12 ms·

>To prime your intuition a bit, consider how woman and minorities more than doubled the work force from the 1960s to 1990s with no loss in jobs or lowering of w

>To prime your intuition a bit, consider how woman and minorities more than doubled the work force from the 1960s to 1990s with no loss in jobs or lowering of wages. You do realize there hasn't been a raise in real wages since the 70s when you account for inflation right? Coincidentally during that same time period the income gap exploded because the wealthy had plentiful cheap labor and were able to pocket the productivity gains as pure profit because workers had no leverage to demand higher wages because there were 0 labor shortages. American's used to be able to support large families of 4+ kids with only 1 working parent. Now you have households with both working and they can't afford to have kids. http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-... I support high skilled immigration because it benefits the country but let's be real, if we dropped 10 million software engineers in Silicon Valley from around the world, guess what? Wages would drop massively because it would be a buyer's market for tech companies, they could pick and choose the most talented for pennies

femiagbabiaka 8y ago
Software engineering isn’t most professions. Salaries have been going up more than a decade accounting for inflation. If 10 million software engineers dropped in Silicon Valley, a lot of things would happen (for one there’s nowhere for them to live). But that’s not what’s happening.
- tossaccount123 8y ago
  It was hyperbole to show the effect of supply and demand More and more I notice how similar software engineers are beginning to sound like the "Made in America" factory workers who said China could never do their job. Never take the present comfy situation for granted
  - femiagbabiaka 8y ago
    Software engineer salaries have been rising in a globalized market. Companies can already hire wherever they want. Many do. I have no doubt that if companies can pay workers less then they will. But that’s not what’s happening.
    - pishpash 8y ago
      Rising compared to what? Junior engineers are doubling or tripling up to live near work in metropolitan areas or face crushing commutes. It's a sign that even in software engineering, capital is crushing labor.
      - femiagbabiaka 8y ago
        You're describing two different problems. Housing supply in the Bay Area and New York -- the areas I'm assuming you're talking about, because most other metropolitan cities are building to keep up with supply just fine -- is incredibly low. In addition, in the Bay Area especially, the incredibly high salaries in combination with that supply is causing skyrocketing prices.
      - emiliobumachar 8y ago
        Be aware that Silicon Valley is an extreme global outlier in real estate prices.
        AYBABTME 8y ago
        Not really, there's cities all over the world with conditions that lead to crazy high real estate/housing costs. Most every metropolis ends up with a similar situation. Slightly different settings that all sum up to "high demand low supplies". NYC, London, Vancouver, Hong Kong, Tokyo, ...
        ben_w 8y ago
        SF is an outlier compared to London. From expatistan.com: Monthly rent for 85 m2 (900 Sqft) furnished accommodation in NORMAL area: SF: $3,663 (£2,789) London: £1,766 Difference: 58%
  - pishpash 8y ago
    Indeed. An argument could be made that given the astronomical living costs of Silicon Valley, the wages should have already been higher given how much profits the companies are making.
  - wycs 8y ago
    Anyone who thinks China is not full of extremely talented software engineers does not know anything about China.
    - femiagbabiaka 8y ago
      so true -- they're even kicking our ass in many fields of CS research.
    - donedealomg 8y ago
      So how come there is 0 tech innovation coming from there? Your statement is absolutely false covered by facts.
  - Buge 8y ago
    If we want stuff to be made in America instead of China, we should increase the number of skilled immigrants allowed in.
    - gesman 8y ago
      Import tax on crap would solve it.
      - Buge 8y ago
        By "stuff" I was actually referring to digital products, digital technology, websites, technology companies, etc. An import tax on those would be harder than for physical products.
        madengr 8y ago
        Yes, mostly crap.
        Buge 8y ago
        I never claimed it wasn't crap, I said it's hard to tax imports of it.
      - PedroBatista 8y ago
        If they did the same, US exports would tank.
      - logfromblammo 8y ago
        It would not. An import tax reduces imports, but also reduces exports by a greater amount. An export tax on real estate transfers to foreign persons, cash or cash-equivalents, luxury goods, artwork, and technology--such as engineering documents and diagrams, manufacturing machinery, and firmware source code--would also not solve it, but it would bite a bigger chunk out of the problem. Imports are paid for by exports. The US is currently paying for the manufacturing that it exported with dollars and documents. It could be paying with cars, and airplanes, and espresso machines, and in-sink garbage disposals, and novelty CNC lathes for engraving wooden pencils and chopsticks, and rapid refrigeration devices for single canned beverages, and maybe even non-imaginary 8K OLED television sets. If you make the specific exports that produce the most internal economic activity the cheapest way to pay for imports, increases in imports would encourage more exports. If you're covering a trade deficit with cash, that impacts the same currency you use to conduct domestic trade--you're giving the trade partner leverage over your whole economy. What