7 ms·

My understanding is that the bottom of the wage scale have seen the biggest gains, in real terms (https://fortune.com/2021/12/10/inflation-wages-low-income-work

• altcognito 5y ago
  Wage gains are not being treated the same as investment gains. It's not like Bezos is taking home an hourly rate. Everybody at the real top is doing quite, quite well. That's why the concentration of wealth into a very few hands at the top marches on, not because of "wages".
  • jonnycomputer 5y ago
    There are the rich and then there are the really rich, and then there are the unbelievably rich. I'll happily call a family earning 500k/y on two salaries in a small town where a million dollar home is literally a mansion on a hill "rich". Because they are. They just aren't as rich as the Trumps or Bezoss of the world.
    • bushbaba 5y ago
      It hit me when I saw a 3MM home in Tampa vs 3MM in Bay Area. I think many’s definition of money is skewed from living in hcol cities.
    • KerrAvon 5y ago
      What do you intend to connote by saying someone is "rich," though? What does it signify? If the definition of "rich" is "independently wealthy," that family certainly doesn't meet it. They still have to work for a living. If it means you never have to worry about where the next meal is coming from or losing the roof over your head, sure, a lot of people are "rich." And maybe this is better than 90% of humanity does, but it's still not a reasonable first world standard for being "rich" IMHO.
      • jonnycomputer 5y ago
        What does not calling them rich signify?
      • jonnycomputer 5y ago
        Their modes of thought, their concerns and worries, their expectations, their assumptions of what is possible, their habits, their identities, all different.
        • gamechaynes 5y ago
          She said: 'I am loosing every time!' He answered: 'No, you are often winning, but when you lose you lose way too high.' (-;
      • pessimizer 5y ago
        > They still have to work for a living. No they don't. They could live in a median dwelling with a median income indefinitely on the interest of what they've saved over the past few years. If you're saying that they have to work for the living that they're accustomed to, so does Musk.
    • sseagull 5y ago
  • georgyo 5y ago
    Your touching on a much more complicated subject about reporting. If someone one owns a billion dollars of stock foobar, and foobar grows 10x, then that person is now worth 10B and "made" 9B. However they have not sold anything so while they can be reported as making 9B, they are none of it was directly cash and not taxed; at least not yet. However, while Bezos "only" has a salary/bonus of 1.5 million a year, it is very common for executives to have total comp packages in the 10s to hundreds of millions a year. These can easily be converted into hourly rate equivalents because there is only so many hours you can work a year.
    • cwkoss 5y ago
      The billionaire stock owner in your example's economic power has increased by 10x regardless though. They can borrow against that money and those funds aren't taxed - so they can effectively spend it without taxation. They can cycle debt to avoid ever having to sell a single share for their entire life, at rates more favorable than any middle class person has access to. We can fix our tax code with legislation to address this loophole, our politicians just don't have the will to do this currently (largely because many of them amass fortunes through stocks and insider tips, IMO).
      • Stupulous 5y ago
        I assume they borrow against the after-tax value of the stock, because it will be taxed before being paid back(?) I don't know if that is significant, but I figure it's worth noting.
        • zeusk 5y ago
          No that’s not how it works. Infact, you can get a margin loan at 0.75% interest from ibkr if you hold more than 50k usd of stock for half of its value. Of course, if that value drops you’ll get margin called for more collateral
          • Stupulous 5y ago
            Half of its value is less than after-tax value, which is at least the initial investment + 63% of the gains.
  • yibg 5y ago
    AMZN is down 10+% over the last year so not sure about that one.
    • tfigment 5y ago
      His ex-wife is shovelling money to charities faster than anyone before and still made more than she gave out.
    • freewilly1040 5y ago
      He's got elite financial engineers at his disposal, it's highly doubtful his fortune has declined in lockstep with the AMZN share price.
• Sevii 5y ago
  Wage gains aren't actually that good. A lot of people are going to be surprised they moved up in tax bracket while their standard of living went down.
  • vsareto 5y ago
    That’s not how taxes work https://www.investopedia.com/ask/answers/071114/can-moving-higher-tax-bracket-cause-me-have-lower-net-income.asp https://www.investopedia.com/ask/answers/071114/can-moving-h...
    • michaelcampbell 5y ago
      I think they mean if you are 1% away from a new tax bracket and get a 5% raise, 4% of that is at the higher tax bracket. So while you still make more money you make less than you would have if the entire 5% were in the lower bracket.
