9 ms·

Why did U.S. wages stagnate for 20 years?

90 points by paulpauper 1y ago

asdff 1y ago
A factor the author didn't really touch is housing. By 1973 many places in CA at least were starting to ban dingbat construction via ordinance against back out parking setups. We also see many cities in CA and elsewhere downzoned around that time. LA went from being zoned for over 10 million people in 1960 to being zoned for just 4.2 million and being built to almost 95% of its zoned capacity by the 2010s. I'm not sure exactly the relationship between wage growth and restriction of housing growth but the fact that these phenomenon seemed to happen in lockstep merits some reflection. Prop 13 also came in 1973.
- yonran 1y ago
  Proposition 13 was 1978 (99 years after the publication of Progress and Poverty).
  - asdff 1y ago
    Thanks for the correction
- bryanlarsen 1y ago
  Housing prices did not outpace inflation in 1973 - 1993. The periods of significant house price inflation (early 2000's, last 15 years) seem to correlate better with periods of wage increase rather than the periods of wage stagnation.
  - asdff 1y ago
    It also correlates quite well to available flat land for greenfield development running dry in major metro areas like the non-antelope valley side of LA county. And what do you know, prices are much cheaper on the other side of the San Gabriels where there is room to develop more housing. Without room for greenfield, infill needs to be legalized, or prices rise such that the only winners are the high income people able to participate in the now buyer constrained housing market like we see today.
- ty6853 1y ago
  The most hilarious thing about housing in california is they had a chance to use ADUs to lower housing prices but of course they totally rigged the game by outlawing splitting off ADUs as a seperate property, meaning all they did was making housing even more expensive because the value of a plot now includes the additional value of the potential to be a landlord but no way to split that value into an economical individual home. They managed to find the one fucking way to make additional housing make being a new homeowner even more expensive, and I believe it was not by accident.
  - onlyrealcuzzo 1y ago
    It is intended that all of the policies make land more expensive... No politician wants more affordable housing in a place where >65% of voters are property owners...
    - Ericson2314 1y ago
      It's good for land to become more valuable. We want land prices to go up, and housing prices to go down. All that means is density is increasing faster than land values. Nothing against allowing lot splits, but this is the wrong reason to be for it. The reasoning in the previous to replies reaks of "homeownership is more virtuous than renting" which is not true. And besides, if you really want more homeownership, the most important path forward is condos, and thus condo defect liability reform.
      - deleted 1y ago
        [deleted]
      - ty6853 1y ago
        On its own higher housing density should lower land prices. All else equal land prices are both cause and effect of housing access. In the philosophical extreme, if zoning allowed infinite density you could stick a hong-kong style condo skyscraper for the entire population on 0.1 acres and the rest of the land would provide no additional housing utility pushing prices down to whatever the value it is as farmland/business/recreation. The housing value of surrounding land would plumet. Low land prices are indicative of less restrictive zoning. In more restrictive zoning that punishes building houses on small plots, land becomes more valuable because the land is the license to build a house. i.e. where I live I had to buy more land than I needed because without it I could not build my house, which drives up land prices (increased demand). The reason why california ADU increase parcel prices is because it prints an additional house license while being illegal to split it off. Otherwise you would be left with two cheaper parcels, although in sum they may be more expensive, but you would still pay less for enough land for license to print a house.
- trod1234 1y ago
  The author is fighting an uphill battle given that this subject has been covered many times in the past, each with their own interpretation, more often than not in contradictory opinion. I stopped reading after it became clear that they are just following the same carved path that's been covered before, with all the same mistakes, not original thought. Monetary debasement (money-printing) explains the issues. The chaos is explained by Mises with regards to centralized systems as early as the 1930s. There's really no point in discussion when the majority is noise.
  - asdff 1y ago
    At the same time cost of living has not risen so much in certain parts of the country. You are paying say $1.2m in CA for a modest home worth say $90k in Toledo, Ohio. Labor certainly isn't so depressed in Ohio vs CA, it is a little but not by a factor of over 10 fold like we see in comps in the housing market. This is why it is important to recognize the regional factors that lead to these differential outcomes IMO, and you can't consider that without considering the state of the housing market. Everywhere had the same Fed but we see dramatically different outcomes.
- _DeadFred_ 1y ago
  When I was young and renting we found the best landlord. She would buy properties and let them run down. Thus changing the neighbors from fighting against her construction permits to championing them. Because she wasn't looking for rental income but had lots of future development properties she rented to us because we were such easy renters to have. Lived in some amazing locations slated to be future exclusive properties around Santa Cruz county. So many weird games spring up around arbitrary rules/laws.
ty6853 1y ago
Technology and automation likely lead to the lion's share in productivity increase. Thus we have seen at least one mode of tech wages that focus on creating higher productivity systems staying strong while many other segments stagnate. Meanwhile I don't see any evidence education in the past 20 years in the US has yielded a significantly higher quality and efficiency of candidate. If you want more money all else equal you have to bring something more to the table. If all you bring to the table is being able to use a more efficient machine it's not clear why your wage would elevate rather than the value of the machine (capital) elevating. Merely having as good an education as the guy 20 years ago isn't going to cut it.
- DangitBobby 1y ago
  I like to think if I employed people, I'd want them to make more money when the company makes more money. It's probably weird to think the entire point of companies, the economy, and society at large is to improve life, though. And I think I'm just slow because I need it spelled out for me how a CEO or the company itself "earned" the gains from automation and productivity tools (that they almost certainly didn't invent themselves) while the employees are just lucky to still be employed.
  - deleted 1y ago
    [deleted]
  - lotsofpulp 1y ago
    How would you compete with other businesses’s that either choose to lower prices or increase investment funding due to the equity’s higher ROI? The market works because all actors are buyers and sellers, and when buying, you are seeking the lowest price, and when selling, you are seeking the highest price. If you stop doing that, someone will outcompete you by allocating resources better (absent corruption). It even applies on a household level, where if you spend extra on charity or groceries or whatever, you will have a smaller downpayment to compete for the house you want. Also, generally, employee pay is highly correlate with the employer’s profit margin (outside of healthcare due to heavy government involvement).
buckle8017 1y ago
The author states that globalization began in 1994 with NAFTA. That seems either extremely naive or intentionally deceptive. Globalization began in 1972 with the opening of China. Which of course perfectly lines up with the stagnation of American wages. https://en.m.wikipedia.org/wiki/1972_visit_by_Richard_Nixon_to_China https://en.m.wikipedia.org/wiki/1972_visit_by_Richard_Nixon_...
- bryanlarsen 1y ago
  Globalization is generally considered to have begun in the 1700's, and was given a name and identified as a big deal in the 1920's. Trade with China was insignificant before 2005; more often than not the US had a surplus with China. We sold them a lot of wheat.
  - bruce511 1y ago
