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Here are a couple of interesting and crucially related graphs: - Nonfarm Business Sector: Real Compensation Per Hour [1] - Nonfarm Business Sector: Real Outpu

Here are a couple of interesting and crucially related graphs: - Nonfarm Business Sector: Real Compensation Per Hour [1] - Nonfarm Business Sector: Real Output Per Hour of All Persons [2] - Real Median Personal Income [3] Nonfarm business sector is defined as "a subset of the domestic economy and excludes the economic activities of the following: general government, private households, nonprofit organizations serving individuals, and farms. The nonfarm business sector accounted for about 77 percent of the value of gross domestic product (GDP) in 2000." I think many of these articles were influenced by an earlier Pew study which showed a sharp disconnect between income and productivity. But their study excluded supervisor positions and only counted wages - not overall compensation. The data I'm presenting here seem to show relatively strong wage growth over time. Interestingly enough median personal income, by contrast, has not grown nearly as rapidly. I present these data as a question more than an answer. But we do live at a time when developers, engineers, and many other 'normal' white collar jobs are going into 6 figures early in their career. And on the other end I know there are also plenty of people making healthy 6 figure salaries doing things like working on offshore rigs (not to mention getting schedules like 2 weeks on, 2 weeks off). And for general low skill work you have fast food/coffee managers making $40-$50k. It could be that all of these sharp increases in wages are somehow being offset by other jobs having seen substantial decline in wages, or it could be that somehow the market dynamics have changed in ways that certain measurements might not accurately reflect. I'm not really sure, though I'm increasingly leaning towards the latter. [1] - https://fred.stlouisfed.org/series/COMPRNFB https://fred.stlouisfed.org/series/COMPRNFB [2] - https://fred.stlouisfed.org/series/OPHNFB https://fred.stlouisfed.org/series/OPHNFB [3] - https://alfred.stlouisfed.org/series?seid=MEPAINUSA672N https://alfred.stlouisfed.org/series?seid=MEPAINUSA672N

jaggederest 8y ago
These are more interesting graphs. https://fred.stlouisfed.org/graph/fredgraph.png?g=ki8y https://fred.stlouisfed.org/graph/fredgraph.png?g=ki8y https://fred.stlouisfed.org/graph/fredgraph.png?g=ki8A https://fred.stlouisfed.org/graph/fredgraph.png?g=ki8A https://fred.stlouisfed.org/graph/fredgraph.png?g=kipg https://fred.stlouisfed.org/graph/fredgraph.png?g=kipg Healthcare, education, and housing have all doubled since the turn of the century compared to median incomes. There are a few sectors of the economy that are absolutely crushing people who make a median wage.
- IkmoIkmo 8y ago
  On housing there are some caveats: - it's a consumer-driven market, higher prices made a lot of ordinary citizens rich. It's not money that disappeared into a few rich shareholders' pockets like say in the medical industry. - [0] mortgage rates have gone down from a peak of 18% to below 3%. That's the money that you'll never see again. Suppose you bought a home 3x your income, you used to be paying 54% of your income on interest alone, now it's 9%. Prices went up, but there was also downward pressure on your actual monthly expenses due to interest rates plummeting. - 'houses' aren't fungible over time. Home sizes are way bigger and household sizes slightly smaller. On average each individual has roughly twice as much home space as before. [1] We choose to live bigger and sharing our space with fewer people. That's at least a sign of shifting preferences, and at best a sign of wealth, not poverty. Caveats can be made about healthcare, too. We've added 8 years of life to each individual since the 1970s. That's insane. I'm less excited about education. I see signs of credentialism. Education still has positive returns for individuals, but the story isn't as strong as for societal returns (i.e., at some point the abundance of degrees become a positional good or in other words a zero-sum game). [0] https://i.stack.imgur.com/eKqLH.gif https://i.stack.imgur.com/eKqLH.gif [1] https://azgolfhomes.com/wp-content/uploads/2016/07/American-Enterprise-Institute-Housing-Data.jpg https://azgolfhomes.com/wp-content/uploads/2016/07/American-...
batterseapower 8y ago
Real compensation has become disconnected from wages mostly due to 2 factors [1]: - Wage inequality (the average wage is growing faster than the median wage) - Growth in benefits like pensions and health insurance which are not part of wages but are part of compensation The inequality and benefits effects are about equally strong. Once you control for these 2 factors, compensation has risen at almost exactly the same rate as productivity growth, which is what you would expect of the economy in long run equilibrium. [1] https://www.resolutionfoundation.org/app/uploads/2014/08/Decoupling-of-wages-and-productivity.pdf https://www.resolutionfoundation.org/app/uploads/2014/08/Dec...

jaggederest 8y ago

These are more interesting graphs. https://fred.stlouisfed.org/graph/fredgraph.png?g=ki8y https://fred.stlouisfed.org/graph/fredgraph.png?g=ki8y https://fred.stlouisfed.org/graph/fredgraph.png?g=ki8A https://fred.stlouisfed.org/graph/fredgraph.png?g=ki8A https://fred.stlouisfed.org/graph/fredgraph.png?g=kipg https://fred.stlouisfed.org/graph/fredgraph.png?g=kipg Healthcare, education, and housing have all doubled since the turn of the century compared to median incomes. There are a few sectors of the economy that are absolutely crushing people who make a median wage.

IkmoIkmo 8y ago
On housing there are some caveats: - it's a consumer-driven market, higher prices made a lot of ordinary citizens rich. It's not money that disappeared into a few rich shareholders' pockets like say in the medical industry. - [0] mortgage rates have gone down from a peak of 18% to below 3%. That's the money that you'll never see again. Suppose you bought a home 3x your income, you used to be paying 54% of your income on interest alone, now it's 9%. Prices went up, but there was also downward pressure on your actual monthly expenses due to interest rates plummeting. - 'houses' aren't fungible over time. Home sizes are way bigger and household sizes slightly smaller. On average each individual has roughly twice as much home space as before. [1] We choose to live bigger and sharing our space with fewer people. That's at least a sign of shifting preferences, and at best a sign of wealth, not poverty. Caveats can be made about healthcare, too. We've added 8 years of life to each individual since the 1970s. That's insane. I'm less excited about education. I see signs of credentialism. Education still has positive returns for individuals, but the story isn't as strong as for societal returns (i.e., at some point the abundance of degrees become a positional good or in other words a zero-sum game). [0] https://i.stack.imgur.com/eKqLH.gif https://i.stack.imgur.com/eKqLH.gif [1] https://azgolfhomes.com/wp-content/uploads/2016/07/American-Enterprise-Institute-Housing-Data.jpg https://azgolfhomes.com/wp-content/uploads/2016/07/American-...

batterseapower 8y ago

Real compensation has become disconnected from wages mostly due to 2 factors [1]: - Wage inequality (the average wage is growing faster than the median wage) - Growth in benefits like pensions and health insurance which are not part of wages but are part of compensation The inequality and benefits effects are about equally strong. Once you control for these 2 factors, compensation has risen at almost exactly the same rate as productivity growth, which is what you would expect of the economy in long run equilibrium. [1] https://www.resolutionfoundation.org/app/uploads/2014/08/Decoupling-of-wages-and-productivity.pdf https://www.resolutionfoundation.org/app/uploads/2014/08/Dec...