  • lotsofpulp 5y ago
    What is the relevance of tax brackets? Earning more nominally while standard of living going down is the same as earning less in real terms. “Moving up” in a tax bracket never means earning less in nominal or in real terms. It just means you get less in your pocket of the extra you earned, not of the total you earned.
    • scatters 5y ago
      If inflation is 5% and you get a 5% raise, you're level in real terms, right? No, because that 5% is taxed at your higher tax rate, which is (usually) higher than your average tax rate. This is called bracket creep.
      • hungryhobo 5y ago
        but you're still earning more than if you haven't gotten that 5% raise.
• MilnerRoute 5y ago
  The other thing I never hear discussed is that this round of inflation isn't expected to be permanent, or even particularly long-lasting. So a wage increase in January which is (temporarily) eaten up by January's inflation means....an actual wage increase in May which then goes on for years and years.
  • bhouser 5y ago
    I think you're making a mathematical error here. If inflation goes to zero, that does not mean prices have fallen to where they were before. It merely means prices stop increasing further. So a temporary bout of inflation equal in magnitude to a one-time but persistent wage increase, _do_ cancel out.
    • MilnerRoute 5y ago
      Maybe I should swap in the word "price increases" for inflation. Gas prices are high now, but nobody expects them to stay at this level indefinitely. (And nobody expects the price of gas to stop increasing without then also dropping back down.) Supply-chain related price increases aren't permanent, and go in the other direction when the supply chain improves. And the larger point is it's a positive development if workers really are able to renegotiate their compensation -- and that isn't entirely negated by slightly higher prices in January.
    • deleted 5y ago
      [deleted]
  • CuriouslyC 5y ago
    Except that producers aren't going to lower prices, because the "expectation" is that other producers won't for any non-commodity good (consolidation is GREAT for the consumer), so we're stuck with it in a lot of cases.
• 015a 5y ago
  The idea that "printing money leads to inflation" is startlingly overblown as the most impactful source of what causes it. It certainly can; but its explicative popularity is mostly the result of it being really easy to explain to children ("if you have two candy bars, wouldn't you feel that each bar is worth less?") Or, more accurately: if everyone has more money, wouldn't demand for goods & services go up? And per the law of supply & demand, if demand goes up, prices should go up. And, per how inflation is calculated (CPI), if prices go up, inflation is on the rise. That's a lot of steps to get from "printing money" to "the value of the US dollar decreases". It certainly can cause, and is a component of today's, inflation. But there are three confounding factors: First: We're in an unprecedented economic climate, yet we still apply many of the laws of economics written during the Gold Rush. Today, its reasonable to assume that many people have a "demand maximum"; outside of a few high value commodities (houses and cars being the two biggest), there's only so many CPI-included goods & services which can see significantly increased consumer demand given a larger money supply. Food doesn't really see increased demand. Housing and Living supplies don't. Maybe you splurge on a PS5 (if you can find one, see (3)) or a bigger TV. Houses & Cars, being the two biggest areas people will splurge, and related to that, Rent, are seeing massive price inflation. Which leads to: Second: All else being equal, the average consumer sitting near a "demand maximum" socioeconomic point should mean that they're sitting on more money in a bank account. But, most aren't. The fundamental reasoning for this is complex, but it boils down to: most of the money being printed by the Fed isn't entering consumer pockets. On the contrary, most Fed policies have hurt consumers more than helped; because of rising real estate prices, which are in no-small-part due to low interest rates, housing & rent prices have skyrocketed, which mostly hurts consumers. QE over the past decade has lined American company balance sheets to unprecedented values, but that money hasn't trickled down to front-line workers in any meaningful sense; all it really serves to do is inflate stock prices, which destabilizes the stock market and makes for fun Forbes headlines about the richest Americans getting even richer (on paper). Third: Biggest: Supply chain shock. CPI is calculated based on the price of consumer goods. Supply & Demand overwhelm the pricing decisions of most consumer goods. Some products are experiencing demand shock; but nearly everything is experiencing supply shock right now. Blame COVID. Blame China & Russia. Blame capitalism's tendency toward hyper-optimization creating a brittle supply chain. Overall point being: Many correctly associate the word "inflation" to mean "weakening of the US dollar", but then incorrectly extrapolate it to mean "weakening of the US dollar relative to other currencies". The reality is exactly what's written on the box: its weakening relative to what you'd buy with it. And if its happening to most currencies (as it is, today); its not a currency issue, it's a supply/price issue. I'd argue not only is it not clear that Fed spending is causing inflation; its most probable that it isn't, and Fed spending over the past two years has been a positive, invisible force against higher inflation.