you really want to do is make a note spent in your own country buy far more than the same note spent elsewhere, so that the notes stay in the country, and the goods and services get exported instead. But you also want the rest of the world to have high demand for your currency, so that you can bring in a lot of imports, or go on lots of cheap tourist vacations. So devaluing your currency is not the best option. But if you had, say, a 50% tax on foreign money transfers, if someone were to buy a $1 doodad from Elbonia, they would have to pay $2 for it in cash--$1 for the importer, and $1 for the tax. But they could also pay for it by purchasing a $1 doohickey locally and trading that for the $1 doodad, avoiding the tax, and keeping the $1 circulating in the domestic economy, and the Elbonian money circulating in Elbonia. Instead of taxing the trade itself, tax imbalanced trades and trade deficits. Of course, any real-world implementation would be politicized to Hell and back, and chock full of loopholes, but it works just fine between imaginary countries.
  - olalonde 8y ago
    More and more? I recall software engineers were panicked over outsourcing just over 15 years ago. Have you watched Office Space? This is not a new phenomenon.
joshe 8y ago
That's super interesting, I didn't know that about hourly wages. I tend to think of income gaining from 1950 to 1990 and flattening from the mid 1990s to now. Though it does look like total compensation (adding in benefits) did actually increase recently, they don't have anything for back to 1960. So maybe the story is that wages stayed flat, but benefits accounted for most of the income increase. Not an economist so I don't know how to tease this out. Heath care does go up from 5% of gdp in 1960 to 18.2% today, maybe most compensation gain is going there? Plus retirement benefits. But... from 1960 to 2000 the civilian labor force increased from 70 million to 141 million [1]. With all those new workers, by your link, compensation didn't actually shrink. That's weird huh? Also real median family income grew from $41K to $72K [2]. And sure 10 million software engineers added to SV tomorrow would lower wages. But maybe not long term? If it was 10 million countrywide? What would an economist or a careful wage survey say? Anyway we're talking about 85,000 jobs all over the country. The main point of my comment is that when economists spend 10 years looking at data and arguing out every detail, they conclude that immigration is increasing jobs and increasing wages. They usually conclude that for specific wage markets too. Maybe we can't rely on some anecdotes in the media to refute their conclusions? [1] https://www.bls.gov/opub/mlr/2002/05/art2full.pdf https://www.bls.gov/opub/mlr/2002/05/art2full.pdf (table 5) [2] https://fred.stlouisfed.org/series/MEFAINUSA672N https://fred.stlouisfed.org/series/MEFAINUSA672N
- servercobra 8y ago
  I generally agree with what you say, but the median family income growing seems like it would be due to most households moving from one to two workers. Looking at it that way, it makes wages look even flatter over the time period.
  - abakker 8y ago
    Yes, this is right. Large increases in the workforce have increased the supply, reducing real wage growth, household earning has grown by adding a second earner. More work is getting done to get the same economic outcome. Put one way, this is terrible for wage earners, out another it is excellent for spenders since the thing you can buy have gotten cheaper through plentiful labor.
Ar-Curunir 8y ago
No, wealth inequality increased because we stopped taxing rich people.
- tossaccount123 8y ago
  The US didn't have an income tax at all until the 20th century, at least at the federal level
  - rswail 8y ago
    It also didn't have any public entitlements. It's also 100 years later. So the point is not particularly relevant.
  - isostatic 8y ago
    Rich: having wealth or great possessions; abundantly supplied with resources, means, or funds; wealthy: a rich man; a rich nation. Not sure how income tax would apply to that
- adventured 8y ago
  Wealth inequality has increased mostly due to the massive expansion of the global economy, which was a large benefit to capital owners and was a detriment to US labor (whose wages were artifically very high in the post WW2 decades). Global labor competed, capital benefited. Federal Reserve policies since ~1970 have also overwhelmingly favored capital, asset holders, and not workers. The US tax code has gotten more progressive over time, not less. The very high tax rates from the past were quite narrow in scope, they covered few taxpayers. The top 25% are paying 85-88% of all income taxes in a given year. The top 10% are paying 70% of all income taxes. The top 1% yield 20% of all income and pay 39% of all income taxes. How do you qualify that very progressive tax code as "stopped taxing rich people"? Simultaneously the US welfare state has massively expanded since 1970. Poverty and homelessness have declined by a lot, while healthcare coverage expanded dramatically. The US spends the equivalent of 20% of its GDP on social welfare programs. That's higher than Canada and Australia, just slightly behind the UK at 22%. All of that is paid for by the top 25% of income earners.
refurb 8y ago
You do realize there hasn't been a raise in real wages since the 70s when you account for inflation right? That's true if you only look at wages. If you look at total compensation, it's grown quite a lot even adjusted for inflation - doubling between 1970 and 2006.[1] [1]https://www.nber.org/digest/oct08/w13953.html https://www.nber.org/digest/oct08/w13953.html
SomewhatLikely 8y ago
You do realize that in the post war period we were the only large economy that was relatively unscathed helping out domestic producer margins?
