5 ms·

Some nice graphs to go along; https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/

tylerhou 6y ago
A bunch of these graphs are misleading, especially the ones from the EPI. /r/badecon can explain better than I can: https://www.reddit.com/r/badeconomics/comments/6rtoh4/productivity_pay_gap_in_epi_we_trust/ https://www.reddit.com/r/badeconomics/comments/6rtoh4/produc... TL;DR: 1. The pay line is for the bottom ~80% of workers, while the productivity line is for all workers. If you graph all workers wages vs all workers productivity, then the gap shrinks quite a bit. (Of course, maybe we should redistribute wealth from top workers to all workers, but that's another discussion.) 2. Average hourly wages doesn't take into account workers' increase in benefits. 3. The lines aren't adjusted for inflation in the same way, which makes the gap look worse.
- josho 6y ago
  > Average hourly wages doesn't take into account workers' increase in benefits. I can't help but feel /r/badecon's rebuttal is dishonest. For many people benefits haven't increased, so the fact that it is excluded is a non-issue. E.g. The growing number of workers who are kept below full time hours to avoid being given fulltime benefits as one of many examples I could list. Regardless, if it is accurate I'm very curious what the growing employer benefits has been.
  - tylerhou 6y ago
    Badecon addresses this — in fact, it’s the top comment.
- webmaven 6y ago
  > Average hourly wages doesn't take into account workers' increase in benefits. There is a pretty good reason for that. Most of the increase in benefits has been in the form of increased healthcare costs, which only somewhat reflect increased value, as much of that value is unrealized due to high deductibles incentivizing people to not use medical services if they can avoid doing so (which preserves an odd form of household rainy day fund dedicated to medical catastrophes). Meanwhile, the segment of workers that are (precariously, so with litle to no leverage even in aggregate) holding one or more part-time jobs instead of a full time job with benefits has grown as well.
  - fuzzfactor 6y ago
    Exactly, workers have much less benefits now.
- Seanambers 6y ago
  I guess it's pretty obvious that it's just a collection of graphs from different sources which all basically indicate that something did happen (decouple) in the early to mid 70s.
- fuzzfactor 6y ago
  The top 3 graphs are all you need: "Growth in productivity and hourly compensation since 1948" "Real GDP, Real Wages and Trade Policies in the U.S. (1947-2014)" "Real family income between 1947 and 2016, as a percentage of 1973 level" As for the remaining graphs, for a number of them; >The lines aren't adjusted for inflation in the same way, which makes the gap look worse. In spite of this discrepancy, the outlooks experienced over these decades are still even worse than they look. Nixon was quite bent on the effort to remove the potential for building middle-class wealth any more for unionized workers. His people didn't like the way it had already occurred to a good extent before he got there. The objective was to not only stop but reverse the trend. And unionized workers were paid much more than average plus had some excellent benefits which were so essential to an upward class move that non-union companies had to mostly have similar benefits even while lower average wages prevailed. So it took them and all average-paid-or-lower workers down by removing cash buying power directly from their earned income & savings. Not just a notch like levying income taxes & instituting the Fed to remove gold from circulation as legal tender, then prohibit its possesion, and the subsequent currency devaluations had done much earlier in the century. Instead was the most devastating thing they could come up with at the time since income tax and central bank had already been done, and they had all the gold in the US under their control. Generations after the safety net of silver had been a lost memory after the Founding Fathers' wise reliance on both silver & gold as the standards when designing US currency to begin with had been compromised leaving only gold. By 1976 average people had lost half their wealth and with hindsight much more than half their wealth potential, just like it seemed was going to happen back in 1971. While the truly wealthy mostly lost half their dollar-denominated wealth too, but they were still rich and their outlook has done nothing but improve in spite of the devaluation of the dollar. Everyone else was set back decades and here we are. Never did it seem like there was any objective other than inequality being preferred over prosperity, even for the top Wall Streeters who numerically lost more millions than any working person to the market crash [0], and inflation which had to be accepted as never-ending at the time, from that point forward until a major reckoning. Still overdue but the wealth removal from the general population needed to continue without more inflation after a certain point or the graphs would have gotten really revealing much too early for those who had yet to cash out. [0] was watching it live on a Quotron: https://en.wikipedia.org/wiki/Quotron https://en.wikipedia.org/wiki/Quotron

