8 ms·

It seems the annual income vs. CPI is the core chart here. Something happened in the decade of 2000-2010 to throw things out of whack. I'm not informed enough t

It seems the annual income vs. CPI is the core chart here. Something happened in the decade of 2000-2010 to throw things out of whack. I'm not informed enough to know if that was the result of policy decisions or what, but I'd like to know how wage growth declined so dramatically during this time while prices seemed to maintain its projected linear growth.

mlcrypto 4y ago
Quantitative easing
okwubodu 4y ago
Unsubstantiated guess: insane P/E ratios became the norm and maintaining them is harder when you’re raising salaries.
- DamnYuppie 4y ago
  How do large P/E ratios impact salaries?
  - Enginerrrd 4y ago
    I don't think this would pass much scrutiny, but I suppose you could have a situation where a small number of people that own a large number of shares in a variety of companies could become a monopolistic unified force that could put downward wage pressures on entire industries.
- JumpCrisscross 4y ago
  > insane P/E ratios became the norm and maintaining them is harder when you’re raising salaries P/E is the inverse of earnings yield. It varies with rates. So 2% -> 1% equity yield means a doubling of P/E. But framed as a yield shift it looks less dramatic (and more familiar).
davesque 4y ago
One thing jumps out in my mind. I think of the 2000s as being the decade in which tech companies that survived the dot com bust turned into tech giants. And these companies would go on to rack up market caps that broke historical records. I remember everyone was sort of in awe of the numbers and generally had a pretty positive sentiment towards the success. However, I'm not sure I can craft a really clear narrative that connects this back to stagnant wages. But it seems related. Perhaps in the sense that large corporations like the tech giants seemed to be free to monopolize and suck up all the money without allowing it to circulate in the economy. The tech giants may have just been a particular touch stone in a long trend of increased, unchecked corporatization of US business. Perhaps that culminated in a kind of phase transition that took place in the 2000s. But there's another interesting detail to that chart which is that wages appear to be back on track since 2010 and have trended upward pretty sharply since then compared to the 2000s. If the slope of the wage line is to be believed (and were to continue), we'd be in pretty good shape in another decade or so. So, to play devil's advocate, perhaps it's wrong to look sideways at some of the big players in the space right now. I don't know. Not an economist.
- gruez 4y ago
  > However, I'm not sure I can craft a really clear narrative that connects this back to stagnant wages. But it seems related but the famous productivity/wage gap chart shows it started in the 70s to 80s. What makes you think it's due to the dotcom bubble?
- bcrosby95 4y ago
  My memory is hazy, but iirc Alan Greenspan brought out a lot of easy money in response to the dotcom bubble bursting, which then helped inflate the housing bubble.
- lotsofpulp 4y ago
  > I remember everyone was sort of in awe of the numbers and generally had a pretty positive sentiment towards the success. However, I'm not sure I can craft a really clear narrative that connects this back to stagnant wages. But it seems related. The relation I can think of is the tech giants obviating away many instances of labor that were being sold. Email, travel agents, streaming, GPS mapping apps, etc all let people do a lot more with the labor of a lot fewer. But that is not solely the domain of tech giants or tech companies. Automation has been happening for decades, along with outsourcing to countries with cheaper labor. Since prices (wages) stayed stagnant, one can conclude that the supply of labor increased more than the demand for labor. Edit: another factor increasing supply of labor is women joining the workforce
hyperation 4y ago
Not saying it's related, but 9/11 happened.
Spooky23 4y ago
Midpoint of a 20 year war. Inflation, combined with the financial engineering of the 90s and the deflationary power of the internet. My parents bought a house when I was born in NYC in the 70s for $20k, sold it for 10x more in 1990 and that buyer sold it for 10x more circa 2007. The deflationary power of the internet powered costs for business. My employer has 1/3 the accountants they had 30 years ago, but 5x as many IT people. Specific occupations make more money, but most make less due to dropped demand. On the production side, you can pretty trivially source goods from a anywhere on the planet. Again, reducing cost. But the hard assets go up. Housing, food, durable goods. The average white good like a fridge costs 50% more and last 50% less time.
kurupt213 4y ago
there was a significant recession around 2007
- quickthrower2 4y ago
  I would say that is a symptom, not a root cause
api 4y ago
Setting a trillion dollars on fire in Iraq and Afghanistan? Of course Putin's doing it now in Ukraine and maybe China is about to do it in Taiwan so don't worry, the rest of the world is catching up to America's stupidity.
quickthrower2 4y ago
I think it is a combination of 1: massive money supply expansion - that mostly benefits the already rich: asset owning classes and banks/institutions that get first dibs on cheap money, and 2: globalization/technology - reducing the value of your typical worker though outsourcing, efficiency, culture, etc. 3: The rich entrenching their power, making it more difficult for everyone else who isn't. Not so much a conspiracy, more of some kind of feedback loop we need to break.
initplus 4y ago
This chart is complete garbage though, it's graphing inflation adjusted income against inflation... If you want a comparison it's possible to draw a valid conclusion from you need to compare non-inflation adjusted income. If I'm being charitable, they made a mistake in their analysis, if I'm uncharitable they didn't care about the methodology and went in looking for a way to write a provocative conclusion like "86% less purchasing power". Obviously a lot of energy was spent here drawing up the pretty infographics, probably should have spent more energy getting the basic statistics correct first?

mlcrypto 4y ago

Quantitative easing

okwubodu 4y ago

Unsubstantiated guess: insane P/E ratios became the norm and maintaining them is harder when you’re raising salaries.

