4 ms·

" No reason to impute other mechanisms or make things unnecessarily complicated." Yes there is, because the reason you cited is not the most important cause st

" No reason to impute other mechanisms or make things unnecessarily complicated." Yes there is, because the reason you cited is not the most important cause structural cause of declining wages. The issue is real wages - i.e. accommodating for inflation. When we say 'nominal' we mean 'dollar value'. When we say 'real' - it's an economic term for 'dollars in some present value'. Issues are far more likely to be causes: + Masses of jobs gone overseas. 'High tech' is irrelevant. Here in Montreal, Bombardier employs 66 000 (!) people in jobs - consistent, good paying jobs. That's more than all the startups put together, and those jobs are mostly for the long-haul. So when things like 'Bombardier' shut down, it's a big deal. + The other issue is the fact that we may not be measuring inflation correctly. If 'real wages' are down - then why do University students have laptops, cell-phones, can travel, are sometimes even fashionable? I'm not that old and we had nothing. Even 'fast fashion' has changed the nature of clothing as we know it - only 20 years ago ... there was 'the Gap' and everything else was expensive, relatively speaking. Everything is like that: smartphones didn't are exist, and are enormously better now - online services, access to information. The # of people getting access to higher education. Even the quality of cars. Driven an 1980's car lately? The cheapest, crappiest new Honda is like riding in clouds compared to the best Mercedes from 1985. Even the groceries. My good man - so much choice, so many brands, so much selection. It's amazing compared to 30 years ago. Inflation is measured against a basket of goods - but those goos also increase in value, i.e. a tomato in 1985 may not be actually the same thing as a tomato in 2017 - if it's riper, nicer, healthier (not saying they are, but could be) - well, that's 'real' improvement, so it's not the same thing. Very difficult to measure. Those two things alone: offshoring/outsourcing of jobs - plus - our inability to measure quality of life increases ... would amount to enough that it's a major problem. Lastly - I would add a financial effect - which is 'low interest rates' - this drives up the value of homes, and expands the disparity between those renting, those in 'starters' those in 'nice homes' and those in 'mansions'. It just exasperates the 'wealth effect' in dollar terms. Anyhow - those are 'big drivers'. A 2% inflation target is a really good thing, and it's not just about deflating wages. Nominal wages have kept up with the 2%.

drewcon 9y ago
> Inflation is measured against a basket of goods - but those goos also increase in value, i.e. a tomato in 1985 may not be actually the same thing as a tomato in 2017 - if it's riper, nicer, healthier (not saying they are, but could be) - well, that's 'real' improvement, so it's not the same thing. This. Every time I hear wage growth stagnation all I think of is this. $1,000 in 1977 buys a whole hell of a lot less VALUE than it does in 2017. Computers, phones, cars, furniture, clothing...the list goes on. Component prices have gone DOWN value (technology) has gone UP in many of the categories that people spend their wages on. Sure if you measure the price and value of a can of coke or a pork rind and compare it to wage growth the picture doesn't look great, but it ignores all the things that have vastly improved on the value side. In a category like "computers" in 1977 vs. a smartphone in 2017, both cost roughly the same and so are mentally "weighted" equally in the wage growth stagnation equation...but that causes us to ignore the huge amount of time VALUE you get back in your life with a smartphone -we assign that essentially a value of zero. Its just doesn't make any sense to me. If we contracted that time line and said..."you get paid the same in 2016 as you did in 2017, but in 2016 you have a computer that costs $1000 and plays pong on a black screen and in 2017 you have an iPhone X that costs $1000 and basically makes you a living cyborg and folds your laundry"...I think the value increase would be immense and obvious and the wage stagnation sort of immaterial. But something about the passage of time makes this point invisible. If I was making exactly the same nominal value in 1977 as I am in 2017, and things cost about the same (if not less in many cases) the amount of value my money extracts is far far greater today than it was then. None of that seems to get captured by just saying...the rate of dollars people get paid doesn't rise as much as we like.
- dnautics 9y ago
  > but that causes us to ignore the huge amount of time VALUE you get back in your life with a smartphone how can you be sure the smartphone doesn't have a negative aggregate time value? For example, I should probably be writing a patch to my code, but I'm sitting on the toilet writing an hn comment instead. Lots of people play candy crush, or swipe with no effect on tinder.
  - 9y ago

drewcon 9y ago

> Inflation is measured against a basket of goods - but those goos also increase in value, i.e. a tomato in 1985 may not be actually the same thing as a tomato in 2017 - if it's riper, nicer, healthier (not saying they are, but could be) - well, that's 'real' improvement, so it's not the same thing. This. Every time I hear wage growth stagnation all I think of is this. $1,000 in 1977 buys a whole hell of a lot less VALUE than it does in 2017. Computers, phones, cars, furniture, clothing...the list goes on. Component prices have gone DOWN value (technology) has gone UP in many of the categories that people spend their wages on. Sure if you measure the price and value of a can of coke or a pork rind and compare it to wage growth the picture doesn't look great, but it ignores all the things that have vastly improved on the value side. In a category like "computers" in 1977 vs. a smartphone in 2017, both cost roughly the same and so are mentally "weighted" equally in the wage growth stagnation equation...but that causes us to ignore the huge amount of time VALUE you get back in your life with a smartphone -we assign that essentially a value of zero. Its just doesn't make any sense to me. If we contracted that time line and said..."you get paid the same in 2016 as you did in 2017, but in 2016 you have a computer that costs $1000 and plays pong on a black screen and in 2017 you have an iPhone X that costs $1000 and basically makes you a living cyborg and folds your laundry"...I think the value increase would be immense and obvious and the wage stagnation sort of immaterial. But something about the passage of time makes this point invisible. If I was making exactly the same nominal value in 1977 as I am in 2017, and things cost about the same (if not less in many cases) the amount of value my money extracts is far far greater today than it was then. None of that seems to get captured by just saying...the rate of dollars people get paid doesn't rise as much as we like.

dnautics 9y ago
> but that causes us to ignore the huge amount of time VALUE you get back in your life with a smartphone how can you be sure the smartphone doesn't have a negative aggregate time value? For example, I should probably be writing a patch to my code, but I'm sitting on the toilet writing an hn comment instead. Lots of people play candy crush, or swipe with no effect on tinder.
- 9y ago