A bunch of these graphs are misleading, especially the ones from the EPI. /r/badecon can explain better than I can: https://www.reddit.com/r/badeconomics/comments/6rtoh4/productivity_pay_gap_in_epi_we_trust/ https://www.reddit.com/r/badeconomics/comments/6rtoh4/produc... TL;DR: 1. The pay line is for the bottom ~80% of workers, while the productivity line is for all workers. If you graph all workers wages vs all workers productivity, then the gap shrinks quite a bit. (Of course, maybe we should redistribute wealth from top workers to all workers, but that's another discussion.) 2. Average hourly wages doesn't take into account workers' increase in benefits. 3. The lines aren't adjusted for inflation in the same way, which makes the gap look worse.

josho 6y ago
> Average hourly wages doesn't take into account workers' increase in benefits. I can't help but feel /r/badecon's rebuttal is dishonest. For many people benefits haven't increased, so the fact that it is excluded is a non-issue. E.g. The growing number of workers who are kept below full time hours to avoid being given fulltime benefits as one of many examples I could list. Regardless, if it is accurate I'm very curious what the growing employer benefits has been.
- tylerhou 6y ago
  Badecon addresses this — in fact, it’s the top comment.
webmaven 6y ago
> Average hourly wages doesn't take into account workers' increase in benefits. There is a pretty good reason for that. Most of the increase in benefits has been in the form of increased healthcare costs, which only somewhat reflect increased value, as much of that value is unrealized due to high deductibles incentivizing people to not use medical services if they can avoid doing so (which preserves an odd form of household rainy day fund dedicated to medical catastrophes). Meanwhile, the segment of workers that are (precariously, so with litle to no leverage even in aggregate) holding one or more part-time jobs instead of a full time job with benefits has grown as well.
- fuzzfactor 6y ago
  Exactly, workers have much less benefits now.
Seanambers 6y ago
I guess it's pretty obvious that it's just a collection of graphs from different sources which all basically indicate that something did happen (decouple) in the early to mid 70s.
fuzzfactor 6y ago
The top 3 graphs are all you need: "Growth in productivity and hourly compensation since 1948" "Real GDP, Real Wages and Trade Policies in the U.S. (1947-2014)" "Real family income between 1947 and 2016, as a percentage of 1973 level" As for the remaining graphs, for a number of them; >The lines aren't adjusted for inflation in the same way, which makes the gap look worse. In spite of this discrepancy, the outlooks experienced over these decades are still even worse than they look. Nixon was quite bent on the effort to remove the potential for building middle-class wealth any more for unionized workers. His people didn't like the way it had already occurred to a good extent before he got there. The objective was to not only stop but reverse the trend. And unionized workers were paid much more than average plus had some excellent benefits which were so essential to an upward class move that non-union companies had to mostly have similar benefits even while lower average wages prevailed. So it took them and all average-paid-or-lower workers down by removing cash buying power directly from their earned income & savings. Not just a notch like levying income taxes & instituting the Fed to remove gold from circulation as legal tender, then prohibit its possesion, and the subsequent currency devaluations had done much earlier in the century. Instead was the most devastating thing they could come up with at the time since income tax and central bank had already been done, and they had all the gold in the US under their control. Generations after the safety net of silver had been a lost memory after the Founding Fathers' wise reliance on both silver & gold as the standards when designing US currency to begin with had been compromised leaving only gold. By 1976 average people had lost half their wealth and with hindsight much more than half their wealth potential, just like it seemed was going to happen back in 1971. While the truly wealthy mostly lost half their dollar-denominated wealth too, but they were still rich and their outlook has done nothing but improve in spite of the devaluation of the dollar. Everyone else was set back decades and here we are. Never did it seem like there was any objective other than inequality being preferred over prosperity, even for the top Wall Streeters who numerically lost more millions than any working person to the market crash [0], and inflation which had to be accepted as never-ending at the time, from that point forward until a major reckoning. Still overdue but the wealth removal from the general population needed to continue without more inflation after a certain point or the graphs would have gotten really revealing much too early for those who had yet to cash out. [0] was watching it live on a Quotron: https://en.wikipedia.org/wiki/Quotron https://en.wikipedia.org/wiki/Quotron