    Maybe your thought there exposes the root of the problem. You are measuring the trade in $ terms. But maybe that's not the right unit when measuring jobs. Imagine country A makes a product (like say wheat) where the number of jobs needed to make that value is low; while country B makes a product like say, apples, which takes a lot of jobs to produce. So country A sells say a $1mil load of wheat (10 jobs) and buys $2mil of apples (1000 jobs.) If we're just measuring trade, the A buys more from B. If we're measuring jobs then B "buys" more than A. So, maybe, instead of just measuring the value of yhe trade, we need to consider the labor cost of the trade? I'm really starting to think that maybe national economics and it's relationship to global trade is, you know, complex, and not somehow magically "fixed" with simple stupid tarrif formulas....
    - bryanlarsen 1y ago
      $2mil of apples or 1000 jobs is insignificant compared to the $30T US economy or its 170 million jobs. Similarly, China trade was insignificant to the US economy prior to ~2005, no matter whether you measure it in dollars or jobs.
    - abakker 1y ago
jmclnx 1y ago
Here is a list: * Union Busting * Wall Street pushing growth above profits * US Gov policies since 1981
- libraryatnight 1y ago
  So in a reductionist view: greed.
  - aidenn0 1y ago
    Are you suggesting greed was absent in the US prior to 1973?
    - sorcerer-mar 1y ago
      It was absolutely put on overdrive in 1970. The dominant business philosophy from the late 40s to the 70s was stakeholder capitalism, then this asshat came along and said quite specifically: greed is not just a force we'll co-opt for pro-social purposes, it is not a mitigable downside of economic growth, it is actually the entire purpose of any commercial enterprise. https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine It is shamefully antisocial and un-American. Today it's so baked-in that many young entrepreneurs don't even realize it's a goofy ass meme that only a moron could expect to yield good outcomes.
      - gruez 1y ago
        From your link: >Friedman argued that the shareholders can then decide for themselves what social initiatives to take part in rather than have an executive whom the shareholders appointed explicitly for business purposes decide such matters for them That seems... fine? Is letting Ford shareholders decide what political causes to fund really that much worse than delegating that to Henry Ford, which subsequently decided to support nazi-adjacent groups?
        sorcerer-mar 1y ago
obsolete_wagie 1y ago
[flagged]
- hollerith 1y ago
  I wonder whether employees' constantly distracting themselves with the web and then the smartphone has been a big factor in keeping productivity from increasing (thereby keeping wages from increasing).
  - yoyohello13 1y ago
    Ah yes. It’s those lazy workers that are the problem.
    - hollerith 1y ago
      This site asks us to be curious and to refrain from political battle.
      - toomuchtodo 1y ago
        I am curious how much longer this is sustainable for. The facts of the torment nexus are already fairly straightforward.
  - vondur 1y ago
    Not sure why OP’s comment was flagged I think it’s pretty accurate. The government significantly increased the money supply in the 1970s, which contributed to rising inflation. Around the same time, immigration increased, and more women entered the workforce. As a result, maintaining the lifestyle that was once achievable on a single income began to require two incomes. This increased competition for jobs and contributed to wage stagnation. Then by the late 90's after NAFTA had taken hold, hundreds of thousands of good union manufacturing jobs were lost to Mexico. It's only gotten worse since then.
timewizard 1y ago
Monopolies. Why would that be hard to understand? When companies don't need to compete for your labor they won't. Also it's not just wages. The entire market is stagnant. Innovation has ground to a halt and billions are poured into wasteful deadend technologies.
- JumpCrisscross 1y ago
  > Monopolies. Why would that be hard to understand? Valid hypothesis. Needs to be substantiated, as the author has done, and explain the stagnation and real wage increases.
  - timewizard 1y ago
    > Needs to be substantiated It is. I'm just not willing to do that here as I'm not writing an article just making a comment. > as the author has done Myself and the author have completely different aims with the use of our time. > and explain the stagnation and real wage increases Doesn't the article point out that most of these increases have only gone to the already wealthy? It seems that even with an explanation failing to contextualize it reduces the value of the explanation to zero. The author, while substantial, has missed this point staring them right in the face.
aaroninsf 1y ago
The broad answer is well known: governmental capture allowed via multiple mechanisms for the near-total capture of real productivity gains to be collected by the wealthy. This as most here can imagine allowed via recurrent acceleration for the profound wealth inequality we experience today, and directly produced our current collapse of democracy into literal kelpto-oligarchy backed by overwhelmingly powerful surveillance. The 1% perceived and perceive no self-interest in a rising tide. Now that hunter-killer machines both online and soon off shall reliably keep what people are still needed at bay, why would they? I wish this were hyperbolic. Neither diagnosis nor prediction is.
liveoneggs 1y ago
https://www.youtube.com/watch?v=saX3Y7C-MAg https://www.youtube.com/watch?v=saX3Y7C-MAg
readthenotes1 1y ago
Weird that the author doesn't talk about the expansion of the labor force with more women coming in in the 1970s, nor also the baby boom expansion that happened at the same time. More workers vying for the same jobs--supply and demand driving down labor costs?
- xienze 1y ago
  ... Or illegal immigrants undercutting American workers in construction and low-skill industries, or H1B workers undercutting American tech workers, or...
- nativeit 1y ago
  I’m not arguing for/against the points being made, but: > Update: Some people have been asking me if the wage stagnation of 1973-1994 might have been caused by the mass entry of women into the U.S. workforce. Here’s the employment rate (also called the “employment-population ratio”) for American women: [see article for graph] You can see that the first part of the timing doesn’t line up here. When the wage stagnation began, American women had already been entering the workforce at a steady clip for 25 years. (The labor force participation rate for women looks much the same). Also, empirical evidence suggests at most a small effect of female labor supply on male wages — and if you look at the breakdown for men and women, you see that the stagnation for men was worse than for women over 1973-1994. And theoretically speaking, women’s mass entry into the workforce shouldn’t produce an overall decline in wages. Just like immigration or a baby boom, women’s entry into the workforce is both a positive labor supply shock and also a positive labor demand shock at the same time — when women earn more, they spend most of what they earn, on things that require labor to produce.1 So we shouldn’t expect the addition of women to the workforce to hold down wages. Thus, this theory also doesn’t line up with the timing of the stagnation, and it’s not clear why we would expect it to be a major factor in the first place. EOF
  - xienze 1y ago
    > when women earn more, they spend most of what they earn, on things that require labor to produce. Uh, what happens if the labor to produce things costs pennies because it's all been shipped out to China?
millipede 1y ago
There's a great graph showing the wages stagnating compared to GDP growth. It looks like wage's haven't gone up. But, when adding back in employer provided health coverage and other benefits, the graphs align again. It just wasn't in dollars. TFA briefly mentions it but I think it should be front and center.
- temp0826 1y ago
  Without digging in to details that's an interesting thought. If modern american healthcare costs were to (magically) get under control, would wages become reasonable (per other living expenses) again?
  - gruez 1y ago
    Obvious point of comparison would be against other countries, that don't have a broken healthcare system.
- SilasX 1y ago
  That feels like sleight-of-hand though. Previously (example numbers): Median compensation is $55k + health insurance. After: Median compensation is $55k + health insurance. "So nothing changed?" "Wrong! Health insurance costs more for the same benefits, so really, you got a raise!" Yeah, sorry if I'm not celebrating.
  - apercu 1y ago
    > "Wrong! Health insurance costs more for the same benefits, so really, you got a raise!" It's even worse than that, health insurance costs more for less benefits.
  - JackYoustra 1y ago
