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If wages are to rise, workers need more bargaining power
- fortythirteen 8y agoReal pay going up 1% per year for 18 years means that it has gone up 19.61% since the year 2000. Another great example of statistics being framed to elicit a certain response.
- bojan 8y agoI wonder how it stakes compared to the real GDP growth during the same period.
- ForHackernews 8y ago"at most" does not imply consistent 1% growth year over year.
- mindthegap 8y agoWhile in the same time frame inflation has been well above 1% per year all the time.
- piker 8y ago"Real X" means X, adjusted for the effects of inflation.
- alexgmcm 8y agoThe Economist is a very honest publication and broadly classical liberal in the British and European sense of the term. In fact it was voted as one of the most trustworthy sources. You make it sound like some sensationalist rag.
- paidleaf 8y agoBut how much have home prices increased since 2000? How much has rent increased? How much has food prices? 19.61% increase in wages seems like a lot but if you factor in housing prices increased 100%+, prices of steaks increased 200%, etc, then that 19.61% doesn't look too good.
- cceyhan 8y agoThis is real income, so costs are already accounted for.
- paidleaf 8y agoInflation calculations doesn't include housing price.
- VLM 8y agoThe real lesson is statistics used in political discussion are ALWAYS manipulated into meaninglessness. If you can hear an axe grinding in the background you know the numbers are have been carefully and methodically rendered meaningless. The trick is to find statistics that aren't used (or aren't used as much) in political discussion. What is the ... divorce rate, or percentage of psychologically medicated people, or suicide rate, or addiction rate or average children per women, crime rates, immigration in or out of an area, job market trends by occupation and pay rate, ratio of local school academic spending to athletic spending, or similar non-headline metrics of success (or not success).
- pjc50 8y agoBy comparison, UK property prices have doubled in nominal terms since then.
- fortythirteen 8y ago1. Real income is adjusted for inflation. 2. Property prices have multiple other factors affecting them than just GDP. For instance, if you have a large increase in population without enough new housing to account for it, then property prices naturally go up. I think that describes 21st century Britain quite well, don't you? 3. The economic dogma of blaming all problems on the rich is no different than blaming all problems on a certain ethnic group. It's just that it's not as easy to immediately recognize it as intellectually dishonest.
- pjc50 8y agoThe population has increased from 59m to 66m in this period (https://tradingeconomics.com/united-kingdom/population https://tradingeconomics.com/united-kingdom/population), an increase of 11% which is hardly overwhelming.
- fortythirteen 8y agoAre most of those 7m moving to Brockenhurst? No, they're piling into London, and new domiciles aren't keeping up, so prices are skyrocketing and pushing up the "national average".
- pjc50 8y agoLondon is something of a special case: https://londonist.com/2016/04/london-migration https://londonist.com/2016/04/london-migration I'd argue that the over-centralisation of the UK economy is a big part of the problem there; there should be as much investment in public transport in Manchester and Birmingham as there is in London.
- giantsloth 8y agoIt’s extremely intellectually dishonest to compare people who live in extreme comfort and can afford tremendous amounts of power because of their money to people who are historically oppressed by law and culture because of their ethnicity. Edit: Also, who has said they hate the rich? Stop propping up silly YouTube strawmen for you to take down with your logic lording.
- tzahola 8y agoAt most 1%.
- wool_gather 8y agoNote, it's at most 1% per year. The HN headline is actually a quote from the body of the article: > In most rich countries, real pay has grown by at most 1% per year, on average, since 2000. The next sentence breaks out one piece of that average: > For low-wage workers the stagnation has been more severe and prolonged: between 1979 and 2016, pay adjusted for inflation for the bottom fifth of American earners barely rose at all.
- farseer 8y agoThe glass is half full. In other words: high standard of living has been preserved in the western world over the last three decades, despite a rising population and the rise of Chinese manufacturing.
- danharaj 8y agoYea, it's great that housing and healthcare have only grown by 1% per year in costs since 2000 as well.
- weber111 8y ago"Real" is a technical term from economics and roughly means "after controlling for price increases".
- danharaj 8y ago"Adjusted for inflation" is an opaque term and doesn't actually explain which costs they controlled for. I doubt they controlled for both healthcare and housing.
- Arnt 8y agoI don't get what you're trying to say here? Are housing and healthcare not included in the general measurement of inflation where you live? Or do you mean that wage rises should be compared against only a part of inflation?