DamnYuppie 4y ago
How do large P/E ratios impact salaries?
- Enginerrrd 4y ago
  I don't think this would pass much scrutiny, but I suppose you could have a situation where a small number of people that own a large number of shares in a variety of companies could become a monopolistic unified force that could put downward wage pressures on entire industries.
JumpCrisscross 4y ago
> insane P/E ratios became the norm and maintaining them is harder when you’re raising salaries P/E is the inverse of earnings yield. It varies with rates. So 2% -> 1% equity yield means a doubling of P/E. But framed as a yield shift it looks less dramatic (and more familiar).

davesque 4y ago

One thing jumps out in my mind. I think of the 2000s as being the decade in which tech companies that survived the dot com bust turned into tech giants. And these companies would go on to rack up market caps that broke historical records. I remember everyone was sort of in awe of the numbers and generally had a pretty positive sentiment towards the success. However, I'm not sure I can craft a really clear narrative that connects this back to stagnant wages. But it seems related. Perhaps in the sense that large corporations like the tech giants seemed to be free to monopolize and suck up all the money without allowing it to circulate in the economy. The tech giants may have just been a particular touch stone in a long trend of increased, unchecked corporatization of US business. Perhaps that culminated in a kind of phase transition that took place in the 2000s. But there's another interesting detail to that chart which is that wages appear to be back on track since 2010 and have trended upward pretty sharply since then compared to the 2000s. If the slope of the wage line is to be believed (and were to continue), we'd be in pretty good shape in another decade or so. So, to play devil's advocate, perhaps it's wrong to look sideways at some of the big players in the space right now. I don't know. Not an economist.

gruez 4y ago
> However, I'm not sure I can craft a really clear narrative that connects this back to stagnant wages. But it seems related but the famous productivity/wage gap chart shows it started in the 70s to 80s. What makes you think it's due to the dotcom bubble?
bcrosby95 4y ago
My memory is hazy, but iirc Alan Greenspan brought out a lot of easy money in response to the dotcom bubble bursting, which then helped inflate the housing bubble.
lotsofpulp 4y ago
> I remember everyone was sort of in awe of the numbers and generally had a pretty positive sentiment towards the success. However, I'm not sure I can craft a really clear narrative that connects this back to stagnant wages. But it seems related. The relation I can think of is the tech giants obviating away many instances of labor that were being sold. Email, travel agents, streaming, GPS mapping apps, etc all let people do a lot more with the labor of a lot fewer. But that is not solely the domain of tech giants or tech companies. Automation has been happening for decades, along with outsourcing to countries with cheaper labor. Since prices (wages) stayed stagnant, one can conclude that the supply of labor increased more than the demand for labor. Edit: another factor increasing supply of labor is women joining the workforce

hyperation 4y ago

Not saying it's related, but 9/11 happened.

Spooky23 4y ago

Midpoint of a 20 year war. Inflation, combined with the financial engineering of the 90s and the deflationary power of the internet. My parents bought a house when I was born in NYC in the 70s for $20k, sold it for 10x more in 1990 and that buyer sold it for 10x more circa 2007. The deflationary power of the internet powered costs for business. My employer has 1/3 the accountants they had 30 years ago, but 5x as many IT people. Specific occupations make more money, but most make less due to dropped demand. On the production side, you can pretty trivially source goods from a anywhere on the planet. Again, reducing cost. But the hard assets go up. Housing, food, durable goods. The average white good like a fridge costs 50% more and last 50% less time.

kurupt213 4y ago

there was a significant recession around 2007

quickthrower2 4y ago
I would say that is a symptom, not a root cause

api 4y ago

Setting a trillion dollars on fire in Iraq and Afghanistan? Of course Putin's doing it now in Ukraine and maybe China is about to do it in Taiwan so don't worry, the rest of the world is catching up to America's stupidity.

quickthrower2 4y ago

I think it is a combination of 1: massive money supply expansion - that mostly benefits the already rich: asset owning classes and banks/institutions that get first dibs on cheap money, and 2: globalization/technology - reducing the value of your typical worker though outsourcing, efficiency, culture, etc. 3: The rich entrenching their power, making it more difficult for everyone else who isn't. Not so much a conspiracy, more of some kind of feedback loop we need to break.

initplus 4y ago

This chart is complete garbage though, it's graphing inflation adjusted income against inflation... If you want a comparison it's possible to draw a valid conclusion from you need to compare non-inflation adjusted income. If I'm being charitable, they made a mistake in their analysis, if I'm uncharitable they didn't care about the methodology and went in looking for a way to write a provocative conclusion like "86% less purchasing power". Obviously a lot of energy was spent here drawing up the pretty infographics, probably should have spent more energy getting the basic statistics correct first?