circle who made mention of no raises. poor raises sure, but that is always relative to expectations

randomdata 9y ago

The most obvious answer seems to be that the workforce keeps growing relative to the demand for that work. Wage stagnation began at the same time the number of women in the workplace started to grow. While a corresponding increase in demand with the supply of workers would have kept incomes moving upward, women were actually already consumers. They had to eat, be sheltered and clothed, etc. even when men made up the vast majority of the workforce. The rate of the growing female workforce itself started to stagnant around the 90s and 2000s, but a new worker had fully emerged on the scene by that point: The robot. It's a slight misconception that robots eliminate jobs. In reality, they compete for them just like people do. They are another worker in the supply of workers. And while robots bring new demand, as they didn't exist before, it is not proportional to what they can create like with humans. And so, increasing supply over the rate of what increases to demand exist, and you get downward price pressure.

geezerjay 9y ago
> The most obvious answer seems to be that the workforce keeps growing relative to the demand for that work. Interesting, and very plausible as well. Please don't get me wrong, but you happen to have any source that supports that hypothesis? I don't doubt any of what you've said and I do believe you're on to something, but I would like to read more on the subject.
- saint_fiasco 9y ago
  A popular book on the subject is The Two-Income Trap, by Elizabeth Warren.
  - PaulHoule 9y ago
    It's a very interesting book, but I think it is more about changes that happened in the 1950-2000 time frame more than later than that. The core idea is that a two income family is less financially resilient than a one income family because (a) the extra money goes to bid up housing prices (education, healthcare, etc.), and (b) if either partner has a setback, the family is at risk of bankruptcy. Impacts of "women entering the workforce" have been relatively unexamined; one of them is that it frees up employers to practice other kinds of discrimination. For instance, many believe that black men held service jobs that got taken over by white women. You will get a woman on the Supreme Court but she will have been educated at Harvard. Pointedly, the supply of "people from high-class families" is doubled, so any bias towards hiring them can be indulged more freely. --- Some of these ideas have gotten traction in unexpected places. I was talking to a conservative friend the other day and he told me that "the gains of paying workers more would be eaten up by cost increases in housing, education and health care", which he didn't know was classic Elizabeth Warren!

YPCrumble 9y ago

Sales is a science. The writer is doing a great job of categorizing "objections" to the sale. That's terminology that any trained salesperson should understand. This categorization helps the salesperson do two things: - De-prioritize leads whose objections they're unlikely to overcome - Craft responses to objections they are likely to overcome and prioritize these leads In this particular case they're unlikely to convince a soon-to-retire or luddite vet -- they should de-prioritize these, maybe put them in the CRM to ping in six months to see if anything has changed. They should also be aware that their target market doesn't include these vets, so if the proportion is high enough they might want to find a different market. For the others, it seems they're already crafting responses to the objections - presumably they'll get a sale fairly soon if the market is big enough.

nulagrithom 9y ago
Wrong article?

MrFantastic 9y ago

When healthcare premiums are rising double digits annually, there is no money to increase salary. We have to decide a basic level of healthcare every Citizen is entitled too and if you want more, the individual pays for it. Cutting taxes on the already wealthy isn't a stimulus, but putting $18k ( avg annual HC premium ) back into pockets the middles classes will stimulate the economy because they will spend it all. Cutting taxes on the wealthy just slows the Velocity of Money.

djrogers 9y ago
That sounds great on the surface (putting $18k “back” into middle class pockets), but where will that money come from? Every example of universal healthcare I’ve seen so far pays for it with huge payroll and income taxes. Payroll taxes have a direct and demonstrable effect on wages and hiring, and income taxes would just wipe out the benefit. The problem with your idea is that it doesn’t actually do anything to contain healthcare insurance costs. Those costs have risen dramatically faster under the ACA than before, and they were already going up quickly. I’m not opposed to universal healthcare at all, but you can’t just hand-wave and make it ‘free’, and with those costs I don’t think you’ll see the benefits to wages you’re looking for.
- jdavis703 9y ago
  You could try to implement a Piketty-style tax on capital. Of course, this would mean that the middle class gets lower retirement savings, but if we're living healthier and longer we can keep working longer. This, of course, assumes the bulk of the middle class wants to live healthier and longer, even if it means having to work harder.
- wfo 9y ago
  Sure there are subtle implementation details, but let's not put the cart before the horse. The political and moral will to do it comes first, the details of how to work it out happens later. If we get to the point where the actual ruling class (not just the vast majority of Americans when polled) is willing to give in to the citizenry and give them universal healthcare and starts saying healthcare should be provided as a right to all Americans, there will be no issue getting the financial details worked out. They have an easy job; it's inherently more efficient (larger risk pool, no middleman), implementing even the expensive policies being proposed right now lead to savings of trillions. Though those savings are concentrated among the poor and middle class for whom health costs are huge and taxes are smaller, not senior vice presidents of health insurance companies . As it turns out in aggregate, it's not only already "free", it saves money.