- lotsofpulp 8y agoHousing in desirable areas with potential for growth is offset by depressed housing in most of the rest of the US, so for the desirable portions of the country, housing, and higher education and healthcare have outpaced wage growth considerably.
- Arnt 8y agoI'm not sure... is this a roundabout way of saying that the expensive things are the ones you prefer, or is there something more substantive behind the statement?
- anoncoward111 8y agoMeanwhile my rent has certainly risen faster than inflation!
- andy_ppp 8y agoThe majority are a lot poorer and the rich have gotten a LOT richer. We've seen what happens before when we don't redistribute opportunity effectively haven't we. EDIT: Seriously the down voting! Here are some resources for you to think about: [1] https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite... [2] https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce... [3] https://en.wikipedia.org/wiki/The_Spirit_Level_(book) https://en.wikipedia.org/wiki/The_Spirit_Level_(book) I suggest the rise of populism is caused by increases in wealth going to the very richest while in real terms the majority of people are poorer than ever.
- tzahola 8y ago>We've seen Where? When?
- matlock 8y agoRussia 1918, France in the revolution for example. Also what happens all over Europe with right wing parties tearing apart the EU based on fear created in part by inequality
- paulpauper 8y agoover Europe with right wing parties tearing apart the EU based on fear created in part by inequality that is due to concerns over immigration , not wealth inequality Russia 1918 this had to do with famine and massive unemployment as a consequence of ww1, not merely wealth inequality. America is a long way from being as bad as Russia was in 1918. The Great Depression is far worse than anything now, yet there was no civil unrest in America. French revolution Wealth inequality was just a single factor, all. France was in financial crisis due to debt from various wars, causing high taxes and food shortages, again, which are problems America does not have.
- realusername 8y ago
- baxtr 8y agoThis information is useless, unless the rise of costs of living are stated
- yondepo 8y agoAffordable hi-tech is one of the results of stagnant salaries, isn't it? People have same salaries but can afford supercomputer with a great camera in their pocket. I could only dream about it in 2000.
- theandrewbailey 8y agoA supercomputer in your pocket doesn't put food on the table, or fix the car, or reduce crime in your neighborhood, or make sure there isn't lead in your water...
- daliusd 8y agoReally? You start navigation and go straight to your place. You do not get lost and do not waste fuel. Here you saved some money for food, fixing your car (oh yes, you are driving less so less to fix), you maybe even have avoided shady area with help of navigation and BTW you have reduced lead in your water by driving less most probably. And I have covered only one minor thing supercomputer in your pocket does.
- 3princip 8y agoPerhaps not, but it does allow you to learn to grow your own food and fix your own car, and all manner of other things. Most people use it for entertainment but we really are spoiled with the amount of information at our fingertips. The good will of professionals sharing their know-how online has helped my career grow and made me much more self-sufficient in other areas. Tangentially regarding wage growth, sure growing some of my food or fixing my car is a net-loss in terms of potential earnings because of the invested time, it's well worth it in other respects. Also, developed countries have a pretty good standard of living already. Needless consumption is a greater problem IMO.
- petermcneeley 8y ago"grow your own food" If you believe in commonly accepted economic thinking like efficiency of large scale production and comparative advantage and specialization, then you must conclude growing your own food does not make economic sense.
- piker 8y agoPSA: "Real pay" means nominal pay adjusted for inflation. So if pay went up by 3%, and inflation was 2%, you'd get something like a 1% "real" pay increase. Please reserve comment about the "cost of living" or inflation, as those are (technically) accounted for in this number.
- Brakenshire 8y agoYes, although it's always worth asking what measure of inflation is being used. Whoever makes the statistic usually picks the measure most favourable to their point, the most common wheeze is not including housing costs where they should be included.
- stdbrouw 8y agoI agree that housing costs should be included in some way, but this is hard to do correctly because – at least if you buy – housing is an investment good, not an expense. In the US the bureau of labor tries to calculate the "owners' equivalent rent"; the EU on the other hand considers the cost of housing and inflation to be strictly separate measures. Rents are generally included, though.
- humanrebar 8y ago> ...housing is an investment good... Only if you realize the appreciation somehow.
- maccard 8y agoYou realize it by default at the end of a mortgage when you're not paying it anymore.
- howard941 8y agoOr you don't because you literally default on the mortgage. Or perhaps you rent and it's really hard to consider housing an investment. It's more like some hybrid of necessary living expense optionally coupled to a consumer investment not amenable to being written off as a tax loss.
- tcbawo 8y agoCant read the article due to paywall. How much of these wage increases can be attributed to the minimum wage increases?