    The point is that there's enormously different implications. If comp stagnates less than productivity then you have a huge bargaining problem. If comp keeps pace with productivity but is all eaten up by healthcare costs, either something caused people to willingly spend much more of their money on healthcare costs than they'd do earlier (aging maybe? obesity maybe?) or something is going crazy with healthcare expenses. I've heard persuasive evidence that if you control for obesity the costs look ok actually.
greenavocado 1y ago
Everything you need to know: http://wtfhappenedin1971.com/ http://wtfhappenedin1971.com/
- mplewis 1y ago
  This site is completely crank.
- bryanlarsen 1y ago
  Thorough debunking: https://www.google.com/search?q=wtfhappenedin1971+site%3Anews.ycombinator.com https://www.google.com/search?q=wtfhappenedin1971+site%3Anew...
  - greenavocado 1y ago
    First of all, a Google search query isn't a "debunking." https://singlelunch.com/2023/09/13/the-bad-economics-of-wtfhappenedin1971/ https://singlelunch.com/2023/09/13/the-bad-economics-of-wtfh... is not a rebuttal but a dismissal by someone unwilling to engage with the evidence. The dude tries to clown on the idea that ending the gold standard wrecked the economy, but his whole argument is just cherry-picked stats, strawman takes, and straight-up ignoring how money actually works. First off, he mocks the divorce rate thing like "lol goldbugs think couples fight about monetary policy." Nah, fam. It's about how fiat money led to inflation, stagnant wages, and financial stress that actually strains marriages. No-fault divorce laws came after the economic chaos started, but he acts like they are the only factor. Weak. Then he claims the wage-productivity gap didn’t start till the 1980s. Even the EPI data he cites shows the split beginning in the early '70s. And yeah, healthcare costs eat into wages, but that doesn’t explain why real compensation (including benefits) still lags behind productivity. Fiat money let corporations and Wall Street siphon off wealth while workers got screwed but he just shrugs like "idk, must be computers or something." On inflation, he’s like "lol inflation just exists, stay mad." Nah, pre-1971, inflation was stable and low. Post-1971? Wild swings, 14% peaks, and a permanent erosion of purchasing power. He acts like floating currencies = stability, but the "Great Moderation" was just Volcker slamming the brakes with insane rates not some magic of fiat money. Housing prices? He blames zoning (fair) but completely ignores how cheap credit from fiat money blew up the bubble. He admits low rates jack up home prices but then pretends it's got nothing to do with the Fed's endless money printer. Cognitive dissonance much? Worst part? He compares the site to anti-vaxxers because "things went up since 1971." Bruh. The end of Bretton Woods was a structural break. Debt exploded, inequality skyrocketed, and financialization took over. That ain't random. But instead of offering an actual counter-theory, he just sneers and says "buy Bitcoin lol" like that's a dunk. All snark, no substance. Fiat money broke the economy, and this guy is just coping. Stay mad
rgreeko42 1y ago
I truly do not understand how Noah Smith, a truly vapid and frankly unintelligent writer, makes it to the front page of this website so often. His writing goes whichever way is soothing to those with money and power.
- jauntywundrkind 1y ago
  I wish we had better ways to build these cases. To collect the various anecdotes and whinges, to aggregate them them together. I want evidence, bona-fides, or a list of comments I've liked with people doing criticism on someone, to be able to drop down when bad people and bad outlets show up again in the feed. Noah Smith definitely deserves this warning. All sorts of stories of ridiculous overconfidence & oversimplification in the the dumbest of reasonings, dating back for many many many years. I'd assumed growing up others would also tend towards the ultra online, that the smart ones were pioneering a lifestyle of intelligence and consideration, of hunting for context to understand the tidbits er run across, to consider widely. I'd assumed networking would spawn & spread to help show the back stories of those who we read. But today, the lack of social defense against bad and or incomeptent seems so so so resounding in the world.
- princealiiiii 1y ago
  On top of that, he has a deep hatred of Chinese, Russians, and Palestinians (basically anyone unaligned with US policy) that he likes to blame for everything - not just the governments, but the actual people of these countries.
- deleted 1y ago
  [deleted]
- suraci 1y ago
  [flagged]
- AnimalMuppet 1y ago
  He submitted hard data for all of his claims, and admitted what he did not know. That is not what I think "truly vapid and frankly unintelligent" looks like. But look, feel free to submit articles that you think are better...
jollyllama 1y ago
Well sure, finance rose uninterrupted since the end of WW2, but the 70s was when the real asset stripping began.
- sorcerer-mar 1y ago
  https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine Probably a coincidence
  - piva00 1y ago
    Don't leave Hayek out of it, the whole Austrian school was a stupid experiment, Friedman packaged it in simple to understand statements so politicians like Nixon, Reagan, Thatcher could gobble it up to turn into policy and doctrine. Hayek's fears from "The Road to Serfdom" never accounted for the opposite: the tyranny arising from wealthy individuals controlling more and more of the public sphere. His fears of the tyranny of governments (completely understandable given the 1930s and 1940s) made him completely blind to non-governmental tyranny that would come from his ideas. It's just sad that 80 years later we are stuck in his and Friedman's ideas, it's outdated but since it became the gospel of neoliberalism and its tyrants we don't get the chance to update these ideas to reflect the reality lived under this doctrine, instead what we are getting is a new wave of fascism spreading around because people can feel the system is not working, they just don't know the root cause of it, and those are propping up populists who promise to fix the wrong issues, never the root cause. In another 50-100 years, Hayek and Friedman will be remembered as the foundations for the problems that triggered this wave of fascism.
notepad0x90 1y ago
I know this is being overly reductive, but I think it sort of boils down to not enough minimum wage workers that vote and everyone else either not caring about low-wage workers, being held hostage by "right to work" (means you can get fired any time for any reason) laws, or relying on job hopping for wage increase. I have seen companies turn down good candidates for jobs too many times, as a result of speculating that the candidate is too good (they'll expect to get paid more). You don't even have to ask for high wages, you have to dumb down your resume and underplay yourself at some point if you want to be considered for a majority of non-junior roles these days, just so you get a shot at an actual interview and low-ball offer.
- mistrial9 1y ago
  D-E-M-C-R-A.... oh forget it..
- dfxm12 1y ago
  not enough minimum wage workers that vote There's a reason it's very hard to vote in some places, election day isn't a national holiday, etc.
- gruez 1y ago
  >I know this is being overly reductive, but I think it sort of boils down to not enough minimum wage workers that vote and everyone else either not caring about low-wage workers, being held hostage by "right to work" (means you can get fired any time for any reason) laws, or relying on job hopping for wage increase. Are you talking about low wage workers, or minimum wage workers? The minimum wage is so low that only 1-2% of workers earn minimum wage.
AndyNemmity 1y ago
"The timing of America’s wage stagnation — roughly, 1973 through 1994 — just didn’t line up well with the era of globalization that began with NAFTA in" The argument isn't that any of this began with NAFTA. The argument as I've always understood it was that it began as the Neoliberal project which started in the late 60s, and early 70s. The 1973-1994 period wasn't before globalization. It was the period where the groundwork was laid to make labor vulnerable to the type of globalization that neoliberals wanted. The threat of capital flight for example was already being used to attack workers. The breakdown of the Bretton Woods system was the start which aligns perfectly with the time period. Noam Chomsky on the topic "Bretton Woods restrictions on finance were dismantled, finance was freed, speculation boomed, huge amounts of capital started going into speculation against currencies and other paper manipulations, and the entire economy became financialized. The power of the economy shifted to the financial institutions, away from manufacturing. And since then, the majority of the population has had a very tough time; in fact it may be a unique period in American history. There’s no other period where real wages — wages adjusted for inflation — have more or less stagnated for so long for a majority of the population and where living standards have stagnated or declined." - https://chomsky.info/20090210/ https://chomsky.info/20090210/ So we start off with an flawed view of the world, and then we move forward with the argument to explain it through other means. The 1973-1994 wage stagnation isn't a "mystery" caused by a patchwork of unrelated events. It's a direct consequence of a fundamental, politically driven shift in the economic regime, specifically the dismantling of the Bretton Woods system in the early 1970s and the subsequent financialization of the economy and deregulation.
