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They should. But the reality is that they haven't: https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decade

They should. But the reality is that they haven't: https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us... There is more to monetary inflation than simply money devaluation: https://news.ycombinator.com/item?id=27476789 https://news.ycombinator.com/item?id=27476789

mullingitover 5y ago
The article you linked seems to be saying the opposite: > In fact, despite some ups and downs over the past several decades, today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. Having the same purchasing power means that wages have indeed kept up with inflation. If they didn't, it wouldn't be the same purchasing power, it would be diminished purchasing power.
- reedjosh 5y ago
  Excepting that the `pie` that is the global economy of goods and services has grown significantly. So in this case, we're all producing more than ever, but not gaining any more than we used to.
  - mullingitover 5y ago
    It's relative to who you consider as 'we.' If you mean workers in the US, yeah it's pretty flat. However if you mean 'we' to be workers globally, we've gained a staggering amount in the past few decades. Somewhere in the neighborhood of 1.5 billion people have been lifted out of extreme poverty in our lifetimes[1]. [1] https://ourworldindata.org/extreme-poverty https://ourworldindata.org/extreme-poverty
    - reedjosh 5y ago
      Yes, but I'm thinking more of the we that are the losers in in the Gini coefficient. https://en.wikipedia.org/wiki/Gini_coefficient https://en.wikipedia.org/wiki/Gini_coefficient
- billytetrud 5y ago
  What's missing from any analysis that only considers CPI is that price inflation doesn't take into account decreasing costs of production. Technological progress and innovation should be driving down prices of quality-adjusted products. So the fact that wages adjusted to inflation are staying constant indicates that there is downward pressure on wages of a similar rate to the rate at which general market costs are decreasing. In a world with no inflation, what we would see here is decreasing costs, decreasing wages, and increasing GDP. What's also missing from this analysis is that CPI doesn't adequately incorporate important things like that the quality-adjusted price of housing has massively increased at much faster than the general rate of inflation.
  - kbenson 5y ago
    > So the fact that wages adjusted to inflation are staying constant indicates that there is downward pressure on wages of a similar rate to the rate at which general market costs are decreasing. Isn't that a simplistic point of view that assumed the U.S. is either a closed system or the rest of the world as progressed at the same rate we have? There's more global competition now, both for customers and for jobs. That wages have stayed inline with inflation in spite of the fact that America has shifted quite a bit to a services economy and those services have competition from other countries (the classic example is India), may actually point to the monetary policy preventing what would be a much worse problem, and for nothing to do with inflation. It's easy to pick one metric and paint a picture that supports a story. It's much harder to account for many important factors, which is also why it's not done as frequently. Anyone's theory that one specific thing is the result of many major worldwide changes is going to have an uphill battle with me. The time frame we're talking about includes the popularization of the internet, increased globalization, the recent aftermath of the civil rights movement, an over 100% increase of global population compared to a ~60% increase in United States population, and mode than halving the number of people in the world that live in extreme poverty. Every single one of those would have massive effects on the economy, production and wages of the United States. I'm not sure how anyone could credibly make claims about how monetary policy in the U.S. was the reason for effect over the last 50 years without accounting for these and other things. It's easy to point at two things that seem to correlate over time. It's much harder to prove causation.

mullingitover 5y ago

The article you linked seems to be saying the opposite: > In fact, despite some ups and downs over the past several decades, today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. Having the same purchasing power means that wages have indeed kept up with inflation. If they didn't, it wouldn't be the same purchasing power, it would be diminished purchasing power.

reedjosh 5y ago
Excepting that the `pie` that is the global economy of goods and services has grown significantly. So in this case, we're all producing more than ever, but not gaining any more than we used to.
- mullingitover 5y ago
  It's relative to who you consider as 'we.' If you mean workers in the US, yeah it's pretty flat. However if you mean 'we' to be workers globally, we've gained a staggering amount in the past few decades. Somewhere in the neighborhood of 1.5 billion people have been lifted out of extreme poverty in our lifetimes[1]. [1] https://ourworldindata.org/extreme-poverty https://ourworldindata.org/extreme-poverty
  - reedjosh 5y ago
    Yes, but I'm thinking more of the we that are the losers in in the Gini coefficient. https://en.wikipedia.org/wiki/Gini_coefficient https://en.wikipedia.org/wiki/Gini_coefficient
billytetrud 5y ago
What's missing from any analysis that only considers CPI is that price inflation doesn't take into account decreasing costs of production. Technological progress and innovation should be driving down prices of quality-adjusted products. So the fact that wages adjusted to inflation are staying constant indicates that there is downward pressure on wages of a similar rate to the rate at which general market costs are decreasing. In a world with no inflation, what we would see here is decreasing costs, decreasing wages, and increasing GDP. What's also missing from this analysis is that CPI doesn't adequately incorporate important things like that the quality-adjusted price of housing has massively increased at much faster than the general rate of inflation.
- kbenson 5y ago
  > So the fact that wages adjusted to inflation are staying constant indicates that there is downward pressure on wages of a similar rate to the rate at which general market costs are decreasing. Isn't that a simplistic point of view that assumed the U.S. is either a closed system or the rest of the world as progressed at the same rate we have? There's more global competition now, both for customers and for jobs. That wages have stayed inline with inflation in spite of the fact that America has shifted quite a bit to a services economy and those services have competition from other countries (the classic example is India), may actually point to the monetary policy preventing what would be a much worse problem, and for nothing to do with inflation. It's easy to pick one metric and paint a picture that supports a story. It's much harder to account for many important factors, which is also why it's not done as frequently. Anyone's theory that one specific thing is the result of many major worldwide changes is going to have an uphill battle with me. The time frame we're talking about includes the popularization of the internet, increased globalization, the recent aftermath of the civil rights movement, an over 100% increase of global population compared to a ~60% increase in United States population, and mode than halving the number of people in the world that live in extreme poverty. Every single one of those would have massive effects on the economy, production and wages of the United States. I'm not sure how anyone could credibly make claims about how monetary policy in the U.S. was the reason for effect over the last 50 years without accounting for these and other things. It's easy to point at two things that seem to correlate over time. It's much harder to prove causation.