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- conanbatt 8y ago> The reason, economists reckon, is power. New hires generate a surplus, reflecting the fact that both worker and firm expect to gain from the transaction. Wage bargaining is a negotiation over how to split this surplus. Hello Marx. > If firms have the upper hand, because a new job is harder to find than a new worker, employers capture most of the surplus, creating a gap between the value created by workers and what they are paid. US has full employment, so this explanation does not take into account that finding a job is super easy. Im skeptical. The plea for unions is so unique coming from The economist.
- moorhosj 8y agoIf we are truly at full employment, why aren’t wages rising 3-4%?
- petermcneeley 8y agohttps://www.youtube.com/watch?v=1i0eQzMRrrc&feature=youtu.be&t=268 https://www.youtube.com/watch?v=1i0eQzMRrrc&feature=youtu.be...
- pjc50 8y ago"Surplus" is a respectable concept in mainstream economics, e.g. "consumer surplus": https://www.britannica.com/topic/consumer-surplus https://www.britannica.com/topic/consumer-surplus ; it's not intrinsically linked to labour theory of value, and the statement as written is true. > The plea for unions is so unique coming from The economist. The Economist and the FT often say things which are considered "radical" by popular economic discourse standards, because their readers are interested in what's actually happening while the popular discourse is extremely dogmatic and driven by the right.
- conanbatt 8y agoYes, but the idea that labor and company are splitting a same pie and that with organized labor you will increase that pie is a veiled labor theory of value. It goes contrary to other concepts like increasing profits , increasing capital investment, increasing wages, etc. > The Economist and the FT often say things which are considered "radical" by popular economic discourse standards, because their readers are interested in what's actually happening while the popular discourse is extremely dogmatic and driven by the right. I do not mind, but the economist is an economically liberal news source and Unions(as they are known by the public) are enemies of liberal economics. I hope Unions don't make a comeback.
- projectramo 8y agopaywall, but did they say mean pay or median pay? Just wondering if the real pay growth was evenly distributed.
- wool_gather 8y agoThe full sentence from the article says "on average", which I take as "mean", because later they make a distinction between "average" and "median". > In most rich countries, real pay has grown by at most 1% per year, on average, since 2000. Later: > Thus labour productivity rose by 75% in America from 1973 to 2016, while average pay rose by less than 50% and median pay by just over 10%. But the article is largely an opinion piece; the statistics are not completely fleshed out.
- Applejinx 8y agoYes, obviously. This is why protestations of 'there is full employment and a job being offered for every jobless person!' are disingenuous, manipulative garbage. If you cannot afford to work and live, it doesn't count as a job. And that's where things are, for most people, so the 'jobs' are lies.
- ctlby 8y agoI don't follow. Evidently, people could "afford to live" in 2000--almost all are still around to collect a paycheck. And now, they can live 19.6% (1.01^18 - 1) better than that! Real, not nominal. So why are the jobs "lies?"
- pjc50 8y agoCohort effects are real. During that time, something like a sixth of the population will have retired and now be collecting a pension (ie living off asset wealth). Another sixth will have come of age (roughly "millenials") and entered the workforce. The latter group also starts with an increased educational debt (in the US and UK) and faces a steep cliff of affording housing. A lot of the jobs are "lies" - the famous zero-hour contracts, where people are technically employed but not guaranteed to be given any shifts at all during a week. There are also a lot of people who are technically self-employed but not able to earn a reasonable income. Is sitting in an Uber waiting for a job "employed"?
- gowld 8y ago18.9% income increase is not living better if it's matched by >=19% cost increase. "Inflation" as usually reported is less than the "cost of living increase"
- pimmen 8y agoI believe this is because the domestic markets of most rich countries are saturated for stuff non-technical workers can supply. We have transportation, we have food, we have energy, we have sanitation, we have retail stores all within our grasp. The stuff we still will always need more of, such as automation and better health care, require highly specialized and skilled individuals and that's something very hard to adjust to. Meanwhile, the other economies of the world has a huge demand for the basic services and goods and thus their economies have risen dramatically. I think we are seeing a levelling off of the world's richest economies because a lot of our growth has been from capital investments into broadening international trade and leveraging. I have actually moved my investments away from Europe for now because the interest rates are so low, the innovation is so low and the political climate is becoming more and more polarized that I just think it's too risky for now.
- SolaceQuantum 8y agoI don’t think we actually have some of those things. See: Flint, MI.