tejtm 1y ago
https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
- JackYoustra 1y ago
  bad site
  - tejtm 1y ago
    Is that opinion meant to be a substantive rebuttal to verifiable data?
    - deleted 1y ago
      [deleted]
    - JackYoustra 1y ago
      https://www.vox.com/2015/7/28/9057149/wages-productivity-inflation https://www.vox.com/2015/7/28/9057149/wages-productivity-inf...
- bryanlarsen 1y ago
  That site has been submitted to HN dozens of times, and HN commenters have torn it apart each time. https://www.google.com/search?q=wtfhappenedin1971+site%3Anews.ycombinator.com https://www.google.com/search?q=wtfhappenedin1971+site%3Anew...
  - fuzzfactor 1y ago
    Some people at the time were better at math than others. As we have seen, still true today.
infogulch 1y ago
Because wage stagnation is literally the Federal Reserve policy for the last 20 years. The fed treats wage growth as a leading indicator inflation -- even though anyone with a brain knows that wages are the last thing to go up in an economic cycle, so if it's anything it must be a trailing indicator -- so when wages start to rise up the fed responds by increasing interest rates. Raising interest rates kills wage growth, as intended. tl;dr: slam the economy every time wages start to go up for 20 years -> "why haven't wages gone up in 20 years" surprise pikachu face
- mcphage 1y ago
  That doesn't match what the article is talking about, though. According to the article, the 20 years of wage stagnation was '73-'94—not the last 20 years.
  - NoGravitas 1y ago
    This really has been Fed policy for much, much longer than 20 years. It's been known since the stagflation associated with the 1973 oil crisis that it doesn't really work very well, but it's practically the only lever they have, so they keep using it.
    - mcphage 1y ago
      I mean fair, but then why did it cause wage stagnation back in the 70s and early 80s, and not since?
      - infogulch 1y ago
        What do you mean, wage growth has been largely stagnant since the 70's. https://files.epi.org/charts/img/7894.png https://files.epi.org/charts/img/7894.png The mistake in my comment was being too specific.
        mcphage 1y ago
        The article claims that wages started growing again in the mid-90s: https://substackcdn.com/image/fetch/w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F9224a6ad-ff94-4640-8064-f5ae583e59ae_1840x1240.jpeg https://substackcdn.com/image/fetch/w_1456,c_limit,f_webp,q_... I don't know enough economics to determine which graph is correct—yours or theirs. Or maybe they're measuring slightly different things?
Supermancho 1y ago
> And theoretically speaking, women’s mass entry into the workforce shouldn’t produce an overall decline in wages. Just like immigration or a baby boom, women’s entry into the workforce is both a positive labor supply shock and also a positive labor demand shock at the same time — when women earn more, they spend most of what they earn, on things that require labor to produce.1 So we shouldn’t expect the addition of women to the workforce to hold down wages. The reason that excess labor doesn't drive down wages is because they spend those wages on rolls dice labor intensive things? This makes no sense in any direction. I'm reading through the beginning, which was a little sus, then jumped to the end and loathe to read most of this handwaving.
- HDThoreaun 1y ago
  excess labor doesnt exist. Labor is a gas, it fills any container it finds itself in.
  - Supermancho 1y ago
    I don't find this correlates with reality. I understand the analogy. Gas is a liquid, which conforms to the container. The problem is that not all gas is used. When there's excess, the value tends to bottom out. I don't think it's like fuel to a fire, where the fire will grow in correlation with the amount of fuel. In a constrained market (like where I have moved to with a 150k people), wages are suppressed locally by excess labor, as one would expect. College kids come in, increased wage posters go up. College kids go out, increased pay posters go up and wages do not meaningfully stay up. I've observed for years and tried to make the argument to get struggling family to move to this area, where the competition is lighter and the costs are lower. Job lines are a thing. Massive stacks of resumes, are a thing. Competition is a thing. If competition for labor didn't matter, everyone would aspire to be a crappy tradesman, because the wages are better than McDonalds. Sector growth is not instantaneous (measured in years or decades) or uniform in growth. eg During COVID there was "overhiring".
burnt-resistor 1y ago
No mention of Robert Reich's work or the politizane infographics chart. [0] Sigh 0. https://youtu.be/QPKKQnijnsM https://youtu.be/QPKKQnijnsM
6510 1y ago
Jack Ma had a fun perspective[1] (2017) Not precisely his words but something like: US companies made a shit ton of money. Then in 30 years the US spend 14.2 T$ on 13 wars. What if they spend part of that money on infrastructure, helping the white collars and the blue collars - no matter how strategically good it is you are suppose to spend money on your own people.[...] The money goes to Wallstreet and in 2008 the financial crisis wiped out 19.2 T$ What if that money was in stead spend on developing industry? China did not steal US jobs, the US didn't distribute the money in a proper way. [1]- https://youtu.be/0jfYSncSTEY?t=43 https://youtu.be/0jfYSncSTEY?t=43
crq-yml 1y ago
I think the reason, if you had to pin it down to one instead of "confluence of factors", could be almost entirely demographics: * The Boomers, an extremely large generation, enter the workforce in number in the 70's... * Simultaneously, the older generations with more of the industrial and trades know-how that powered the mid-century economy are now retiring. * The new focus of the economy in the 70's involved a restructuring around imported-goods, services, high tech, with corresponding winners and losers. * Part of this restructuring also involved a revamped military to roll out the new "smart weapons" and run a professionalized military instead of the conscription troops that fought in Vietnam. When you add those trends together, it will look like a stagnant graph: investing in high-tech doesn't come with immediate payoffs, and the new cohort is larger so they have to compete more intensively for top positions while not having the job experiences of the previous. DoD spending has an outsized influence on the balance sheet, and 1994 marks the start of the Internet boom, which reflects the tech sector's move away from defense contracts(the end of the Cold War came with major layoffs in defense) and towards VC moonshots, right around the same time that Gen X is entering - a much smaller generation. The Boomers are at that point entering more senior career roles; both cohorts are productive in the sense of facilitating deskilling, offshoring and cost-cutting, which make the balance sheets of the 90's look great, and reflective in many cases of genuine efficiencies that were now coming to fruition.
incomingpain 1y ago
>There are a few theories, but none of them really satisfies. Reading through, much the same. >Nobody knows exactly why productivity slowed down for two decades The post also doesnt particularly satisfy >And theoretically speaking, women’s mass entry into the workforce shouldn’t produce an overall decline in wages. https://en.wikipedia.org/wiki/Unemployment#/media/File:US_Labor_Force_Participation_Rate_by_gender.png https://en.wikipedia.org/wiki/Unemployment#/media/File:US_La... The total participation rate has gone mostly unchanged. Which means women displaced men from the workplace. Makes sense, skilled and talented women will replace unskilled and untalented men. Those men still need to work. Supply of workers increased significantly while demand remained the same. Of course there will be a decrease in wages. Especially true if entrepreneurship being >50% declined over the last 40 years. which is a different issue; mostly a failure of government.
NoGravitas 1y ago
Interestingly, the word "neoliberalism" never appears in this article.