blazespin 8y ago
Wouldn't everyone become a founder then?
rdlecler1 8y ago
It to mention housing prices.
e3b0c 8y ago
That would probably be true if all other conditions held constant. However, Silicon Valley can pay handsome money because many companies located there run well and outperform their competitors for a fertile global market. And those companies can beat their competitors because (at least part of the reasons) they have the best talents available. If the skilled engineers from China, European, India all went back to their home countries, would the competitiveness of those SV companies be no different relative to their foreign competitors? If companies in SV were losing its advantage to another tech hub outside the united states, would they still be able to pay so well? I doubt that.
- wolco 8y ago
  If labor/labour supply doubled wages would drop for most of the market.
  - e3b0c 8y ago
    That assumes the demand and the supply are independent variables. More people would mean smaller pieces if the size of the pie held constant. But what if there are also fewer people making the pie? In reality, it's even more complicated in that the contribution of the pie making is not proportional to the headcounts either.
    - itsfun10213123 8y ago
      > That assumes the demand and the supply are independent variables. When the argument is that an increase in supply causes lower wages your counter argument doesn't make any sense at all. For wages to rise the demand has to grow faster than the oversupply. The primary way to increase demand is by lowering the price of a service aka workers get paid less. In other words it is possible that even with an extreme amount of immigration everyone still gets a decently paying job but in the end wages across the market have fallen. Whatever pie analogy you're trying to pull doesn't matter. I don't know why people keep getting nerdsniped by that word and often even use their own hyper specific definition of it which doesn't match the definition of the other person. There is no law that says people always benefit from a growing economy and there is no law that says people can never benefit from a shrinking economy.
thaumasiotes 8y ago
> American's used to be able to support large families of 4+ kids with only 1 working parent. Now you have households with both working and they can't afford to have kids. I'm broadly sympathetic to your viewpoint, but this isn't accurate. Children are fundamentally not expensive. The problem is that couples believe they can't afford to have kids, not that they actually can't afford them.
- geggam 8y ago
  Typical income is 50k a year and it takes ~250k to raise a kid you are looking at 13,888k a year for the kid, after taxes Children are extremely expensive. I have raised 4. You are broke the entire time and can always spend more on them. In the US you are 1 medical incident from not affording anything and relying on welfare https://www.thestreet.com/personal-finance/cost-to-raise-child-14814957 https://www.thestreet.com/personal-finance/cost-to-raise-chi...
  - thaumasiotes 8y ago
    You can always spend more on anything. That doesn't mean there's a good reason to do it.
    - geggam 8y ago
      You will notice the children who grow up to be the most productive tend to get the most support from their parents. I guess it depends on how much you want your kids to succeed vs how much you want to keep for yourself.
- bluedino 8y ago
  My health insurance costs alone would almost quadruple if I had a wife+kid
  - howard941 8y ago
    Mine (through work) quadrupled when I got the wife even though we're childfree. The work benefit I was offered provided for either me alone or for my family with unlimited dependents.
jayd16 8y ago
By this logic, any increase in productivity is bad because it reduces labor scarcity. That's just not how it works. > if we dropped 10 million software engineers in Silicon Valley from around the world, guess what? Guess what, we'd get a lot more overseas clients as they wrestled with the labor shortage abroad. (Although, the real problem would be the humanitarian crisis in housing 10m more in SV overnight, ha)
- pasabagi 8y ago
  >any increase in productivity is bad because it reduces labor scarcity Isn't it? Increases in productivity, normally called automation, must reduce labour scarcity unless demand for the product is proportionately increased. There are plenty of sectors where this is exactly what happens, and some where it isn't.
  - tobltobs 8y ago
    > Increases in productivity, normally called automation That is a wrong assumption to start with. Inventing the wheel wasn't automation.
    - tomrod 8y ago
      Actually... Production has three components: capital, labor, and technology. Automation, as I understand it, both improves technology and lowers the cost of capital. If I recall right, this strand of economic lit is called Total Factor Productivity.[0] I believe the Wheel falls squarely in the technology bracket. [0] https://en.m.wikipedia.org/wiki/Total_factor_productivity https://en.m.wikipedia.org/wiki/Total_factor_productivity
    - mediaman 8y ago
      Inventing the wheel absolutely is automation. Why would the wheel, which allows the movement of goods with much less labor, be any different in concept than the transistor, which allows e.g. the accounting of a corporation to be done with far fewer accountants? Or the assembly of a car with robots? All productivity gains (expressed as production per person-hour) is a result of either (1) advancement in technology or (2) the increased use of existing technology through capital investment or (3) quality of labor (education, training, etc). The invention of the wheel, the invention of fire, the invention of the steam engine, and the gas engine, the solar cell and the transistor all fall under (1) and the expansion of their use falls under (2).