- pimmen 8y agoWhat happened in Flint was a scandal because that's not supposed to happen in a rich country, that sort of water supply is an eye sore that someone should've done something about years ago. The sentiment that things like these can and should be dealt with swiftly is so engrained in us because of all the benefits we enjoy. Meanwhile, in some places where millions of people live cholera in the main water supply is Tuesday. You can make boatloads of cash if you satisfy that market demand.
- megaman22 8y agoYes, a horrifically mismanaged city that collapsed into corruption when it's tentpole heavy industry packed up and left makes a great example. That's not necessarily representative of anything, though.
- Gustomaximus 8y agoI feel your on the wrong tack here, shown by looking at company profits which are still growing at healthy rates in the wealthiest nations. https://tradingeconomics.com/united-states/corporate-profits https://tradingeconomics.com/united-states/corporate-profits And I believe, though recognise this has counter arguments, if we kept (or implemented depending on region) better tax redistribution and worker wage support the first world economies would be growing at a better rate. The trickle down policy we see in most western countries has been disproven time and time again yet the politicians still rebrand and implement it as its good for short term gains for the people funding their political careers. You do have a point that developing economies have a advantage in they have more upside to gain and this lets countries have those 10%+ per annum growth rates. But also its worth noting, and this may be 'causation does not equal correlation' type scenario, but no country has become developed as we consider it now without having a significant improvement in financial equality. See this graph: https://ourworldindata.org/wp-content/uploads/2013/12/Top-Incomes.png https://ourworldindata.org/wp-content/uploads/2013/12/Top-In... Article here: https://ourworldindata.org/income-inequality https://ourworldindata.org/income-inequality And while its not as simple as one variable, its going to be interesting to see what happens if we continue to allow inequality to grow.
- roenxi 8y agoReal wages increasing means that living standards aren't just steady, but growing in real terms - ie, people have more stuff and services than they did last year. Now, picking on the US, primary energy production has risen by less than 1% /edit: per annum/ since the year 2000 [1]. I suspect manufacturing growth is of a similar magnitude [2]. There was a report making the rounds a while ago saying that US infrastructure isn't in a great place. It isn't obvious how you could generate real increases without an increased real production to back it up, no matter how good your strongarm negotiating. I don't see how the Economist came up with a position of the problem being disorganised labour. The issues in America are that whatever people are doing isn't creating real wealth. Maybe they're finally hitting resource limits, maybe there are capital allocation issues. [1] https://www.eia.gov/totalenergy/data/annual/#summary https://www.eia.gov/totalenergy/data/annual/#summary [2] https://fred.stlouisfed.org/series/OUTMS https://fred.stlouisfed.org/series/OUTMS
- emodendroket 8y agoOrganized labor can demand that a greater share of profits be shared with workers far more effectively than individual workers.
- jgeada 8y agoIsn't that assuming that production remains as energy inefficient over time as it used to be? If production over the time period became more efficient by X% than that X% generates economic growth that is not visible in energy production. Given that energy/GDP has been steadily decreasing, both in the US and worldwide, this indicates that efficiency of production definitely needs to be taken into account. (eg https://www.eia.gov/todayinenergy/detail.php?id=10491 https://www.eia.gov/todayinenergy/detail.php?id=10491)
- givan 8y agoInflation only measures price for certain products but it doesn't cover quality or quantity decrease which decreased considerably for most products over the years.
- mkirklions 8y agoCompanies find ways to reduce the cost of things, that has nothing to do with how much money the government prints every year. Btw, this thread only reminds me why I believe in Bitcoin. Government money is only as responsible as the government behind it. After decades of American politics and corruption, I'll take BTC>USD long.
- paulddraper 8y agoBTC for transactional!?!? Most people don't stockpile USD; they use it for transactions...salary, rent, groceries, stock etc.
- mkirklions 8y agoI used my Shift card to buy taco bell. No fees, instant. Feels like a regular credit card. the only thing I pay in USD is my mortgage. I DCA my salary into BTC and pay for groceries with BTC.
- jonbarker 8y agoWhat matters most is economic mobility, and my definition of that is what percent of poverty level 20 somethings end up in the top income (and savings) brackets by their 30s and 40s. Because it's kind of OK if the bottom fifth of earners is just college baristas and bartenders, or financially independent people just picking up side jobs. I'm pretty sure that's not what is occurring in the US though, because pensions are now nonexistent and our average savings rate has always been horrible.
