3 ms·

"Unfortunately, what has happened is that wages haven’t kept up with the cost of living, by and large, for the last 50 years or so" That's putting it mildly.

by mikece 3y ago

"Unfortunately, what has happened is that wages haven’t kept up with the cost of living, by and large, for the last 50 years or so" That's putting it mildly. I lived better 15 years ago making $40k less than I do now. Price increases for consumer goods, energy, food, and property taxes in the last four years have been especially brutal!

pleasantpeasant 3y ago
Until we reverse Reagan's disastrous Trickle-Down Theory(Voodoo Economics), we won't see this changing. Even in the '80s they knew this current world would be the outcome. This isn't a surprise to the Fed or the Reaganites.
no_wizard 3y ago
This is the trouble with 'infinite inflation' which is the economic model in which we exist (most central banks target 2% inflation), you combine this modeling with what that doesn't cover - things like housing, that up many multiples higher than the official inflation rate. Now many argue "well raises should be higher than inflation" but data continues to show that this isn't the case, as mentioned in the top of the article, for the last 50 years or so, raises have not kept pace with real cost of living increases. I have seen an argument that raises have evened out somewhat to beat the official inflation rate, but this is dubious, because the reported government inflation rate has exclusions to its calculation and doesn't capture the real cost of living increases faced across the US, due to inflation rate calculation exclusions and approaches. I've long argued we need some kind of deflation in real costs, what that would look like is hard for me to say. I know its complicated, however I think a good place to start is perhaps returning to pre Reagan era economic 'reforms' is a good first step, as I've seen mentioned elsewhere (on HN or otherwise), as so called 'Reaganomics' hasn't really panned out for the average American over the long term.
- slowmovintarget 3y ago
  We haven't had "Reaganomics" at play since Bush senior. Repeal of Glass-Steagall under Clinton, ACA, and Dodd-Frank puts us in a completely different economic regime than 'Reaganomics.' Include alternative definitions for both CPI and unemployment which paint rosier but untrue pictures of the system. These have been in place starting with the Obama administration and continue today. The admonition from the Reagan administration on economics was fairly simple: Lower the rates, broaden the base. We've not been doing that for a long time.
verteu 3y ago
But the median wage is up 40% in the last 15 years... If your pay has been constant, you're getting salary decreases in real terms.
- _mlbt 3y ago
  That's great, but how much has the price of housing, food, cars, energy, and a college education increased during that time frame?
  - deleted 3y ago
    [deleted]
  - verteu 3y ago
    My other comment in this thread compares the growth of CPI and wages (wages grew faster).
    - _mlbt 3y ago
      CPI doesn’t properly account for these factors that I mentioned.
      - verteu 3y ago
        CPI includes housing, food, cars, & energy. You're welcome to check an alternate metric (eg Truflation), but they're all quite similar to CPI.
        yftsui 3y ago
        A simple Google search will give you an obvious result: “Spending to purchase and improve houses and other housing units is treated as investment and not consumption in the CPI.” You are welcome.
        verteu 3y ago
        Right, that's covered by "owner's equivalent rent." This is LOWER than what homeowners actually pay. (Think about it -- Do landlords make negative `profit = home_payment_expenses - rent`?) Any why would GGP mention food, cars, and energy? They are directly included in the CPI. I think it's more likely that GGP is under the false impression that these items are excluded from the CPI -- It's a conspiracy theory originating from economists' practice of using "CPI Excluding Food, Shelter, Energy, and Used Cars and Trucks" as a lower-variance estimate of the future inflation rate. > You are welcome. Skip the snark, it's against HN guidelines.

by mikece 3y ago

pleasantpeasant 3y ago

Until we reverse Reagan's disastrous Trickle-Down Theory(Voodoo Economics), we won't see this changing. Even in the '80s they knew this current world would be the outcome. This isn't a surprise to the Fed or the Reaganites.

no_wizard 3y ago

This is the trouble with 'infinite inflation' which is the economic model in which we exist (most central banks target 2% inflation), you combine this modeling with what that doesn't cover - things like housing, that up many multiples higher than the official inflation rate. Now many argue "well raises should be higher than inflation" but data continues to show that this isn't the case, as mentioned in the top of the article, for the last 50 years or so, raises have not kept pace with real cost of living increases. I have seen an argument that raises have evened out somewhat to beat the official inflation rate, but this is dubious, because the reported government inflation rate has exclusions to its calculation and doesn't capture the real cost of living increases faced across the US, due to inflation rate calculation exclusions and approaches. I've long argued we need some kind of deflation in real costs, what that would look like is hard for me to say. I know its complicated, however I think a good place to start is perhaps returning to pre Reagan era economic 'reforms' is a good first step, as I've seen mentioned elsewhere (on HN or otherwise), as so called 'Reaganomics' hasn't really panned out for the average American over the long term.

slowmovintarget 3y ago
We haven't had "Reaganomics" at play since Bush senior. Repeal of Glass-Steagall under Clinton, ACA, and Dodd-Frank puts us in a completely different economic regime than 'Reaganomics.' Include alternative definitions for both CPI and unemployment which paint rosier but untrue pictures of the system. These have been in place starting with the Obama administration and continue today. The admonition from the Reagan administration on economics was fairly simple: Lower the rates, broaden the base. We've not been doing that for a long time.

verteu 3y ago

But the median wage is up 40% in the last 15 years... If your pay has been constant, you're getting salary decreases in real terms.

_mlbt 3y ago
That's great, but how much has the price of housing, food, cars, energy, and a college education increased during that time frame?
- deleted 3y ago
  [deleted]
- verteu 3y ago
  My other comment in this thread compares the growth of CPI and wages (wages grew faster).
  - _mlbt 3y ago
    CPI doesn’t properly account for these factors that I mentioned.
    - verteu 3y ago
      CPI includes housing, food, cars, & energy. You're welcome to check an alternate metric (eg Truflation), but they're all quite similar to CPI.
      - yftsui 3y ago
        A simple Google search will give you an obvious result: “Spending to purchase and improve houses and other housing units is treated as investment and not consumption in the CPI.” You are welcome.
        verteu 3y ago
        Right, that's covered by "owner's equivalent rent." This is LOWER than what homeowners actually pay. (Think about it -- Do landlords make negative `profit = home_payment_expenses - rent`?) Any why would GGP mention food, cars, and energy? They are directly included in the CPI. I think it's more likely that GGP is under the false impression that these items are excluded from the CPI -- It's a conspiracy theory originating from economists' practice of using "CPI Excluding Food, Shelter, Energy, and Used Cars and Trucks" as a lower-variance estimate of the future inflation rate. > You are welcome. Skip the snark, it's against HN guidelines.