skookumchuck 8y ago
If the US doesn't allow software engineers in, will they just disappear? Nope. They'll write code for foreign companies which will compete with Silicon Valley. I.e. the competition is there anyway.
wyclif 8y ago
Now you have households with both working and they can't afford to have kids This strikes me as ridiculous as a broad-brush, general statement. It's not that Americans can't afford to have kids, it's that they incentivize different things than they did in the past. I don't deny that real wages haven't risen because of the supply of workers and dual-income families, but c'mon. There's been an increase in professional married people that want it all, and these DINKs refuse to sacrifice anything materially to have children. They have lots of adult toys and other conveniences, but somehow can't find the money to raise a child.
- mschuster91 8y ago
  > They have lots of adult toys and other conveniences, but somehow can't find the money to raise a child. I'm German and affected by this. It begins with being unable to rent an apartment with enough space for a kid and ends with "how to afford a car in this city".
  - dsfyu404ed 8y ago
    <tone-deaf> But Europe has good public transit everywhere. Surely you can take rail + bus + walk to get anywhere you want to go even with kids.</tone deaf> Dragging toddler around on public transit is a massive PITA. One is doable but two is hell.
    - adrianN 8y ago
      The quality of public transit varies between cities. My parents for example raised two children without having a car.
- chefkoch 8y ago
  I'm sorry but you don't seem to know what kids kost. Rent, childcare, clothing, food plus only one income are in no relation to some electronic toys or a fancy holiday.
  - wyclif 8y ago
ramblerman 8y ago
> because it would be a buyer's market for tech companies, they could pick and choose the most talented for pennies Not exactly too much of a price drop would negate the point of them wanting to come in the first place.
dmichulke 8y ago
> You do realize there hasn't been a raise in real wages since the 70s when you account for inflation right This also coincides with the end of the gold standard ('68) and subsequently cheaper interest rates and (thereby) access to much more and cheaper capital for those who already have enough capital to begin with. Also, lower interest rates beget higher inflation.
- tomrod 8y ago
  Standard of living arguably continues to increase as well.
  - dmichulke 8y ago
    Technological advance is a confounding factor for basically any empirical discussion about economics and standard of living. Any smooth annual negative impact below the rate of technological advance is very hard to detect due to this.
    - tomrod 8y ago
      I reckon if standard of living improves, so does my dollar per unit of happiness ratio improves, then a flat real wage isn't a terrible thing. Of course, this belies the fact that wealth inequality increases. This means though the median may stay stable, the tails get fatter: or, in other words, the standard of living isn't necessarily getting better for everyone.
mschuster91 8y ago
> You do realize there hasn't been a raise in real wages since the 70s when you account for inflation right? Thank decades of union busting and neoliberalism for that one. When corporations only pay out the minimum that they can get away with instead of following the historic Ford mantra that people must be paid liveable wages, this is what results.
MarkMc 8y ago
> American's used to be able to support large families of 4+ kids with only 1 working parent. Now you have households with both working and they can't afford to have kids. This statement isn't supported by the Pew Research article you linked to. If real average earnings are constant then a household which now has two breadwinners will double its income and be better off. Also keep in mind longitudinal effects: native-born Americans have seen their wages rise but this is offset by immigrants who generally have lower-than-average wages - but still higher than in the country they emigrated from. Both groups are better off even though average wages haven't changed.
mberning 8y ago
It is hard believe so many people still don’t “get it”. You cannot inflate the supply of labor, regardless of the means, and get a good result for the average working stiff.
- milquetoastaf 8y ago
  You can if the profits are redistributed to the workforce and not just captured by the leadership / elite. There's more people working than ever. Profits are higher than ever. Yet, wages are stagnating. Where did the money go?
- snikeris 8y ago
  Hmm...how about: inflate the supply of labor, price of goods goes down and better goods are invented, then average working stiff benefits when buying these goods? I understand your point that the average working stiff might experience wage loss or lose their job altogether, but I'm not sure you're considering the benefits to consumers, which is another role of the average working stiff.
  - bdcs 8y ago
    Wages and salaries (and, perhaps, prices) would not go down. Your argument and the parent of it, is falling for the lump of labor fallacy. By adding supply of labor, the demand for labor goes up as well. It is actually well-agreed on by economists, but I see many smart people, on the left and right, get it wrong. I implore you both to read and listen about it (google/"lump of labor").
  - rileyphone 8y ago
    That's the entire point of the real wages statistic: the price of goods has remained relatively pinned to wages since that point.
- staplers 8y ago
  There must be some people out there earning more wages on the 10x increase in stock prices, investments..
- 8y ago