tmaly 9y ago

You have to also consider the money supply and creation of commercial credit in the system. If the currency was a true stable store of value, the savers would be rewarded. Over time, the value of their money would purchase more due to innovation and reductions in price. Historically, before the Gold Reserve Act of 1933, the one ounce double eagle gold coins were valued at $20. You could buy a good suit with just one of those coins. Fast forward to the present, if you take a current double eagle one ounce gold coin that is produced today, you can still buy a good suit with it.

djrogers 9y ago
I don’t know what kind of suit you could buy but I 1933 for $20, but I know that today 1200 is far more than you’d need for a ‘nice suit’ due to price reduction and globalization.
- tmaly 9y ago
  my point was that you could buy a suit for the $20 prior to 1933 and with the same coin today still buy a suit. The currency was stable, so it protected a person's savings. You hear all these horrible stories of elderly people having to choose between food and medicine. Prices keep escalating, and these elderly people live on fixed incomes.

louprado 9y ago

Perhaps the phrase "six-figure salary" has caused wage stagnation. Once a manager, for example, hits their personal goal of "six-figures", they feel they have hit an important milestone. So they are content year after year to privately make $100,001 but publicly/subconsciously use the misleading phrase of "six-figures". A manager's salary is implicitly the upper bound of their subordinates' pay so the whole work-force suffers. If the goal is inspire a higher paid workforce, let's stop with the "six-figures" vagueness and use concrete income milestones (e.g., $250k a year, $10k a week, etc.) instead.

jdavis703 9y ago
I don't know anyone who's content to just make the same amount of money (at least those earning say less than $200k). That money usually starts going to things like a bigger house, fancier vacations, better schools for the children, nicer cars etc.
wfo 9y ago
I've never heard of a manager who is content with $100,000 and does not immediately wish for the position a couple rungs up up on the ladder where they can make $150,000 or $200,000. Nobody is content with stagnant wages, management or labor, especially when costs are constantly increasing.

shams93 9y ago

A lot of employers try to offer so little for unskilled jobs that it costs more to commute to the job than you could make. Those jobs will go unfilled because no rational human is going to pay someone to be their employee even if they dropped out of high school most people can do enough basic math to know whether a job will cost more to commute to than they can make.

matt_wulfeck 9y ago
That may explain unskilled labor, but what about "skilled" labor, such as plumbers and electricians? Huge shortage of these workers and they pay very well.

prostoalex 9y ago

They track "average hourly earnings" which leaves out a number of non-monetary benefits, such as * health + dental + vision insurance * 401(k) matching * ESPP * other stock-based compensation, such as options * number and flexibility of vacation days (i.e. if someone didn't get a raise, but got 5 extra vacation days, it certainly has value for them) * free food, massage, yoga on premises, etc. Tracking average hourly earnings also means that $1 annual salary CEOs such as Mark Zuckerberg or Larry Page are dragging down averages quite a bit. Every startup that pays sub-market salary in exchange for a generous options package is also dragging such average down.

s73ver 9y ago
The vast majority of startups paying sub-market salaries are either going to fail, or be acquired in such a way that the workers don't see anything meaningful from their "generous options package". And this article is about the broader labor market in general. Not just startups. And a lot of workers won't see any of those benefits that you listed.