90 points by paulpauper 1y ago

A factor the author didn't really touch is housing. By 1973 many places in CA at least were starting to ban dingbat construction via ordinance against back out parking setups. We also see many cities in CA and elsewhere downzoned around that time. LA went from being zoned for over 10 million people in 1960 to being zoned for just 4.2 million and being built to almost 95% of its zoned capacity by the 2010s. I'm not sure exactly the relationship between wage growth and restriction of housing growth but the fact that these phenomenon seemed to happen in lockstep merits some reflection. Prop 13 also came in 1973.

yonran 1y ago
Proposition 13 was 1978 (99 years after the publication of Progress and Poverty).
- asdff 1y ago
  Thanks for the correction
bryanlarsen 1y ago
Housing prices did not outpace inflation in 1973 - 1993. The periods of significant house price inflation (early 2000's, last 15 years) seem to correlate better with periods of wage increase rather than the periods of wage stagnation.
- asdff 1y ago
  It also correlates quite well to available flat land for greenfield development running dry in major metro areas like the non-antelope valley side of LA county. And what do you know, prices are much cheaper on the other side of the San Gabriels where there is room to develop more housing. Without room for greenfield, infill needs to be legalized, or prices rise such that the only winners are the high income people able to participate in the now buyer constrained housing market like we see today.
ty6853 1y ago
The most hilarious thing about housing in california is they had a chance to use ADUs to lower housing prices but of course they totally rigged the game by outlawing splitting off ADUs as a seperate property, meaning all they did was making housing even more expensive because the value of a plot now includes the additional value of the potential to be a landlord but no way to split that value into an economical individual home. They managed to find the one fucking way to make additional housing make being a new homeowner even more expensive, and I believe it was not by accident.
- onlyrealcuzzo 1y ago
  It is intended that all of the policies make land more expensive... No politician wants more affordable housing in a place where >65% of voters are property owners...
  - Ericson2314 1y ago
    It's good for land to become more valuable. We want land prices to go up, and housing prices to go down. All that means is density is increasing faster than land values. Nothing against allowing lot splits, but this is the wrong reason to be for it. The reasoning in the previous to replies reaks of "homeownership is more virtuous than renting" which is not true. And besides, if you really want more homeownership, the most important path forward is condos, and thus condo defect liability reform.
    - deleted 1y ago
      [deleted]
    - ty6853 1y ago
      On its own higher housing density should lower land prices. All else equal land prices are both cause and effect of housing access. In the philosophical extreme, if zoning allowed infinite density you could stick a hong-kong style condo skyscraper for the entire population on 0.1 acres and the rest of the land would provide no additional housing utility pushing prices down to whatever the value it is as farmland/business/recreation. The housing value of surrounding land would plumet. Low land prices are indicative of less restrictive zoning. In more restrictive zoning that punishes building houses on small plots, land becomes more valuable because the land is the license to build a house. i.e. where I live I had to buy more land than I needed because without it I could not build my house, which drives up land prices (increased demand). The reason why california ADU increase parcel prices is because it prints an additional house license while being illegal to split it off. Otherwise you would be left with two cheaper parcels, although in sum they may be more expensive, but you would still pay less for enough land for license to print a house.
trod1234 1y ago
The author is fighting an uphill battle given that this subject has been covered many times in the past, each with their own interpretation, more often than not in contradictory opinion. I stopped reading after it became clear that they are just following the same carved path that's been covered before, with all the same mistakes, not original thought. Monetary debasement (money-printing) explains the issues. The chaos is explained by Mises with regards to centralized systems as early as the 1930s. There's really no point in discussion when the majority is noise.
- asdff 1y ago
  At the same time cost of living has not risen so much in certain parts of the country. You are paying say $1.2m in CA for a modest home worth say $90k in Toledo, Ohio. Labor certainly isn't so depressed in Ohio vs CA, it is a little but not by a factor of over 10 fold like we see in comps in the housing market. This is why it is important to recognize the regional factors that lead to these differential outcomes IMO, and you can't consider that without considering the state of the housing market. Everywhere had the same Fed but we see dramatically different outcomes.
_DeadFred_ 1y ago
When I was young and renting we found the best landlord. She would buy properties and let them run down. Thus changing the neighbors from fighting against her construction permits to championing them. Because she wasn't looking for rental income but had lots of future development properties she rented to us because we were such easy renters to have. Lived in some amazing locations slated to be future exclusive properties around Santa Cruz county. So many weird games spring up around arbitrary rules/laws.

ty6853 1y ago

Technology and automation likely lead to the lion's share in productivity increase. Thus we have seen at least one mode of tech wages that focus on creating higher productivity systems staying strong while many other segments stagnate. Meanwhile I don't see any evidence education in the past 20 years in the US has yielded a significantly higher quality and efficiency of candidate. If you want more money all else equal you have to bring something more to the table. If all you bring to the table is being able to use a more efficient machine it's not clear why your wage would elevate rather than the value of the machine (capital) elevating. Merely having as good an education as the guy 20 years ago isn't going to cut it.

DangitBobby 1y ago
I like to think if I employed people, I'd want them to make more money when the company makes more money. It's probably weird to think the entire point of companies, the economy, and society at large is to improve life, though. And I think I'm just slow because I need it spelled out for me how a CEO or the company itself "earned" the gains from automation and productivity tools (that they almost certainly didn't invent themselves) while the employees are just lucky to still be employed.
- deleted 1y ago
  [deleted]
- lotsofpulp 1y ago
  How would you compete with other businesses’s that either choose to lower prices or increase investment funding due to the equity’s higher ROI? The market works because all actors are buyers and sellers, and when buying, you are seeking the lowest price, and when selling, you are seeking the highest price. If you stop doing that, someone will outcompete you by allocating resources better (absent corruption). It even applies on a household level, where if you spend extra on charity or groceries or whatever, you will have a smaller downpayment to compete for the house you want. Also, generally, employee pay is highly correlate with the employer’s profit margin (outside of healthcare due to heavy government involvement).

buckle8017 1y ago

The author states that globalization began in 1994 with NAFTA. That seems either extremely naive or intentionally deceptive. Globalization began in 1972 with the opening of China. Which of course perfectly lines up with the stagnation of American wages. https://en.m.wikipedia.org/wiki/1972_visit_by_Richard_Nixon_to_China https://en.m.wikipedia.org/wiki/1972_visit_by_Richard_Nixon_...