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- billysielu 8y agoInflation is not measured correctly because it does not include housing and shrinkflation, and probably other things. By excluding these things, the inflation figure is smaller. This smaller figure is then used by your employer to justify your small pay rises. E.g. "real pay has grown by 1%" when in reality it might be "real pay has fallen by 5%"
- alexandercrohde 8y agoInteresting. Could you suggest a good source that would explain why houses aren't included in inflation, and what the inflation figure might really look like if they were?
- Install_Gentoo 8y agoI'm just going to interject here. Havn't read the article but this study by Yakovenko https://arxiv.org/pdf/1612.01624 https://arxiv.org/pdf/1612.01624. Would give a more complete understanding of income.
- JulianMorrison 8y agoAs far as bargaining power goes, a UBI that fully covers subsistence would definitely be the most effective thing. Because then it would be possible to say "no". Whole sectors of the economy would have to actually present a value proposition to employees.
- philipodonnell 8y agoI haven't studied UBI a ton, but it seems to me like prices on non-discretionary goods would increase to absorb the additional income and the people who set those prices would be the ones benefiting i.e. the people already benefiting now. Rent seems like it would be a big one. I bet if you just up and gave everyone an extra $500/month then rents would rise by $500/month and house prices would increase commensurately, which is great if you're a homeowner but not so great if you're a renter (and many of the people who we are trying to help with this are renters).
- JulianMorrison 8y agoIt would probably need to be linked to rent controls. Or honestly, rent nationalization. I do not feel that private landlords for residential property are a thing that should exist. They really are nothing more than accumulating a sufficient pile of money to exclude people from a human necessity, and then using the leverage to squeeze people.
- gowld 8y ago> prices on non-discretionary goods would increase Only if those are demand-priced, not commodities. That's a problem whether UBI exists or not, and therefore needs to be addressed in conjunction, not instead. Anyone who saves any money at all would benefit from increased income.
- philipodonnell 8y agoCan you provide examples of the difference? Are you saying commodity pricing isn't demand-based? Or am I misinterpreting you here? I don't think there are many good and services typically purchased by low-income individuals that are not demand-priced.
- spir 8y agoA great bargaining chip for unskilled workers would be the viable alternative of unemployment backed by universal health care and basic income. EDIT: this idea is in the article: More radical ideas like a universal basic income—a welfare payment made to everyone regardless of work status—or a jobs guarantee, which extends the right to a government job paying a decent wage to everyone, would shift power to workers and force firms to work harder to retain employees.
- jeffreyrogers 8y agoWouldn't any publicly financeable UBI be around $10k per year? Plus it would replace many other welfare programs? That doesn't seem like it provides much better quality of life for unskilled workers.
- nimbius 8y agoSpeaking as a full time lead maintenance mechanic at a local auto repair shop, The tradecrafts have kept a pretty reasonable grip on bargaining power. The shop owners understand that if its not an honest days work for an honest days pay, I will leave. strong unions in the past have worked hard to ensure I could, if i chose to, open my own shop in about 3 days time. My local automotive mechanics union would even cover the cost of shipping new tools to my shop, and maybe run an ad or two in the paper. Mr H. if you're reading this, im certainly not quitting anytime soon! :) Ive worked in aerospace as well, where tradesmen are frequently paid more than managers. hassling an engine tech here, or casually second guessing one, is unthinkable and has gotten good managers demoted or fired. I was basically on-par with a surgeon as far as my respect and authority was concerned. Im not saying ive never been part of a strike. Most of my union jobs have been rewarding and fulfilling, with a level of transparency rarely seen in big shops. Ive had C level accountants sit down in a hanger with us to go over why we need to trim down on expenses, and make sure we understand it in plain english. To me, that speaks a lot. As for people in the Amazon shipping trenches, all you need to do is be brave, stay motivated, and push for a union. You regional and long haul amazon truckers also have a lot more bargaining power than you realize.
- petermcneeley 8y agoGreat read. But your last line about amazon and truckers is interesting because we all know that there is a drive to automate these positions.
- rm_-rf_slash 8y agoStill a long ways out. In the meantime, there is a significant trucker shortage and wages are rising quickly.
- jklinger410 8y agoThere will continue to be rising wages and trucker shortages as no one sees a great future in that line of work. Sure, jobs will remain. People will be paid to sit on trucks while they drive themselves across the country. People will be paid to sit in air conditioned offices and watch trucks as little dots as they travel across the country. They will have to find people to do those as well. The whole industry is boring unless you are management/executive level. Truckers today will have first dibs on all those positions, also, leaving new truckers completely screwed as their relatively new high paying trucking job leaves them with nothing.