femiagbabiaka 8y ago

Software engineering isn’t most professions. Salaries have been going up more than a decade accounting for inflation. If 10 million software engineers dropped in Silicon Valley, a lot of things would happen (for one there’s nowhere for them to live). But that’s not what’s happening.

tossaccount123 8y ago
It was hyperbole to show the effect of supply and demand More and more I notice how similar software engineers are beginning to sound like the "Made in America" factory workers who said China could never do their job. Never take the present comfy situation for granted
- femiagbabiaka 8y ago
  Software engineer salaries have been rising in a globalized market. Companies can already hire wherever they want. Many do. I have no doubt that if companies can pay workers less then they will. But that’s not what’s happening.
  - pishpash 8y ago
    Rising compared to what? Junior engineers are doubling or tripling up to live near work in metropolitan areas or face crushing commutes. It's a sign that even in software engineering, capital is crushing labor.
    - femiagbabiaka 8y ago
      You're describing two different problems. Housing supply in the Bay Area and New York -- the areas I'm assuming you're talking about, because most other metropolitan cities are building to keep up with supply just fine -- is incredibly low. In addition, in the Bay Area especially, the incredibly high salaries in combination with that supply is causing skyrocketing prices.
    - emiliobumachar 8y ago
      Be aware that Silicon Valley is an extreme global outlier in real estate prices.
      - AYBABTME 8y ago
        Not really, there's cities all over the world with conditions that lead to crazy high real estate/housing costs. Most every metropolis ends up with a similar situation. Slightly different settings that all sum up to "high demand low supplies". NYC, London, Vancouver, Hong Kong, Tokyo, ...
        ben_w 8y ago
        SF is an outlier compared to London. From expatistan.com: Monthly rent for 85 m2 (900 Sqft) furnished accommodation in NORMAL area: SF: $3,663 (£2,789) London: £1,766 Difference: 58%
- pishpash 8y ago
  Indeed. An argument could be made that given the astronomical living costs of Silicon Valley, the wages should have already been higher given how much profits the companies are making.
- wycs 8y ago
  Anyone who thinks China is not full of extremely talented software engineers does not know anything about China.
  - femiagbabiaka 8y ago
    so true -- they're even kicking our ass in many fields of CS research.
  - donedealomg 8y ago
    So how come there is 0 tech innovation coming from there? Your statement is absolutely false covered by facts.
- Buge 8y ago
  If we want stuff to be made in America instead of China, we should increase the number of skilled immigrants allowed in.
  - gesman 8y ago
    Import tax on crap would solve it.
    - Buge 8y ago
      By "stuff" I was actually referring to digital products, digital technology, websites, technology companies, etc. An import tax on those would be harder than for physical products.
      - madengr 8y ago
        Yes, mostly crap.
        Buge 8y ago
        I never claimed it wasn't crap, I said it's hard to tax imports of it.
    - PedroBatista 8y ago
      If they did the same, US exports would tank.
    - logfromblammo 8y ago
      It would not. An import tax reduces imports, but also reduces exports by a greater amount. An export tax on real estate transfers to foreign persons, cash or cash-equivalents, luxury goods, artwork, and technology--such as engineering documents and diagrams, manufacturing machinery, and firmware source code--would also not solve it, but it would bite a bigger chunk out of the problem. Imports are paid for by exports. The US is currently paying for the manufacturing that it exported with dollars and documents. It could be paying with cars, and airplanes, and espresso machines, and in-sink garbage disposals, and novelty CNC lathes for engraving wooden pencils and chopsticks, and rapid refrigeration devices for single canned beverages, and maybe even non-imaginary 8K OLED television sets. If you make the specific exports that produce the most internal economic activity the cheapest way to pay for imports, increases in imports would encourage more exports. If you're covering a trade deficit with cash, that impacts the same currency you use to conduct domestic trade--you're giving the trade partner leverage over your whole economy. What you really want to do is make a note spent in your own country buy far more than the same note spent elsewhere, so that the notes stay in the country, and the goods and services get exported instead. But you also want the rest of the world to have high demand for your currency, so that you can bring in a lot of imports, or go on lots of cheap tourist vacations. So devaluing your currency is not the best option. But if you had, say, a 50% tax on foreign money transfers, if someone were to buy a $1 doodad from Elbonia, they would have to pay $2 for it in cash--$1 for the importer, and $1 for the tax. But they could also pay for it by purchasing a $1 doohickey locally and trading that for the $1 doodad, avoiding the tax, and keeping the $1 circulating in the domestic economy, and the Elbonian money circulating in Elbonia. Instead of taxing the trade itself, tax imbalanced trades and trade deficits. Of course, any real-world implementation would be politicized to Hell and back, and chock full of loopholes, but it works just fine between imaginary countries.
- olalonde 8y ago
  More and more? I recall software engineers were panicked over outsourcing just over 15 years ago. Have you watched Office Space? This is not a new phenomenon.