bryanlarsen 1y ago
Globalization is generally considered to have begun in the 1700's, and was given a name and identified as a big deal in the 1920's. Trade with China was insignificant before 2005; more often than not the US had a surplus with China. We sold them a lot of wheat.
- bruce511 1y ago
  Maybe your thought there exposes the root of the problem. You are measuring the trade in $ terms. But maybe that's not the right unit when measuring jobs. Imagine country A makes a product (like say wheat) where the number of jobs needed to make that value is low; while country B makes a product like say, apples, which takes a lot of jobs to produce. So country A sells say a $1mil load of wheat (10 jobs) and buys $2mil of apples (1000 jobs.) If we're just measuring trade, the A buys more from B. If we're measuring jobs then B "buys" more than A. So, maybe, instead of just measuring the value of yhe trade, we need to consider the labor cost of the trade? I'm really starting to think that maybe national economics and it's relationship to global trade is, you know, complex, and not somehow magically "fixed" with simple stupid tarrif formulas....
  - bryanlarsen 1y ago
    $2mil of apples or 1000 jobs is insignificant compared to the $30T US economy or its 170 million jobs. Similarly, China trade was insignificant to the US economy prior to ~2005, no matter whether you measure it in dollars or jobs.
  - abakker 1y ago

jmclnx 1y ago

Here is a list: * Union Busting * Wall Street pushing growth above profits * US Gov policies since 1981

libraryatnight 1y ago
So in a reductionist view: greed.
- aidenn0 1y ago
  Are you suggesting greed was absent in the US prior to 1973?
  - sorcerer-mar 1y ago
    It was absolutely put on overdrive in 1970. The dominant business philosophy from the late 40s to the 70s was stakeholder capitalism, then this asshat came along and said quite specifically: greed is not just a force we'll co-opt for pro-social purposes, it is not a mitigable downside of economic growth, it is actually the entire purpose of any commercial enterprise. https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine It is shamefully antisocial and un-American. Today it's so baked-in that many young entrepreneurs don't even realize it's a goofy ass meme that only a moron could expect to yield good outcomes.
    - gruez 1y ago
      From your link: >Friedman argued that the shareholders can then decide for themselves what social initiatives to take part in rather than have an executive whom the shareholders appointed explicitly for business purposes decide such matters for them That seems... fine? Is letting Ford shareholders decide what political causes to fund really that much worse than delegating that to Henry Ford, which subsequently decided to support nazi-adjacent groups?
      - sorcerer-mar 1y ago

obsolete_wagie 1y ago

[flagged]

hollerith 1y ago
I wonder whether employees' constantly distracting themselves with the web and then the smartphone has been a big factor in keeping productivity from increasing (thereby keeping wages from increasing).
- yoyohello13 1y ago
  Ah yes. It’s those lazy workers that are the problem.
  - hollerith 1y ago
    This site asks us to be curious and to refrain from political battle.
    - toomuchtodo 1y ago
      I am curious how much longer this is sustainable for. The facts of the torment nexus are already fairly straightforward.
- vondur 1y ago
  Not sure why OP’s comment was flagged I think it’s pretty accurate. The government significantly increased the money supply in the 1970s, which contributed to rising inflation. Around the same time, immigration increased, and more women entered the workforce. As a result, maintaining the lifestyle that was once achievable on a single income began to require two incomes. This increased competition for jobs and contributed to wage stagnation. Then by the late 90's after NAFTA had taken hold, hundreds of thousands of good union manufacturing jobs were lost to Mexico. It's only gotten worse since then.

timewizard 1y ago

Monopolies. Why would that be hard to understand? When companies don't need to compete for your labor they won't. Also it's not just wages. The entire market is stagnant. Innovation has ground to a halt and billions are poured into wasteful deadend technologies.

JumpCrisscross 1y ago
> Monopolies. Why would that be hard to understand? Valid hypothesis. Needs to be substantiated, as the author has done, and explain the stagnation and real wage increases.
- timewizard 1y ago
  > Needs to be substantiated It is. I'm just not willing to do that here as I'm not writing an article just making a comment. > as the author has done Myself and the author have completely different aims with the use of our time. > and explain the stagnation and real wage increases Doesn't the article point out that most of these increases have only gone to the already wealthy? It seems that even with an explanation failing to contextualize it reduces the value of the explanation to zero. The author, while substantial, has missed this point staring them right in the face.

aaroninsf 1y ago

The broad answer is well known: governmental capture allowed via multiple mechanisms for the near-total capture of real productivity gains to be collected by the wealthy. This as most here can imagine allowed via recurrent acceleration for the profound wealth inequality we experience today, and directly produced our current collapse of democracy into literal kelpto-oligarchy backed by overwhelmingly powerful surveillance. The 1% perceived and perceive no self-interest in a rising tide. Now that hunter-killer machines both online and soon off shall reliably keep what people are still needed at bay, why would they? I wish this were hyperbolic. Neither diagnosis nor prediction is.

liveoneggs 1y ago

https://www.youtube.com/watch?v=saX3Y7C-MAg https://www.youtube.com/watch?v=saX3Y7C-MAg

readthenotes1 1y ago

Weird that the author doesn't talk about the expansion of the labor force with more women coming in in the 1970s, nor also the baby boom expansion that happened at the same time. More workers vying for the same jobs--supply and demand driving down labor costs?

xienze 1y ago
... Or illegal immigrants undercutting American workers in construction and low-skill industries, or H1B workers undercutting American tech workers, or...
nativeit 1y ago
I’m not arguing for/against the points being made, but: > Update: Some people have been asking me if the wage stagnation of 1973-1994 might have been caused by the mass entry of women into the U.S. workforce. Here’s the employment rate (also called the “employment-population ratio”) for American women: [see article for graph] You can see that the first part of the timing doesn’t line up here. When the wage stagnation began, American women had already been entering the workforce at a steady clip for 25 years. (The labor force participation rate for women looks much the same). Also, empirical evidence suggests at most a small effect of female labor supply on male wages — and if you look at the breakdown for men and women, you see that the stagnation for men was worse than for women over 1973-1994. And theoretically speaking, women’s mass entry into the workforce shouldn’t produce an overall decline in wages. Just like immigration or a baby boom, women’s entry into the workforce is both a positive labor supply shock and also a positive labor demand shock at the same time — when women earn more, they spend most of what they earn, on things that require labor to produce.1 So we shouldn’t expect the addition of women to the workforce to hold down wages. Thus, this theory also doesn’t line up with the timing of the stagnation, and it’s not clear why we would expect it to be a major factor in the first place. EOF
- xienze 1y ago
  > when women earn more, they spend most of what they earn, on things that require labor to produce. Uh, what happens if the labor to produce things costs pennies because it's all been shipped out to China?

millipede 1y ago

There's a great graph showing the wages stagnating compared to GDP growth. It looks like wage's haven't gone up. But, when adding back in employer provided health coverage and other benefits, the graphs align again. It just wasn't in dollars. TFA briefly mentions it but I think it should be front and center.

temp0826 1y ago
Without digging in to details that's an interesting thought. If modern american healthcare costs were to (magically) get under control, would wages become reasonable (per other living expenses) again?
- gruez 1y ago
  Obvious point of comparison would be against other countries, that don't have a broken healthcare system.
SilasX 1y ago
That feels like sleight-of-hand though. Previously (example numbers): Median compensation is $55k + health insurance. After: Median compensation is $55k + health insurance. "So nothing changed?" "Wrong! Health insurance costs more for the same benefits, so really, you got a raise!" Yeah, sorry if I'm not celebrating.
- apercu 1y ago
  > "Wrong! Health insurance costs more for the same benefits, so really, you got a raise!" It's even worse than that, health insurance costs more for less benefits.
- JackYoustra 1y ago
  The point is that there's enormously different implications. If comp stagnates less than productivity then you have a huge bargaining problem. If comp keeps pace with productivity but is all eaten up by healthcare costs, either something caused people to willingly spend much more of their money on healthcare costs than they'd do earlier (aging maybe? obesity maybe?) or something is going crazy with healthcare expenses. I've heard persuasive evidence that if you control for obesity the costs look ok actually.

