3 ms·

I interpreted it as follows: If unemployment is indeed down (and he asserts that it is) then the supply of extra workers is down also. The salaries, following

by gota 8y ago

I interpreted it as follows: If unemployment is indeed down (and he asserts that it is) then the supply of extra workers is down also. The salaries, following the supply/demand ratio, should be up. And they are not. Since they're not, the law of supply/demand dictating 'prices' does not work for worker's compensation.

bko 8y ago
What people call "salaries" does not include employer cost of benefits. For instance, US health care spending grew 4.3% in 2016 [0]. Since many employers cover health care in the US, a growth in health care expenditures on the employer side can be seen as a increase in salary. And since health care benefits is a disproportionate amount for low or middle income workers, this will hamper their wage growth the most in relative terms. In other words, if 25% of your "pay" is health care, and health care is growing at 4%, your effective "salary" can be said to be growing at 1% as long as your premiums and coverage stay the same. [0] https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.html https://www.cms.gov/Research-Statistics-Data-and-Systems/Sta...
- eptcyka 8y ago
  I think the meager growth in health care spending is not nearly big enough to cover the discrepancy between the increase in salaries predicted by extrapolating market forces and what the salaries actually are. Not to mention, most low paying jobs don't provide health care.
  - bko 8y ago
    This is something that can easily be referenced. Benefits make up around 30% of workers wages with health insurance around 8%. If health care expenditures grow at 4%, that's 0.32% wage growth from health care costs. You may consider that insiginificant but I don't. https://www.bls.gov/news.release/ecec.nr0.htm https://www.bls.gov/news.release/ecec.nr0.htm
    - SketchySeaBeast 8y ago
      > If health care expenditures grow at 4%, that's 0.32% wage growth from health care costs. So if you earn $100,000 each year you get a raise of $320 due to health care? To be honest with you, that seems pretty insignificant. And it's also sort of a feedback loop - the quality of care isn't increasing - the system is only costing more because the system can charge more. All that's doing is accounting for "healthcare inflation", and if a cost of living raise is a significant raise, something is wrong.
- conanbatt 8y ago
  Excellent point! Healthcare truly should be the #1 policy discussion in the US, due to the magnitude of its economic impact and how the current status quo is not supported by economists on either side of the aisle. I wish that someone drafted some economic-concensus presidential mandates for trump to irresponsibly sign before his term is over and someone argues for socialization of healthcare.
ianai 8y ago
Supply and demand can be affected by externalities. In the labor market, those externalities include legal discrepancies between individuals and companies as well as international trade. With inappropriately cheap shipping costs local labor is competing against foreign labor. So the model would have to take into account wage levels abroad. Ie until US wages sink to Brazilian, Chinese, and Indian levels no broad wage increases are likely locally (as a strong interpretation).
zip1234 8y ago
Other things to keep in mind: - Labor market is bigger than a single country - Other costs may affect wages (if profits are squeezed, increased competition, rising costs of goods or benefits, etc) - Government policies impact wages (law of unintended consequences)
randomdata 8y ago
> The salaries, following the supply/demand ratio, should be up. And they are not. Supply and demand says that offers will go up. And they have. After all, if you are unemployed, employers see your value as being less than the amount you are willing to work for (which can be no lower than minimum wage). If they could hire you for $0, or a negative amount, they most certainly would. There is always some price point where it is worthwhile. Those rising offers is what has allowed those previously unemployed to find jobs with agreeable compensation and join the employed where previously offers were not high enough to reach an agreement (by choice or due to the law). > Since they're not, the law of supply/demand dictating 'prices' does not work for worker's compensation. The law of supply and demand is being observed exactly as expected here.
walshemj 8y ago
Or there are a lot of hidden unemployed that are not captured by the statistics.

by gota 8y ago

bko 8y ago

What people call "salaries" does not include employer cost of benefits. For instance, US health care spending grew 4.3% in 2016 [0]. Since many employers cover health care in the US, a growth in health care expenditures on the employer side can be seen as a increase in salary. And since health care benefits is a disproportionate amount for low or middle income workers, this will hamper their wage growth the most in relative terms. In other words, if 25% of your "pay" is health care, and health care is growing at 4%, your effective "salary" can be said to be growing at 1% as long as your premiums and coverage stay the same. [0] https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.html https://www.cms.gov/Research-Statistics-Data-and-Systems/Sta...

eptcyka 8y ago
I think the meager growth in health care spending is not nearly big enough to cover the discrepancy between the increase in salaries predicted by extrapolating market forces and what the salaries actually are. Not to mention, most low paying jobs don't provide health care.
- bko 8y ago
  This is something that can easily be referenced. Benefits make up around 30% of workers wages with health insurance around 8%. If health care expenditures grow at 4%, that's 0.32% wage growth from health care costs. You may consider that insiginificant but I don't. https://www.bls.gov/news.release/ecec.nr0.htm https://www.bls.gov/news.release/ecec.nr0.htm
  - SketchySeaBeast 8y ago
    > If health care expenditures grow at 4%, that's 0.32% wage growth from health care costs. So if you earn $100,000 each year you get a raise of $320 due to health care? To be honest with you, that seems pretty insignificant. And it's also sort of a feedback loop - the quality of care isn't increasing - the system is only costing more because the system can charge more. All that's doing is accounting for "healthcare inflation", and if a cost of living raise is a significant raise, something is wrong.
conanbatt 8y ago
Excellent point! Healthcare truly should be the #1 policy discussion in the US, due to the magnitude of its economic impact and how the current status quo is not supported by economists on either side of the aisle. I wish that someone drafted some economic-concensus presidential mandates for trump to irresponsibly sign before his term is over and someone argues for socialization of healthcare.

ianai 8y ago

Supply and demand can be affected by externalities. In the labor market, those externalities include legal discrepancies between individuals and companies as well as international trade. With inappropriately cheap shipping costs local labor is competing against foreign labor. So the model would have to take into account wage levels abroad. Ie until US wages sink to Brazilian, Chinese, and Indian levels no broad wage increases are likely locally (as a strong interpretation).

zip1234 8y ago

Other things to keep in mind: - Labor market is bigger than a single country - Other costs may affect wages (if profits are squeezed, increased competition, rising costs of goods or benefits, etc) - Government policies impact wages (law of unintended consequences)

randomdata 8y ago

> The salaries, following the supply/demand ratio, should be up. And they are not. Supply and demand says that offers will go up. And they have. After all, if you are unemployed, employers see your value as being less than the amount you are willing to work for (which can be no lower than minimum wage). If they could hire you for $0, or a negative amount, they most certainly would. There is always some price point where it is worthwhile. Those rising offers is what has allowed those previously unemployed to find jobs with agreeable compensation and join the employed where previously offers were not high enough to reach an agreement (by choice or due to the law). > Since they're not, the law of supply/demand dictating 'prices' does not work for worker's compensation. The law of supply and demand is being observed exactly as expected here.

walshemj 8y ago

Or there are a lot of hidden unemployed that are not captured by the statistics.