3 ms·

The inflation rate has huge error bars, at least in terms of how official inflation compares to "real" inflation. So comparing one "inflation adjusted" number t

by hugh3 15y ago

The inflation rate has huge error bars, at least in terms of how official inflation compares to "real" inflation. So comparing one "inflation adjusted" number to another from 43 years ago and getting concerned over a difference of a mere couple of hundred bucks (about three percent) is pretty meaningless. The biggest flaw in the article seems to be the assumption that the inflation-adjusted income of the median worker should be increasing. Wages will basically track inflation, since the main thing we buy from one another is each others' labour. Meanwhile land gets more expensive but technology gets cheaper. It's pretty much a wash.

coenhyde 15y ago
Real wages should have increased considering the huge increase in productivity that has occurred.
- sp332 15y ago
  Alternatively: real wages should have decreased considering the increase in competition among workers.
  - lcargill99 15y ago
    Not so much, no. Lump of Labor fallacy, m'lord. Wages have fallen because of something fuzzy and abstract ( and indefinable ) called "liquidity preference". If you take to the "fear vs. greed" cycle theory of economics, that means fear is winning. A ... textile job in Indonesia still pays the same as it did, roughly ( modulo Baumol Cost Disease stuff - increased admin cost ) in 1950, it's just that that $2.00 or $0.50 per hour isn't worth driving to in the high-cost US.
- lcargill99 15y ago
  They have revised GDP figures since 2007 or so. So in the interim/short term, productivity is actually much closer to hours worked than previously thought. The longer term trend is also questionable starting around 1973, ala Tyler Cowan. Ah, good old economic numerology.
- cperciva 15y ago
  Why does one imply the other? Productivity is measured in $GDP per man-hour, and is consequently skewed by the effects of capital. Giving someone better tools increases his productivity, but it doesn't mean that he's a better worker or deserves higher wages; the person who deserves the increased income is the guy who provided the tools.
  - VladRussian 15y ago
    as a result, if better tools don't require higher skills/education (and thus don't naturally lead to higher wages), nobody wants to be the guy using the tools. In this case it is necessary either to still increase the wages for using the tools or outsource or bring cheap labor in.

by hugh3 15y ago

coenhyde 15y ago

Real wages should have increased considering the huge increase in productivity that has occurred.

sp332 15y ago
Alternatively: real wages should have decreased considering the increase in competition among workers.
- lcargill99 15y ago
  Not so much, no. Lump of Labor fallacy, m'lord. Wages have fallen because of something fuzzy and abstract ( and indefinable ) called "liquidity preference". If you take to the "fear vs. greed" cycle theory of economics, that means fear is winning. A ... textile job in Indonesia still pays the same as it did, roughly ( modulo Baumol Cost Disease stuff - increased admin cost ) in 1950, it's just that that $2.00 or $0.50 per hour isn't worth driving to in the high-cost US.
lcargill99 15y ago
They have revised GDP figures since 2007 or so. So in the interim/short term, productivity is actually much closer to hours worked than previously thought. The longer term trend is also questionable starting around 1973, ala Tyler Cowan. Ah, good old economic numerology.
cperciva 15y ago
Why does one imply the other? Productivity is measured in $GDP per man-hour, and is consequently skewed by the effects of capital. Giving someone better tools increases his productivity, but it doesn't mean that he's a better worker or deserves higher wages; the person who deserves the increased income is the guy who provided the tools.
- VladRussian 15y ago
  as a result, if better tools don't require higher skills/education (and thus don't naturally lead to higher wages), nobody wants to be the guy using the tools. In this case it is necessary either to still increase the wages for using the tools or outsource or bring cheap labor in.