greenavocado 1y ago

Everything you need to know: http://wtfhappenedin1971.com/ http://wtfhappenedin1971.com/

mplewis 1y ago
This site is completely crank.
bryanlarsen 1y ago
Thorough debunking: https://www.google.com/search?q=wtfhappenedin1971+site%3Anews.ycombinator.com https://www.google.com/search?q=wtfhappenedin1971+site%3Anew...
- greenavocado 1y ago
  First of all, a Google search query isn't a "debunking." https://singlelunch.com/2023/09/13/the-bad-economics-of-wtfhappenedin1971/ https://singlelunch.com/2023/09/13/the-bad-economics-of-wtfh... is not a rebuttal but a dismissal by someone unwilling to engage with the evidence. The dude tries to clown on the idea that ending the gold standard wrecked the economy, but his whole argument is just cherry-picked stats, strawman takes, and straight-up ignoring how money actually works. First off, he mocks the divorce rate thing like "lol goldbugs think couples fight about monetary policy." Nah, fam. It's about how fiat money led to inflation, stagnant wages, and financial stress that actually strains marriages. No-fault divorce laws came after the economic chaos started, but he acts like they are the only factor. Weak. Then he claims the wage-productivity gap didn’t start till the 1980s. Even the EPI data he cites shows the split beginning in the early '70s. And yeah, healthcare costs eat into wages, but that doesn’t explain why real compensation (including benefits) still lags behind productivity. Fiat money let corporations and Wall Street siphon off wealth while workers got screwed but he just shrugs like "idk, must be computers or something." On inflation, he’s like "lol inflation just exists, stay mad." Nah, pre-1971, inflation was stable and low. Post-1971? Wild swings, 14% peaks, and a permanent erosion of purchasing power. He acts like floating currencies = stability, but the "Great Moderation" was just Volcker slamming the brakes with insane rates not some magic of fiat money. Housing prices? He blames zoning (fair) but completely ignores how cheap credit from fiat money blew up the bubble. He admits low rates jack up home prices but then pretends it's got nothing to do with the Fed's endless money printer. Cognitive dissonance much? Worst part? He compares the site to anti-vaxxers because "things went up since 1971." Bruh. The end of Bretton Woods was a structural break. Debt exploded, inequality skyrocketed, and financialization took over. That ain't random. But instead of offering an actual counter-theory, he just sneers and says "buy Bitcoin lol" like that's a dunk. All snark, no substance. Fiat money broke the economy, and this guy is just coping. Stay mad

rgreeko42 1y ago

I truly do not understand how Noah Smith, a truly vapid and frankly unintelligent writer, makes it to the front page of this website so often. His writing goes whichever way is soothing to those with money and power.

jauntywundrkind 1y ago
I wish we had better ways to build these cases. To collect the various anecdotes and whinges, to aggregate them them together. I want evidence, bona-fides, or a list of comments I've liked with people doing criticism on someone, to be able to drop down when bad people and bad outlets show up again in the feed. Noah Smith definitely deserves this warning. All sorts of stories of ridiculous overconfidence & oversimplification in the the dumbest of reasonings, dating back for many many many years. I'd assumed growing up others would also tend towards the ultra online, that the smart ones were pioneering a lifestyle of intelligence and consideration, of hunting for context to understand the tidbits er run across, to consider widely. I'd assumed networking would spawn & spread to help show the back stories of those who we read. But today, the lack of social defense against bad and or incomeptent seems so so so resounding in the world.
princealiiiii 1y ago
On top of that, he has a deep hatred of Chinese, Russians, and Palestinians (basically anyone unaligned with US policy) that he likes to blame for everything - not just the governments, but the actual people of these countries.
deleted 1y ago
[deleted]
suraci 1y ago
[flagged]
AnimalMuppet 1y ago
He submitted hard data for all of his claims, and admitted what he did not know. That is not what I think "truly vapid and frankly unintelligent" looks like. But look, feel free to submit articles that you think are better...

jollyllama 1y ago

Well sure, finance rose uninterrupted since the end of WW2, but the 70s was when the real asset stripping began.

sorcerer-mar 1y ago
https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine Probably a coincidence
- piva00 1y ago
  Don't leave Hayek out of it, the whole Austrian school was a stupid experiment, Friedman packaged it in simple to understand statements so politicians like Nixon, Reagan, Thatcher could gobble it up to turn into policy and doctrine. Hayek's fears from "The Road to Serfdom" never accounted for the opposite: the tyranny arising from wealthy individuals controlling more and more of the public sphere. His fears of the tyranny of governments (completely understandable given the 1930s and 1940s) made him completely blind to non-governmental tyranny that would come from his ideas. It's just sad that 80 years later we are stuck in his and Friedman's ideas, it's outdated but since it became the gospel of neoliberalism and its tyrants we don't get the chance to update these ideas to reflect the reality lived under this doctrine, instead what we are getting is a new wave of fascism spreading around because people can feel the system is not working, they just don't know the root cause of it, and those are propping up populists who promise to fix the wrong issues, never the root cause. In another 50-100 years, Hayek and Friedman will be remembered as the foundations for the problems that triggered this wave of fascism.

notepad0x90 1y ago

I know this is being overly reductive, but I think it sort of boils down to not enough minimum wage workers that vote and everyone else either not caring about low-wage workers, being held hostage by "right to work" (means you can get fired any time for any reason) laws, or relying on job hopping for wage increase. I have seen companies turn down good candidates for jobs too many times, as a result of speculating that the candidate is too good (they'll expect to get paid more). You don't even have to ask for high wages, you have to dumb down your resume and underplay yourself at some point if you want to be considered for a majority of non-junior roles these days, just so you get a shot at an actual interview and low-ball offer.

mistrial9 1y ago
D-E-M-C-R-A.... oh forget it..
dfxm12 1y ago
not enough minimum wage workers that vote There's a reason it's very hard to vote in some places, election day isn't a national holiday, etc.
gruez 1y ago
>I know this is being overly reductive, but I think it sort of boils down to not enough minimum wage workers that vote and everyone else either not caring about low-wage workers, being held hostage by "right to work" (means you can get fired any time for any reason) laws, or relying on job hopping for wage increase. Are you talking about low wage workers, or minimum wage workers? The minimum wage is so low that only 1-2% of workers earn minimum wage.

AndyNemmity 1y ago

"The timing of America’s wage stagnation — roughly, 1973 through 1994 — just didn’t line up well with the era of globalization that began with NAFTA in" The argument isn't that any of this began with NAFTA. The argument as I've always understood it was that it began as the Neoliberal project which started in the late 60s, and early 70s. The 1973-1994 period wasn't before globalization. It was the period where the groundwork was laid to make labor vulnerable to the type of globalization that neoliberals wanted. The threat of capital flight for example was already being used to attack workers. The breakdown of the Bretton Woods system was the start which aligns perfectly with the time period. Noam Chomsky on the topic "Bretton Woods restrictions on finance were dismantled, finance was freed, speculation boomed, huge amounts of capital started going into speculation against currencies and other paper manipulations, and the entire economy became financialized. The power of the economy shifted to the financial institutions, away from manufacturing. And since then, the majority of the population has had a very tough time; in fact it may be a unique period in American history. There’s no other period where real wages — wages adjusted for inflation — have more or less stagnated for so long for a majority of the population and where living standards have stagnated or declined." - https://chomsky.info/20090210/ https://chomsky.info/20090210/ So we start off with an flawed view of the world, and then we move forward with the argument to explain it through other means. The 1973-1994 wage stagnation isn't a "mystery" caused by a patchwork of unrelated events. It's a direct consequence of a fundamental, politically driven shift in the economic regime, specifically the dismantling of the Bretton Woods system in the early 1970s and the subsequent financialization of the economy and deregulation.