- dmschulman 8y agoThere's something painfully ironic about this article being behind a paywall
- jejones3141 8y ago"And unions look like monopoly sellers of labour—cartels, intended to leech rents from society as a whole." That's what they are.
- marsRoverDev 8y agoI think there is a balance when it comes to unions - a point where they are very much necessary, and a point where they are a burden upon society. If workers in general are being underpaid, I think they are justified. But then you have other industries where they have a good grip on it and then take things a bit too far.
- philipodonnell 8y agoI always though of this as unions being very important for safety and quality of work. That is what is often touted as the benefits of unions, the 40 hour week, OSHA, minimum wage, the end of child labor, etc... But once an industry is generally pretty safe and relatively fairly structured, unions begin to lack a certain sense of purpose. Union leadership is elected and "keeping us safe and fairly paid" won't get you re-elected. Promising to extract better compensation for your members (even beyond just 'safe' and 'fair') will get you votes, so that is naturally what happens. There's just no objective way to tell a union that they have accomplished their goals and aren't really needed until/unless there is a threat to those goals, but nor is there a way to tell a company that they are operating unfairly and their workers need a union...
- matchbok 8y agoWhat a compelling argument. Union membership is the lowest ever, and so is wage growth. Too much kool-aid, I think.
- gowld 8y ago"sellers of labour" is almost exactly what "society" is. You can't leech rent from yourself. It's always interesting to see free marketeers sing the praises of monopsonist buyers of labor and (corporate) sellers of products, but suddenly change their tune when sellers of labor gain market power.
- TangoTrotFox 8y agoThe data on this topic really changed my entire worldview. I ran into this [1] when actually searching information on the chiseling out of the middle class. And that paper does describe that chiseling of the middle class. In 1979 the middle class controlled 46% of all income, and the upper/rich classes controlled 30%. Today (well at least today as of 2014) the rich and upper class control 63% with the middle class left with 26%. There's even been a chiseling out of the middle class as a whole declining from 38.8% of society to 32% of society. But the eye opener is this. This is the change in the size of each economic group between 1979 and 2014 as a percent of the total population: - Rich: 0.1% -> 1.8% - Upper Middle Class: 12.9% -> 29.4% - Middle Class: 38.8% -> 32% - Lower Middle Class: 23.9% -> 17.1% - Poor or Near-Poor: 24.3% -> 19.8% Such tremendous progress in just 35 years is absolutely remarkable. Statistics like this are certainly subject to biased interpretation and 'massaging'. If one is curious about the source, wiki has a section on the political stance of the Urban Institute [2]. Though the paper itself is very transparent in their methodology and extremely readable. I found it all eye opening to the point that it actually changed my worldview. [1] - https://www.urban.org/research/publication/growing-size-and-incomes-upper-middle-class https://www.urban.org/research/publication/growing-size-and-... [2] - https://en.wikipedia.org/wiki/Urban_Institute#Political_stance https://en.wikipedia.org/wiki/Urban_Institute#Political_stan...
- dragonwriter 8y ago> Such tremendous progress in just 35 years is absolutely remarkable No, it's just a product of bad methodology that adopts a operationalization of economic class that is incompatible with the general use of the term. “Absolute income thresholds adjusted for inflation” don't have much correlation to the way anyone defines economic class outside the context of that specific piece of research. The classic definitions of class in capitalist society have to do with economic roles (labor, mixed, or capital); the common modern American use is based around income percentiles.
- TangoTrotFox 8y agoSo you don't think inflation adjusted spending power defines class? Income percentiles can't really define progress as of course there will always be e.g. 20% in the bottom 20% of society and their relative income to the top is meaningless as it could just as well mean that the top of society has nothing as it could that the bottom of society has lots. So you need to measure spending power, which is exactly what this paper did.
- hacknat 8y agoI don’t disagree, but is the economist libertarian anymore?
- spiralx 8y agoIt never was libertarian in the first place. Here's what they have to say about their stance: > What, besides free trade and free markets, does The Economist believe in? "It is to the Radicals that The Economist still likes to think of itself as belonging. The extreme centre is the paper's historical position." That is as true today as when former Economist editor Geoffrey Crowther said it in 1955. The Economist considers itself the enemy of privilege, pomposity and predictability. It has backed conservatives such as Ronald Reagan and Margaret Thatcher. It has supported the Americans in Vietnam. But it has also endorsed Harold Wilson and Bill Clinton, and espoused a variety of liberal causes: opposing capital punishment from its earliest days, while favouring penal reform and decolonisation, as well as—more recently—gun control and gay marriage.