joshe 8y ago

That's super interesting, I didn't know that about hourly wages. I tend to think of income gaining from 1950 to 1990 and flattening from the mid 1990s to now. Though it does look like total compensation (adding in benefits) did actually increase recently, they don't have anything for back to 1960. So maybe the story is that wages stayed flat, but benefits accounted for most of the income increase. Not an economist so I don't know how to tease this out. Heath care does go up from 5% of gdp in 1960 to 18.2% today, maybe most compensation gain is going there? Plus retirement benefits. But... from 1960 to 2000 the civilian labor force increased from 70 million to 141 million [1]. With all those new workers, by your link, compensation didn't actually shrink. That's weird huh? Also real median family income grew from $41K to $72K [2]. And sure 10 million software engineers added to SV tomorrow would lower wages. But maybe not long term? If it was 10 million countrywide? What would an economist or a careful wage survey say? Anyway we're talking about 85,000 jobs all over the country. The main point of my comment is that when economists spend 10 years looking at data and arguing out every detail, they conclude that immigration is increasing jobs and increasing wages. They usually conclude that for specific wage markets too. Maybe we can't rely on some anecdotes in the media to refute their conclusions? [1] https://www.bls.gov/opub/mlr/2002/05/art2full.pdf https://www.bls.gov/opub/mlr/2002/05/art2full.pdf (table 5) [2] https://fred.stlouisfed.org/series/MEFAINUSA672N https://fred.stlouisfed.org/series/MEFAINUSA672N

servercobra 8y ago
I generally agree with what you say, but the median family income growing seems like it would be due to most households moving from one to two workers. Looking at it that way, it makes wages look even flatter over the time period.
- abakker 8y ago
  Yes, this is right. Large increases in the workforce have increased the supply, reducing real wage growth, household earning has grown by adding a second earner. More work is getting done to get the same economic outcome. Put one way, this is terrible for wage earners, out another it is excellent for spenders since the thing you can buy have gotten cheaper through plentiful labor.

Ar-Curunir 8y ago

No, wealth inequality increased because we stopped taxing rich people.

tossaccount123 8y ago
The US didn't have an income tax at all until the 20th century, at least at the federal level
- rswail 8y ago
  It also didn't have any public entitlements. It's also 100 years later. So the point is not particularly relevant.
- isostatic 8y ago
  Rich: having wealth or great possessions; abundantly supplied with resources, means, or funds; wealthy: a rich man; a rich nation. Not sure how income tax would apply to that
adventured 8y ago
Wealth inequality has increased mostly due to the massive expansion of the global economy, which was a large benefit to capital owners and was a detriment to US labor (whose wages were artifically very high in the post WW2 decades). Global labor competed, capital benefited. Federal Reserve policies since ~1970 have also overwhelmingly favored capital, asset holders, and not workers. The US tax code has gotten more progressive over time, not less. The very high tax rates from the past were quite narrow in scope, they covered few taxpayers. The top 25% are paying 85-88% of all income taxes in a given year. The top 10% are paying 70% of all income taxes. The top 1% yield 20% of all income and pay 39% of all income taxes. How do you qualify that very progressive tax code as "stopped taxing rich people"? Simultaneously the US welfare state has massively expanded since 1970. Poverty and homelessness have declined by a lot, while healthcare coverage expanded dramatically. The US spends the equivalent of 20% of its GDP on social welfare programs. That's higher than Canada and Australia, just slightly behind the UK at 22%. All of that is paid for by the top 25% of income earners.

refurb 8y ago

You do realize there hasn't been a raise in real wages since the 70s when you account for inflation right? That's true if you only look at wages. If you look at total compensation, it's grown quite a lot even adjusted for inflation - doubling between 1970 and 2006.[1] [1]https://www.nber.org/digest/oct08/w13953.html https://www.nber.org/digest/oct08/w13953.html

SomewhatLikely 8y ago

You do realize that in the post war period we were the only large economy that was relatively unscathed helping out domestic producer margins?