tejtm 1y ago

https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/

JackYoustra 1y ago
bad site
- tejtm 1y ago
  Is that opinion meant to be a substantive rebuttal to verifiable data?
  - deleted 1y ago
    [deleted]
  - JackYoustra 1y ago
    https://www.vox.com/2015/7/28/9057149/wages-productivity-inflation https://www.vox.com/2015/7/28/9057149/wages-productivity-inf...
bryanlarsen 1y ago
That site has been submitted to HN dozens of times, and HN commenters have torn it apart each time. https://www.google.com/search?q=wtfhappenedin1971+site%3Anews.ycombinator.com https://www.google.com/search?q=wtfhappenedin1971+site%3Anew...
- fuzzfactor 1y ago
  Some people at the time were better at math than others. As we have seen, still true today.

infogulch 1y ago

Because wage stagnation is literally the Federal Reserve policy for the last 20 years. The fed treats wage growth as a leading indicator inflation -- even though anyone with a brain knows that wages are the last thing to go up in an economic cycle, so if it's anything it must be a trailing indicator -- so when wages start to rise up the fed responds by increasing interest rates. Raising interest rates kills wage growth, as intended. tl;dr: slam the economy every time wages start to go up for 20 years -> "why haven't wages gone up in 20 years" surprise pikachu face

mcphage 1y ago
That doesn't match what the article is talking about, though. According to the article, the 20 years of wage stagnation was '73-'94—not the last 20 years.
- NoGravitas 1y ago
  This really has been Fed policy for much, much longer than 20 years. It's been known since the stagflation associated with the 1973 oil crisis that it doesn't really work very well, but it's practically the only lever they have, so they keep using it.
  - mcphage 1y ago
    I mean fair, but then why did it cause wage stagnation back in the 70s and early 80s, and not since?
    - infogulch 1y ago
      What do you mean, wage growth has been largely stagnant since the 70's. https://files.epi.org/charts/img/7894.png https://files.epi.org/charts/img/7894.png The mistake in my comment was being too specific.
      - mcphage 1y ago
        The article claims that wages started growing again in the mid-90s: https://substackcdn.com/image/fetch/w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F9224a6ad-ff94-4640-8064-f5ae583e59ae_1840x1240.jpeg https://substackcdn.com/image/fetch/w_1456,c_limit,f_webp,q_... I don't know enough economics to determine which graph is correct—yours or theirs. Or maybe they're measuring slightly different things?

Supermancho 1y ago

> And theoretically speaking, women’s mass entry into the workforce shouldn’t produce an overall decline in wages. Just like immigration or a baby boom, women’s entry into the workforce is both a positive labor supply shock and also a positive labor demand shock at the same time — when women earn more, they spend most of what they earn, on things that require labor to produce.1 So we shouldn’t expect the addition of women to the workforce to hold down wages. The reason that excess labor doesn't drive down wages is because they spend those wages on rolls dice labor intensive things? This makes no sense in any direction. I'm reading through the beginning, which was a little sus, then jumped to the end and loathe to read most of this handwaving.

HDThoreaun 1y ago
excess labor doesnt exist. Labor is a gas, it fills any container it finds itself in.
- Supermancho 1y ago
  I don't find this correlates with reality. I understand the analogy. Gas is a liquid, which conforms to the container. The problem is that not all gas is used. When there's excess, the value tends to bottom out. I don't think it's like fuel to a fire, where the fire will grow in correlation with the amount of fuel. In a constrained market (like where I have moved to with a 150k people), wages are suppressed locally by excess labor, as one would expect. College kids come in, increased wage posters go up. College kids go out, increased pay posters go up and wages do not meaningfully stay up. I've observed for years and tried to make the argument to get struggling family to move to this area, where the competition is lighter and the costs are lower. Job lines are a thing. Massive stacks of resumes, are a thing. Competition is a thing. If competition for labor didn't matter, everyone would aspire to be a crappy tradesman, because the wages are better than McDonalds. Sector growth is not instantaneous (measured in years or decades) or uniform in growth. eg During COVID there was "overhiring".

burnt-resistor 1y ago

No mention of Robert Reich's work or the politizane infographics chart. [0] Sigh 0. https://youtu.be/QPKKQnijnsM https://youtu.be/QPKKQnijnsM

6510 1y ago

Jack Ma had a fun perspective[1] (2017) Not precisely his words but something like: US companies made a shit ton of money. Then in 30 years the US spend 14.2 T$ on 13 wars. What if they spend part of that money on infrastructure, helping the white collars and the blue collars - no matter how strategically good it is you are suppose to spend money on your own people.[...] The money goes to Wallstreet and in 2008 the financial crisis wiped out 19.2 T$ What if that money was in stead spend on developing industry? China did not steal US jobs, the US didn't distribute the money in a proper way. [1]- https://youtu.be/0jfYSncSTEY?t=43 https://youtu.be/0jfYSncSTEY?t=43

crq-yml 1y ago

I think the reason, if you had to pin it down to one instead of "confluence of factors", could be almost entirely demographics: * The Boomers, an extremely large generation, enter the workforce in number in the 70's... * Simultaneously, the older generations with more of the industrial and trades know-how that powered the mid-century economy are now retiring. * The new focus of the economy in the 70's involved a restructuring around imported-goods, services, high tech, with corresponding winners and losers. * Part of this restructuring also involved a revamped military to roll out the new "smart weapons" and run a professionalized military instead of the conscription troops that fought in Vietnam. When you add those trends together, it will look like a stagnant graph: investing in high-tech doesn't come with immediate payoffs, and the new cohort is larger so they have to compete more intensively for top positions while not having the job experiences of the previous. DoD spending has an outsized influence on the balance sheet, and 1994 marks the start of the Internet boom, which reflects the tech sector's move away from defense contracts(the end of the Cold War came with major layoffs in defense) and towards VC moonshots, right around the same time that Gen X is entering - a much smaller generation. The Boomers are at that point entering more senior career roles; both cohorts are productive in the sense of facilitating deskilling, offshoring and cost-cutting, which make the balance sheets of the 90's look great, and reflective in many cases of genuine efficiencies that were now coming to fruition.

incomingpain 1y ago

>There are a few theories, but none of them really satisfies. Reading through, much the same. >Nobody knows exactly why productivity slowed down for two decades The post also doesnt particularly satisfy >And theoretically speaking, women’s mass entry into the workforce shouldn’t produce an overall decline in wages. https://en.wikipedia.org/wiki/Unemployment#/media/File:US_Labor_Force_Participation_Rate_by_gender.png https://en.wikipedia.org/wiki/Unemployment#/media/File:US_La... The total participation rate has gone mostly unchanged. Which means women displaced men from the workplace. Makes sense, skilled and talented women will replace unskilled and untalented men. Those men still need to work. Supply of workers increased significantly while demand remained the same. Of course there will be a decrease in wages. Especially true if entrepreneurship being >50% declined over the last 40 years. which is a different issue; mostly a failure of government.

NoGravitas 1y ago

Interestingly, the word "neoliberalism" never appears in this article.