- deleted 8y ago[deleted]
- paidleaf 8y agoHow exactly can workers gain more bargaining power when the system allows corporations to move production overseas in search of cheaper labor and encourages poor migrants ( legal and illegal ) to move to wealthier nations to undercut wages? The modern world economic system makes it easy for capital to move overseas by removing barriers ( legal, national, borders ) while keeping labor bound to particular nations and regions. And in regards to the US, we allow corporations to keep money offshore untaxed while if I moved overseas to work, I have to pay taxes on my earnings. The economist along with most media has pushed the neoliberal agenda of the wealthy elite for decades while large swathes of the nation turned to the rust belt. The days of me taking anything from the economist or much of the media seriously has long passed. I consider the economist and much of the media as I do facebook, just information pollution.
- lewis500 8y agoI wonder how much empowered workers would bargain for wages vs other things they might want. For example, in the US, we public employees do bargain for higher wages, but we also go pretty hard for pensions, job security and lower health co-pays. Increasingly we are also bargaining for childcare help due to the insane increases in the cost of childcare (this is a genuine mystery to me: in the 80's early 90's my broke parents could easily afford to put me in full-time, quality childcare from like 3 months onward). In European countries with strong bargaining, workers demand more vacation time. In short, I don't think it's right to imagine wages going up enormously with more bargaining power; I think it's more accurate to imagine benefits and terms of employment (job security, vacation, autonomy) going up. Not a normative point but more of a positive one. I believe this happens because of how the union works. People who care a lot about some issue (e.g., parents caring about childcare) will push hard on the union to bargain for their particular benefit. Wage increases, by contrast, are spread over the whole union and thus expensive in total but not huge for any individual, so there is a sort of collective action inertia even within the union. A small wage increase would cost as much as a huge increase in childcare help, so the parents will be able to mobilize more easily. Personally, this arrangement me benefits me a lot as I care more about those benefits than salary.
- Bartweiss 8y agoYour last point is a really interesting and undervalued one. I think "dedicated interest groups care way more than the bulk of people" is an under-appreciated factor in all kinds of negotiations; we know it happens in politics, but it ends up shaping everything from workplace benefits to product design. As for specific benefits, healthcare is a very obvious example of why people push for benefits, and how it distorts earning charts. Per capita healthcare spending has grown much faster than inflation. A worker who forgoes healthcare for a salary hike will either fall behind immediately, or need to negotiate a present-value benefit that will quickly become an awkwardly large number. (And that's before we take into account the ability of employers to get good healthcare at a discount.) The price of healthcare, college, housing, and childcare have skyrocketed compared to inflation. Anything an employer can offer that either covers those costs (healthcare, on-site daycare) or helps reduce them (flexible hours or a shuttle to improve commutes) is going to become steadily more valuable to employees for as long as that continues, and consequently more important to lock in now.
- icu 8y agoThe premise of this article is simply addressing the symptoms and not the cause. Any first year Economics Undergraduate learns that prices rise when quantity demanded outstrips quantity supplied. Wages are simply the price of labour. For the price of labour to rise, there must be less workers willing to do work at the market clearing price. It is just not possible to do this at this time due to societal factors that Economists, and this article, have largely failed to address—due to the sensitive nature of the these factors. Foremost, the addition of women in the workplace has effectively doubled the labour supply. IMHO quite rightly as well, freedom is a fundamental civil rights issue... but the global economy did not outgrow the additional labour supply and wages have been flat as a result. Secondly, globalisation has brought about the shifting of jobs from higher cost centres to lower ones. This reduces the demand side for labour in the West, resulting in a lower price equilibrium (but has increased the demand side for labour in the East, where wages have been forced to rise, albeit from a very low place). It's also obvious that this issue has been a political hot potato as most moderate political parties in the West have accelerated globalisation at the same time as they largely ignored its consequences. I think it's fair to say that this has now given rise to extreme political views, and parties, on both the left and the right. Lastly, it is hard to argue that immigration movements have not also brought about an over supply of labour to the West. Legal or illegal it doesn't really matter, the net effect is an increase in the labour supply which will push down price equilibrium. And as a bonus, most Economists fail to think about the impact inflation (AKA stealth tax) has on real (AKA inflation-adjusted) wages. IMHO, productivity and growth are the real only solutions, but I'm afraid that political uncertainty caused by social upheaval will mean that productivity and growth are stymied for years to come.