blazespin 8y ago

Wouldn't everyone become a founder then?

rdlecler1 8y ago

It to mention housing prices.

e3b0c 8y ago

That would probably be true if all other conditions held constant. However, Silicon Valley can pay handsome money because many companies located there run well and outperform their competitors for a fertile global market. And those companies can beat their competitors because (at least part of the reasons) they have the best talents available. If the skilled engineers from China, European, India all went back to their home countries, would the competitiveness of those SV companies be no different relative to their foreign competitors? If companies in SV were losing its advantage to another tech hub outside the united states, would they still be able to pay so well? I doubt that.

wolco 8y ago
If labor/labour supply doubled wages would drop for most of the market.
- e3b0c 8y ago
  That assumes the demand and the supply are independent variables. More people would mean smaller pieces if the size of the pie held constant. But what if there are also fewer people making the pie? In reality, it's even more complicated in that the contribution of the pie making is not proportional to the headcounts either.
  - itsfun10213123 8y ago
    > That assumes the demand and the supply are independent variables. When the argument is that an increase in supply causes lower wages your counter argument doesn't make any sense at all. For wages to rise the demand has to grow faster than the oversupply. The primary way to increase demand is by lowering the price of a service aka workers get paid less. In other words it is possible that even with an extreme amount of immigration everyone still gets a decently paying job but in the end wages across the market have fallen. Whatever pie analogy you're trying to pull doesn't matter. I don't know why people keep getting nerdsniped by that word and often even use their own hyper specific definition of it which doesn't match the definition of the other person. There is no law that says people always benefit from a growing economy and there is no law that says people can never benefit from a shrinking economy.

thaumasiotes 8y ago

> American's used to be able to support large families of 4+ kids with only 1 working parent. Now you have households with both working and they can't afford to have kids. I'm broadly sympathetic to your viewpoint, but this isn't accurate. Children are fundamentally not expensive. The problem is that couples believe they can't afford to have kids, not that they actually can't afford them.

geggam 8y ago
Typical income is 50k a year and it takes ~250k to raise a kid you are looking at 13,888k a year for the kid, after taxes Children are extremely expensive. I have raised 4. You are broke the entire time and can always spend more on them. In the US you are 1 medical incident from not affording anything and relying on welfare https://www.thestreet.com/personal-finance/cost-to-raise-child-14814957 https://www.thestreet.com/personal-finance/cost-to-raise-chi...
- thaumasiotes 8y ago
  You can always spend more on anything. That doesn't mean there's a good reason to do it.
  - geggam 8y ago
    You will notice the children who grow up to be the most productive tend to get the most support from their parents. I guess it depends on how much you want your kids to succeed vs how much you want to keep for yourself.
bluedino 8y ago
My health insurance costs alone would almost quadruple if I had a wife+kid
- howard941 8y ago
  Mine (through work) quadrupled when I got the wife even though we're childfree. The work benefit I was offered provided for either me alone or for my family with unlimited dependents.

jayd16 8y ago

By this logic, any increase in productivity is bad because it reduces labor scarcity. That's just not how it works. > if we dropped 10 million software engineers in Silicon Valley from around the world, guess what? Guess what, we'd get a lot more overseas clients as they wrestled with the labor shortage abroad. (Although, the real problem would be the humanitarian crisis in housing 10m more in SV overnight, ha)

pasabagi 8y ago
>any increase in productivity is bad because it reduces labor scarcity Isn't it? Increases in productivity, normally called automation, must reduce labour scarcity unless demand for the product is proportionately increased. There are plenty of sectors where this is exactly what happens, and some where it isn't.
- tobltobs 8y ago
  > Increases in productivity, normally called automation That is a wrong assumption to start with. Inventing the wheel wasn't automation.
  - tomrod 8y ago
    Actually... Production has three components: capital, labor, and technology. Automation, as I understand it, both improves technology and lowers the cost of capital. If I recall right, this strand of economic lit is called Total Factor Productivity.[0] I believe the Wheel falls squarely in the technology bracket. [0] https://en.m.wikipedia.org/wiki/Total_factor_productivity https://en.m.wikipedia.org/wiki/Total_factor_productivity
  - mediaman 8y ago
    Inventing the wheel absolutely is automation. Why would the wheel, which allows the movement of goods with much less labor, be any different in concept than the transistor, which allows e.g. the accounting of a corporation to be done with far fewer accountants? Or the assembly of a car with robots? All productivity gains (expressed as production per person-hour) is a result of either (1) advancement in technology or (2) the increased use of existing technology through capital investment or (3) quality of labor (education, training, etc). The invention of the wheel, the invention of fire, the invention of the steam engine, and the gas engine, the solar cell and the transistor all fall under (1) and the expansion of their use falls under (2).

