7 ms·

Your second link is not real wages per capita, it's average real wages for workers (and only non-supervisory workers at that!). A true per capita figure would h

Your second link is not real wages per capita, it's average real wages for workers (and only non-supervisory workers at that!). A true per capita figure would have to count wages of non-workers as 0. The distinction is important: One reason real individual wages haven't grown with GDP is that a much larger fraction of women are now working than in 1970, and basic microeconomics suggests that as supply (of workers) grows, prices (wages) drop. There are a bunch of other problems with the implied claim that workers are no better off today than in the 1970's: There have been major demographic shifts. Non-wage benefits make up a much larger fraction of total compensation today. Comparing against the mid-'70s is effectively cherry-picking due to the massive (and unseen since) run-up in inflation over the next decade. Trying to compare inflation-adjusted figures over decades is perilous because even small errors in producing "equivalent" classes of goods to compare will compound over time: This is the "cars are safer / houses are bigger / phones are now SciFI devices" argument ...

novok 6y ago
The basics of life that consume the expenses of most people you had in the 1960s was significantly more affordable back then, and many would wish they could get that. You can't easily today, especially in health care. In the past, college, room & board was payable with the part time work of a college student working low end jobs. You cannot do that today. Single income households were a common occurrence, since dual income households competing for housing were not out competing single income houses. And I don't mean this in a crypto conservative way, even Elizabeth Warren wrote a book about it: https://en.wikipedia.org/wiki/The_Two-Income_Trap https://en.wikipedia.org/wiki/The_Two-Income_Trap Could you buy a 1970s level of service health plan today and expect a similar cost profile? No. The non-essential extras that didn't consume much of the budget in the past anyway being nicer or cheaper, such as clothing, entertainment and so on? Cold comfort. After you have 10 shirts, 10 more cheap t-shirts have little utility. HD video is nicer, but TBH, old SD TVs also give you %80 of the entertainment value. 2500 sqft of house is nice, but 1500 sqft of house is still giving you %80 of the benefit and so on. There is diminishing marginal value to these improvements.
- lotsofpulp 6y ago
  >The basics of life that consume the expenses of most people you had in the 1960s was significantly more affordable back then, and many would wish they could get that. You can't easily today, especially in health care. While I agree with much of your comment, healthcare in particular is very hard to compare across different times. The quality of healthcare has improved dramatically, as has the qualifications of those providing healthcare. Does a doctors visit for a flu in 1960 cost more even inflation adjusted in 2020? Probably. But the doctor is probably more educated, and the healthcare providers are more equipped and able to handle more complicated diagnoses. Current costs might not be in line with the increase in level of care, but the product offered in the 1960s is different to the product offered today. There's also been significant changes to liability for healthcare providers since the 1960s that are tough to take into account comparison wise.
  - dantheman 6y ago
    Yet cosmetic surgery and eye care have both gotten better and cheaper, so maybe there is something else going on... Perhaps it's the way the supply is controlled and a market can't work because of government intervention.
  - novok 6y ago
    Yes I agree that it's impossible to buy 1960s healthcare today. What I'm saying is many would be very happy to be able to buy 1960s healthcare today, legal liability differences and all, for a much more affordable 1960s equivalent price, which you can calculate as hours worked at the median hourly wage during both times, thus sidestepping comparability issues. But you cannot. Also many other developed countries deliver modern health care for significantly cheaper prices than the US does.
- SketchySeaBeast 6y ago
  > Single income households were a common occurrence, since dual income households competing for housing were not out competing single income houses. And I don't mean this in a crypto conservative way, even Elizabeth Warren wrote a book about it: https://en.wikipedia.org/wiki/The_Two-Income_Trap https://en.wikipedia.org/wiki/The_Two-Income_Trap I haven't read the book, but her speech a decade ago is really eye opening. https://www.youtube.com/watch?v=akVL7QY0S8A https://www.youtube.com/watch?v=akVL7QY0S8A
mediaman 6y ago
The micro supply and demand view that increased labor force from greater participation rate by women causing suppression of wages is incorrect. Such a view would suggest that any increase in labor hampers wages. What actually happens is that increased worker participation itself grows GDP, which increases demand of inputs, including labor. Unlike a short-term supply and demand curve, the economy operates on long-term shifts of aggregate labor supply and demand, in which an increase of aggregate supply of labor causes an aggregate increase in demand for labor (by modifying the overall demand curve of goods - consumption goes up), ending in a place where increased labor force participation may actually result in a higher price of labor than before. In other words, women joining the workforce enhances per capita income. This is also why xenophobia can be damaging: immigration does not actually suppress wages, as would be suggested by a simplistic econ 101 static supply and demand curve; in most cases it grows per capita GDP and has a similar income-enhancing effect as was seen from women joining the workforce. I do agree with some of your other points re: the difficulty in calculating improvement in quality of goods, and the basket substitution effect problem of calculating CPI. Accurately comparing wages from the 1970s to now is very difficult.
- briandear 6y ago
  > Such a view would suggest that any increase in labor hampers wages. Of course it does, if the supply of workers exceeds the demand, there would be a drop in wages. 10 people competing for 1 job is going to have a lower wage than 1 person competing for 1 job.
  - mediaman 6y ago
    This logic would suggest that all increases in population (labor supply) in the history of humanity should be pushing labor down, because more people are competing for jobs. This is obviously, clearly wrong. Re-read what you responded to, especially the part about the longer term effect of increased consumption and GDP from higher participation rates. What you say is only true in a very short-term, micro view (labor supply in a small town over a matter of days, for example), not in the macro timeframe that is the context of this discussion. This is a well-studied area of economics and the field is not in consensus with your statement.