davidf18 9y ago

The author has a degree in history. Perhaps it would be helpful to have an economist write an article about economics. I am not one, but at least have training in jobs that require analysis and not dogma. 1. Wages are just part of the overall benefit package per worker. Healthcare costs to firms have been rising dramatically and these higher healthcare costs (even as employers are having workers pay more out-of-pocket) have resulted in a flat overall wage payout. 2. What should be focused on is overall standard of living and not wages. In cities such as my own, NYC, but also SF, LA, SD, Boston, DC, the price of housing and commercial real estate (an increasing cost to businesses which can result in lower wages paid out) is caused because of "rent-seeking" that causes an artificial scarcity of land through politics that limit zoning density with the resultant higher proportion of income going towards housing costs. The rent-seeking benefits special interests which in this case are wealthy landlords such as Donald Trump. 3. Importing illegal immigrants holds down wage costs among the working class. Except for Trump, almost all Democratic and Republican Presidential candidates wanted to import illegal immigrants. 4. Exporting factory jobs to China and Mexico have also kept wage rates low. 5. The abuse of H1-B Visas have helped to keep wages lower among STEM workers. H1-B Visas are supposed to be used only in the case where there is no American with the skill set to fill the job. Many Democrats and some Republicans actually want to increase the number of H1-B Visas to further depress STEM wages. Trump campaigned against H1-B Visa abuse and spoke against Disney replacing 250 American IT workers with H1-B from India, a clear abuse of H1-B. Clinton did not speak out against H1-B Visa abuse. 6. Raising minimum wage by law to $15 per hour as the author suggested demonstrates to me that he wants to take this simplistic solution which ends up with higher costs to poor people who have to buy goods and services. In summary, instead of focusing on wages alone, focus on standard of living much of which is poor because of rent-seeking which benefits wealthy landlords to the cost of everyone else. When focusing on wages, deal with the structural issues which are 1) increasing costs of healthcare and other benefits 2) increasing real-estate costs to businesses, 3) eliminating illegal immigrants 4) eliminating H1-B Visa abuse and decreasing the number of H1-B Visas. Raising the minimum wage through law simply lowers the standard of living to the poor such as retirees on fixed incomes as the grocery store costs and other costs increase.

Terr_ 9y ago

jernfrost 9y ago

I think this is part of the equation about illegal immigrants which nobody in the US seem to talk about. They dont talk about all the companies exploiting illegal workers. We had a situation in Norway with exploited Polish workers. It was when Norwegian unions started targetting polish workers when things turned around. With polish info about workers rights, salaries and conditions improved. If you get unions more actively involved in the US you might not need big walls. Businesses are not going to hire mexicans if they cant pay them shitty salaries. If salaries and conditions are better americans are going to take those jobs instead.

Mankhool 9y ago

Not just America. In Canada too salaries have been flat forever. I work at one of our big three telcos and we were told last year that nobody is getting a raise for at least the next 3 years. Like, none of my costs of living are going to go up in the next three years either? http://globalnews.ca/news/3531614/average-hourly-wage-canada-stagnant/?utm_source=GlobalNews&utm_medium=Facebook http://globalnews.ca/news/3531614/average-hourly-wage-canada...

philcyr 9y ago

In the industry I work in it's a skills gap. I work for an Industrial Electrical Contractor. We cannot find enough skilled electricians out there. The good ones have jobs and don't seem to look to change. We've had to start our own 5 year apprentice program because of lack of qualified candidates. A real problem is too many school counselors and society in general tell people you can't make a living doing skilled blue collar work.

TheAdamAndChe 9y ago
Well given the fact that many of those skilled blue collar jobs have either been outsourced or supplanted by illegal immigrants, and given the fact that their wages have either been stagnant or on the decline since the 70's, it makes sense that the schools would push the kids into careers resistant to those forces.

flatfilefan 9y ago

No new markets where to expand. Since Russia got re-grouped with Putin, the Russian (and former USSR) markets started to close for US exports. Chinese had their own dynamics. The labor participation rate is at the 70-ties rate again. Go for the maiximal time period here to see the dynamics. https://tradingeconomics.com/united-states/labor-force-participation-rate https://tradingeconomics.com/united-states/labor-force-parti... Also check who's getting all the gold recently https://tradingeconomics.com/russia/gold-reserves https://tradingeconomics.com/russia/gold-reserves

randyrand 9y ago

wow and slate has no understanding of basic economics. take a macro class sometime.

Im_back_4_U 9y ago

At what point do we address the elephant in the room? People forget, are selfish, and nobody is in control. EVERY MAN FOR HIMSELF DOES NOT WORK. The system has to be designed so people are allowed to be all they can be, with power making sure they act more than their animalistic instincts will ensure. That's the point of having power you fucking fools.

justforFranz 9y ago

Labor has no pricing power in the USA and it's partially responsible for the candidacy of Donald Trump & Bernie Sanders - for what it's worth. All the spigots for cheap labor in the USA are turned on full blast and have been increasingly so since the late 1970's when labor power was at its zenith. Those spigots are: free-trade agreements with other countries, automation, anti-union actions, flow of illegal labor, flow of legal immigrant labor, globalization. It's the cause of social turmoil, but that's not much of a concern (in fact it's something to be harnessed and consumed) for the ruling (and chattering) classes.