skookumchuck 8y ago

If the US doesn't allow software engineers in, will they just disappear? Nope. They'll write code for foreign companies which will compete with Silicon Valley. I.e. the competition is there anyway.

wyclif 8y ago

Now you have households with both working and they can't afford to have kids This strikes me as ridiculous as a broad-brush, general statement. It's not that Americans can't afford to have kids, it's that they incentivize different things than they did in the past. I don't deny that real wages haven't risen because of the supply of workers and dual-income families, but c'mon. There's been an increase in professional married people that want it all, and these DINKs refuse to sacrifice anything materially to have children. They have lots of adult toys and other conveniences, but somehow can't find the money to raise a child.

mschuster91 8y ago
> They have lots of adult toys and other conveniences, but somehow can't find the money to raise a child. I'm German and affected by this. It begins with being unable to rent an apartment with enough space for a kid and ends with "how to afford a car in this city".
- dsfyu404ed 8y ago
  <tone-deaf> But Europe has good public transit everywhere. Surely you can take rail + bus + walk to get anywhere you want to go even with kids.</tone deaf> Dragging toddler around on public transit is a massive PITA. One is doable but two is hell.
  - adrianN 8y ago
    The quality of public transit varies between cities. My parents for example raised two children without having a car.
chefkoch 8y ago
I'm sorry but you don't seem to know what kids kost. Rent, childcare, clothing, food plus only one income are in no relation to some electronic toys or a fancy holiday.
- wyclif 8y ago

ramblerman 8y ago

> because it would be a buyer's market for tech companies, they could pick and choose the most talented for pennies Not exactly too much of a price drop would negate the point of them wanting to come in the first place.

dmichulke 8y ago

> You do realize there hasn't been a raise in real wages since the 70s when you account for inflation right This also coincides with the end of the gold standard ('68) and subsequently cheaper interest rates and (thereby) access to much more and cheaper capital for those who already have enough capital to begin with. Also, lower interest rates beget higher inflation.

tomrod 8y ago
Standard of living arguably continues to increase as well.
- dmichulke 8y ago
  Technological advance is a confounding factor for basically any empirical discussion about economics and standard of living. Any smooth annual negative impact below the rate of technological advance is very hard to detect due to this.
  - tomrod 8y ago
    I reckon if standard of living improves, so does my dollar per unit of happiness ratio improves, then a flat real wage isn't a terrible thing. Of course, this belies the fact that wealth inequality increases. This means though the median may stay stable, the tails get fatter: or, in other words, the standard of living isn't necessarily getting better for everyone.

mschuster91 8y ago

> You do realize there hasn't been a raise in real wages since the 70s when you account for inflation right? Thank decades of union busting and neoliberalism for that one. When corporations only pay out the minimum that they can get away with instead of following the historic Ford mantra that people must be paid liveable wages, this is what results.

MarkMc 8y ago

> American's used to be able to support large families of 4+ kids with only 1 working parent. Now you have households with both working and they can't afford to have kids. This statement isn't supported by the Pew Research article you linked to. If real average earnings are constant then a household which now has two breadwinners will double its income and be better off. Also keep in mind longitudinal effects: native-born Americans have seen their wages rise but this is offset by immigrants who generally have lower-than-average wages - but still higher than in the country they emigrated from. Both groups are better off even though average wages haven't changed.

mberning 8y ago

It is hard believe so many people still don’t “get it”. You cannot inflate the supply of labor, regardless of the means, and get a good result for the average working stiff.

milquetoastaf 8y ago
You can if the profits are redistributed to the workforce and not just captured by the leadership / elite. There's more people working than ever. Profits are higher than ever. Yet, wages are stagnating. Where did the money go?
snikeris 8y ago
Hmm...how about: inflate the supply of labor, price of goods goes down and better goods are invented, then average working stiff benefits when buying these goods? I understand your point that the average working stiff might experience wage loss or lose their job altogether, but I'm not sure you're considering the benefits to consumers, which is another role of the average working stiff.
- bdcs 8y ago
  Wages and salaries (and, perhaps, prices) would not go down. Your argument and the parent of it, is falling for the lump of labor fallacy. By adding supply of labor, the demand for labor goes up as well. It is actually well-agreed on by economists, but I see many smart people, on the left and right, get it wrong. I implore you both to read and listen about it (google/"lump of labor").
- rileyphone 8y ago
  That's the entire point of the real wages statistic: the price of goods has remained relatively pinned to wages since that point.
staplers 8y ago
There must be some people out there earning more wages on the 10x increase in stock prices, investments..
8y ago