4 ms·

The median real wage in Germany grew until the 90s, stagnated for a while, then started declining in the early noughts[0], with the effect worse for new entrant

The median real wage in Germany grew until the 90s, stagnated for a while, then started declining in the early noughts[0], with the effect worse for new entrants to the employment marketplace (i.e. young people and immigrants). The latter is predictable in a developed country (meaning past peak GDP growth) with high social safety nets and employee protection (meaning an additional burden for newer entrants to clear). I'm not sure about "free fall", but the median worker's earnings has basically broken even since the 80s or so, with a definite noticeable downward trend since the 2000s. [0]: https://labourmarketresearch.springeropen.com/articles/10.1007/s12651-017-0227-3 https://labourmarketresearch.springeropen.com/articles/10.10...

s1artibartfast 3y ago
Looking only at workers earnings is misleading in both Germany and the United States because it ignores monetary transfers through the government, which is a huge component of GDP. I can't speak for Germany, but for the US, worker earnings continue to climb if you count government mediated benefits. Similarly, it's impossible for worker income to grow at the rate of GDP while taxes grow faster than GDP
- prottog 3y ago
  Absolutely true, and it's a good point; but I'm not sure if the source I listed for Germany includes or excludes transfer receipts.
  - s1artibartfast 3y ago
    yeah, It is kind of the elephant in the room nobody talks about in these discussions. If you look at the US, inflation adjusted Government spending tripled between 2000 and 2022. Do people feel that they are getting 300% more services for the taxes 300% higher than 20 years ago. Schools, roads, healthcare, and prisons certainly aren't 3X better. https://www.imf.org/en/Publications/WEO/weo-database/2022/October/weo-report?c=134,111,&s=NGDPD,NGDPRPC,GGX,GGX_NGDP,&sy=2000&ey=2027&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1 https://www.imf.org/en/Publications/WEO/weo-database/2022/Oc...
- jjoonathan 3y ago
  > worker earnings continue to climb if you count government mediated benefits I thought counting medical inflation as a salary increase only changed the threshold from 90% to 80% of workers seeing wage contraction over the last 40 years.
  - s1artibartfast 3y ago
    There's a bunch of papers and books that recalculate growth after transfer payments. Here is a link to one book review and you can take a look at some of the figures that they came up with. https://johnhcochrane.blogspot.com/2022/12/calomiris-on-gramm-ekelund-and-early-on.html https://johnhcochrane.blogspot.com/2022/12/calomiris-on-gram...? When you see those numbers about wage stagnation it always comes down to three big questions: 1) Are transfers & taxes included 2) Do you calculate the value of the transfer at the cost the government spent, or the utility received 3) What inflation metric you use
- ComputerGuru 3y ago
  Looking at government benefits has its own set of shortcomings - it hides the struggle of “the middle class” where “middle class” is defined as starting at the point where one no longer qualifies for the most substantial government wealth transfer programs.

s1artibartfast 3y ago

Looking only at workers earnings is misleading in both Germany and the United States because it ignores monetary transfers through the government, which is a huge component of GDP. I can't speak for Germany, but for the US, worker earnings continue to climb if you count government mediated benefits. Similarly, it's impossible for worker income to grow at the rate of GDP while taxes grow faster than GDP

prottog 3y ago
Absolutely true, and it's a good point; but I'm not sure if the source I listed for Germany includes or excludes transfer receipts.
- s1artibartfast 3y ago
  yeah, It is kind of the elephant in the room nobody talks about in these discussions. If you look at the US, inflation adjusted Government spending tripled between 2000 and 2022. Do people feel that they are getting 300% more services for the taxes 300% higher than 20 years ago. Schools, roads, healthcare, and prisons certainly aren't 3X better. https://www.imf.org/en/Publications/WEO/weo-database/2022/October/weo-report?c=134,111,&s=NGDPD,NGDPRPC,GGX,GGX_NGDP,&sy=2000&ey=2027&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1 https://www.imf.org/en/Publications/WEO/weo-database/2022/Oc...
jjoonathan 3y ago
> worker earnings continue to climb if you count government mediated benefits I thought counting medical inflation as a salary increase only changed the threshold from 90% to 80% of workers seeing wage contraction over the last 40 years.
- s1artibartfast 3y ago
  There's a bunch of papers and books that recalculate growth after transfer payments. Here is a link to one book review and you can take a look at some of the figures that they came up with. https://johnhcochrane.blogspot.com/2022/12/calomiris-on-gramm-ekelund-and-early-on.html https://johnhcochrane.blogspot.com/2022/12/calomiris-on-gram...? When you see those numbers about wage stagnation it always comes down to three big questions: 1) Are transfers & taxes included 2) Do you calculate the value of the transfer at the cost the government spent, or the utility received 3) What inflation metric you use
ComputerGuru 3y ago
Looking at government benefits has its own set of shortcomings - it hides the struggle of “the middle class” where “middle class” is defined as starting at the point where one no longer qualifies for the most substantial government wealth transfer programs.