novok 6y ago

The basics of life that consume the expenses of most people you had in the 1960s was significantly more affordable back then, and many would wish they could get that. You can't easily today, especially in health care. In the past, college, room & board was payable with the part time work of a college student working low end jobs. You cannot do that today. Single income households were a common occurrence, since dual income households competing for housing were not out competing single income houses. And I don't mean this in a crypto conservative way, even Elizabeth Warren wrote a book about it: https://en.wikipedia.org/wiki/The_Two-Income_Trap https://en.wikipedia.org/wiki/The_Two-Income_Trap Could you buy a 1970s level of service health plan today and expect a similar cost profile? No. The non-essential extras that didn't consume much of the budget in the past anyway being nicer or cheaper, such as clothing, entertainment and so on? Cold comfort. After you have 10 shirts, 10 more cheap t-shirts have little utility. HD video is nicer, but TBH, old SD TVs also give you %80 of the entertainment value. 2500 sqft of house is nice, but 1500 sqft of house is still giving you %80 of the benefit and so on. There is diminishing marginal value to these improvements.

lotsofpulp 6y ago
>The basics of life that consume the expenses of most people you had in the 1960s was significantly more affordable back then, and many would wish they could get that. You can't easily today, especially in health care. While I agree with much of your comment, healthcare in particular is very hard to compare across different times. The quality of healthcare has improved dramatically, as has the qualifications of those providing healthcare. Does a doctors visit for a flu in 1960 cost more even inflation adjusted in 2020? Probably. But the doctor is probably more educated, and the healthcare providers are more equipped and able to handle more complicated diagnoses. Current costs might not be in line with the increase in level of care, but the product offered in the 1960s is different to the product offered today. There's also been significant changes to liability for healthcare providers since the 1960s that are tough to take into account comparison wise.
- dantheman 6y ago
  Yet cosmetic surgery and eye care have both gotten better and cheaper, so maybe there is something else going on... Perhaps it's the way the supply is controlled and a market can't work because of government intervention.
- novok 6y ago
  Yes I agree that it's impossible to buy 1960s healthcare today. What I'm saying is many would be very happy to be able to buy 1960s healthcare today, legal liability differences and all, for a much more affordable 1960s equivalent price, which you can calculate as hours worked at the median hourly wage during both times, thus sidestepping comparability issues. But you cannot. Also many other developed countries deliver modern health care for significantly cheaper prices than the US does.
SketchySeaBeast 6y ago
> Single income households were a common occurrence, since dual income households competing for housing were not out competing single income houses. And I don't mean this in a crypto conservative way, even Elizabeth Warren wrote a book about it: https://en.wikipedia.org/wiki/The_Two-Income_Trap https://en.wikipedia.org/wiki/The_Two-Income_Trap I haven't read the book, but her speech a decade ago is really eye opening. https://www.youtube.com/watch?v=akVL7QY0S8A https://www.youtube.com/watch?v=akVL7QY0S8A

mediaman 6y ago

The micro supply and demand view that increased labor force from greater participation rate by women causing suppression of wages is incorrect. Such a view would suggest that any increase in labor hampers wages. What actually happens is that increased worker participation itself grows GDP, which increases demand of inputs, including labor. Unlike a short-term supply and demand curve, the economy operates on long-term shifts of aggregate labor supply and demand, in which an increase of aggregate supply of labor causes an aggregate increase in demand for labor (by modifying the overall demand curve of goods - consumption goes up), ending in a place where increased labor force participation may actually result in a higher price of labor than before. In other words, women joining the workforce enhances per capita income. This is also why xenophobia can be damaging: immigration does not actually suppress wages, as would be suggested by a simplistic econ 101 static supply and demand curve; in most cases it grows per capita GDP and has a similar income-enhancing effect as was seen from women joining the workforce. I do agree with some of your other points re: the difficulty in calculating improvement in quality of goods, and the basket substitution effect problem of calculating CPI. Accurately comparing wages from the 1970s to now is very difficult.

briandear 6y ago
> Such a view would suggest that any increase in labor hampers wages. Of course it does, if the supply of workers exceeds the demand, there would be a drop in wages. 10 people competing for 1 job is going to have a lower wage than 1 person competing for 1 job.
- mediaman 6y ago
  This logic would suggest that all increases in population (labor supply) in the history of humanity should be pushing labor down, because more people are competing for jobs. This is obviously, clearly wrong. Re-read what you responded to, especially the part about the longer term effect of increased consumption and GDP from higher participation rates. What you say is only true in a very short-term, micro view (labor supply in a small town over a matter of days, for example), not in the macro timeframe that is the context of this discussion. This is a well-studied area of economics and the field is not in consensus with your statement.