4 ms·

5% raise when inflation is >5% is a real wage cut.

by ivalm 5y ago

earthscienceman 5y ago
In simplistic terms, maybe yes. I'm on the side of labor in this (in any) market so I don't intend to undercut the purpose of your comment... ... however. This depends on where the inflation is in the market and the way you intend to use your wages. "Inflation" is a number that we use to indicate much more complex and varied market trends.
- ivalm 5y ago
  I mean sure, you can dispute inflation number as being the relevant index, but CPI if anything underrepresents increased costs lots of people experience in Seattle.
- incongruity 5y ago
  Indeed - inflation is an aggregate measure and it definitely doesn’t apply equally across all individuals, in terms of impact. Recognizing my own privilege here, for me, for example, many of my expenses are fixed: student loans and mortgage take the lion’s share of our monthly cash flow after taxes and retirement. Neither of those are indexed to inflation so if this drives higher cost of living increases, it’s a net win for me, in all likelihood.
datavirtue 5y ago
Yes, and no. If you are paying for a $400k house in 2005 dollars with a 2021 salary the inflation is all good (bring it on). All the squawking about inflation is annoying and often wrong (gentle inflation like we are seeing is good for the common person). If you are sitting on piles of cash from yesteryear you become less wealthy--not counting gains from interest income or stock price appreciation. Who doesn't like inflation? I love it when the market makes my existing debt cheaper.
- deathanatos 5y ago
  > Who doesn't like inflation? I love it when the market makes my existing debt cheaper. Those of us who want to purchase? …And understand that the housing market cannot outpace inflation indefinitely, and are queasy about what will happen when that day comes: do home prices eventually level off at some absurd level, or do interest rates rise, demand slackens, prices level off & then speculators jump ship for more lucrative investments and then prices crater, putting people underwater on their mortgage?
- mlac 5y ago
  Here are a few people who don’t like inflation: - People who aren’t leveraged with a lot of debt. - People who are seeing wage stagnation while the cost of living goes up. The majority of jobs that keep the economy running aren’t like the tech sector where one can job hop to keep wages up. - People who have a significant chunk of their savings in cash for a down payment, and they are seeing property values run away from them while the value of their money goes down. They are also seeing increasing costs, impacting their ability to save for a down payment. - The people who are trying to buy a house that was $400k in 2005, that is now valued at 1.2M and requires $240k for a down payment.
  - PaulDavisThe1st 5y ago
    > People who have a significant chunk of their savings in cash for a down payment, and they are seeing property values run away from them while the value of their money goes down. This is a very important issue, but it's not really inflation in any normal sense.
    - cwkoss 5y ago
      Why is that 'not really inflation'?
      - PaulDavisThe1st 5y ago
        1) Housing costs are not part of a lot of measures of inflation. 2) Rental housing costs and owner-occupied housing costs are correlated but have a complex non-linear, non-monotonic relationship 3) Housing costs vary in absolute terms by substantial ratios in different areas 4) Housing costs vary in relative (CoL) terms in different areas 5) Changes in housing costs over a given time period can vary dramatically in different areas.

5% raise when inflation is >5% is a real wage cut.

by ivalm 5y ago

5% raise when inflation is >5% is a real wage cut.

In simplistic terms, maybe yes. I'm on the side of labor in this (in any) market so I don't intend to undercut the purpose of your comment... ... however. This depends on where the inflation is in the market and the way you intend to use your wages. "Inflation" is a number that we use to indicate much more complex and varied market trends.

ivalm 5y ago
I mean sure, you can dispute inflation number as being the relevant index, but CPI if anything underrepresents increased costs lots of people experience in Seattle.
incongruity 5y ago
Indeed - inflation is an aggregate measure and it definitely doesn’t apply equally across all individuals, in terms of impact. Recognizing my own privilege here, for me, for example, many of my expenses are fixed: student loans and mortgage take the lion’s share of our monthly cash flow after taxes and retirement. Neither of those are indexed to inflation so if this drives higher cost of living increases, it’s a net win for me, in all likelihood.

datavirtue 5y ago

Yes, and no. If you are paying for a $400k house in 2005 dollars with a 2021 salary the inflation is all good (bring it on). All the squawking about inflation is annoying and often wrong (gentle inflation like we are seeing is good for the common person). If you are sitting on piles of cash from yesteryear you become less wealthy--not counting gains from interest income or stock price appreciation. Who doesn't like inflation? I love it when the market makes my existing debt cheaper.

deathanatos 5y ago
> Who doesn't like inflation? I love it when the market makes my existing debt cheaper. Those of us who want to purchase? …And understand that the housing market cannot outpace inflation indefinitely, and are queasy about what will happen when that day comes: do home prices eventually level off at some absurd level, or do interest rates rise, demand slackens, prices level off & then speculators jump ship for more lucrative investments and then prices crater, putting people underwater on their mortgage?
mlac 5y ago
Here are a few people who don’t like inflation: - People who aren’t leveraged with a lot of debt. - People who are seeing wage stagnation while the cost of living goes up. The majority of jobs that keep the economy running aren’t like the tech sector where one can job hop to keep wages up. - People who have a significant chunk of their savings in cash for a down payment, and they are seeing property values run away from them while the value of their money goes down. They are also seeing increasing costs, impacting their ability to save for a down payment. - The people who are trying to buy a house that was $400k in 2005, that is now valued at 1.2M and requires $240k for a down payment.
- PaulDavisThe1st 5y ago
  > People who have a significant chunk of their savings in cash for a down payment, and they are seeing property values run away from them while the value of their money goes down. This is a very important issue, but it's not really inflation in any normal sense.
  - cwkoss 5y ago
    Why is that 'not really inflation'?
    - PaulDavisThe1st 5y ago
      1) Housing costs are not part of a lot of measures of inflation. 2) Rental housing costs and owner-occupied housing costs are correlated but have a complex non-linear, non-monotonic relationship 3) Housing costs vary in absolute terms by substantial ratios in different areas 4) Housing costs vary in relative (CoL) terms in different areas 5) Changes in housing costs over a given time period can vary dramatically in different areas.