- seem_2211 8y agoYou should re-read the article. We've seen an increase in productivity, but no matched increase in wages (a 75% increase in worker productivity in America from 1973 to 2016, while average pay rose by less than 50% and median pay by just over 10%). As for the rest of your comment, you should look into the Lump of Labour fallacy[1]. 1: https://en.wikipedia.org/wiki/Lump_of_labour_fallacy https://en.wikipedia.org/wiki/Lump_of_labour_fallacy
- s73v3r_ 8y ago
- exabrial 8y agoI have major issues with many of the points in the article. Stronger unions, for instance, have been shown to just send jobs overseas to human rights abuser companies. Raising the minimum wage has been shown to be regressive to the poor, and it just increases their cost of living and devalues their savings. And then there are the moral implications of a UBI funded by forced taxation. I'll propose two alternatives: If wages are to rise, people need to be more fluid about their job situation. How this happens could manifest itself in many ways. The most idealistic case is that people save money instead of living month to month, giving them the confidence to invest in a job search or absorb the expenses of moving to an area that pays better or has a lower cost of living. I'd entertain ideas to move to improve the possibility of people moving jobs or locations. The second is basic money management skills. I think there's an entire class of people in the USA that could be paid several thousand a month and they would still be in debt. We overuse credit and salespeople on everything from cars to cell phones want you to talk about affording monthly payments rather than paying the lowest possible price.
- EGreg 8y agoSocialism and Capitalism both rely on an outdated assumption: that demand for human labor will always be high. Capitalism says you will always find an employer who values your work. But whereas your grandfather worked for decades as a company man, had a pension and was able to support a family on one paycheck, today productivity per capita is 4-10x higher and people are doing 2 year stints, part time jobs, gig economy, etc. Socialism says collective bargaining power will get workers what they want because they are valued collectively. But as much as oxen and horses unionized the fields would still be turned into parking lots. People have needs like food and rent. A Universal Basic Income captures
- TOGoS 8y agoFor the time being, workers do collectively have potential (if we were better organized) bargaining power. Otherwise unemployment would be a lot higher. Which is why we need to organize now if we want a future where everyone benefits from technology and not wait for the rich to control everything with an army of robots.
- moorhosj 8y agoWe have been convinced taxes are the problem, while wages stagnate.
- verylongname 8y agoThe bargaining power of workers is being undermined by large-scale immigration and by trade policy. The National Academy of Sciences report on immigration found that current immigration policy diverts a shocking 500 billion dollars a year away from wage earners (and a net benefit to the economy of about 50 billion dollars a year from immigration). I suspect trade policy has an even bigger impact. Everything else is lower order.
- antpls 8y agoAgain an article about the economist magazine...
- anovikov 8y agoWhy not just concede to the fact that the role of 'broad' labor in the economy has irreversibly fell and not going to return? I mean, share of labor in the economic pie is probably not falling, but it's the top 10% who wins anything, and most goes to top 1% - and these are actual labor, employees, not some corruptioners, or business owners. Broad labor - 'the masses' - has lost it and it's not going to return. Why trying to break the neck of economy by introducing artificial redistributive policies, which will skew things closer and closer to communism? I grew up in the Soviet Union and i definitely don't want to see any of that shit, ever again. Why not look for solutions in non-economic means such as better propaganda, better ways to spend time, and better law enforcement?
- bmedwar 8y ago> In most rich countries, real pay has grown by at most 1% per year, on average, since 2000. > in America from 1973 to 2016, while average pay rose by less than 50% and median pay by just over 10%. Wild mix of numbers. Each one in isolation I would draw different conclusions.
- mcovey 8y agoI had to negotiate working several days a week remote, because my job doesn't pay enough to live in or within 45 minutes of the city it's in. Starting this July I'll be working in-office 2 days a week and commuting over an hour. This is so I can afford housing. I basically offered my employer a very gentle ultimatum - I explained that my rent was going up and I'm being priced out of the city, that I like my job and would like them to invest in me, and offered them the two solutions of a raise or working more time remote so I could live somewhere more affordable. They picked the latter. I feel less invested in to be honest. I am ambivalent about this solution. On one hand, even if I were to lose my job, I'd be able to afford my house just with unemployment pay, and even if I take a job that pays less after, it will likely still remain affordable. On the other hand, it ties me more to my employer because not all are willing to allow remote work and if I have to take a new job in the city, it may require a very long commute 5 days a week. But not all, or even most employers in the city pay enough to live in or near it. That's just the way it is. I understand many people are not lucky enough to have either choice.