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As far as I can tell, over the last few years at least, that's mostly not true: wages outpaced inflation, and it outpaced inflation more for lower-income worker

As far as I can tell, over the last few years at least, that's mostly not true: wages outpaced inflation, and it outpaced inflation more for lower-income workers than higher. > In stark contrast to prior decades, low-wage workers experienced dramatically fast real wage growth between 2019 and 2023 https://www.epi.org/publication/swa-wages-2023/ https://www.epi.org/publication/swa-wages-2023/ ("real wages" are wages adjusted for inflation)

silisili 1y ago
I'm obviously not an expert, but assumed the same thing. I watched a fast food joint near me go from 9/hr to 21/hr in just a few years. Maybe that was just pandemic pricing, I don't know. But getting >2x salary in such short order is outpacing pretty much everyone else, percentage wise.
- bluefirebrand 1y ago
  This probably means that those wages were being suppressed hard for years and they finally weren't able to hire people at that wage anymore
  - silisili 1y ago
    You're probably right, but it ultimately leads to wage compression which is for most of the middle class a disaster. You don't have to look far to see everyday people complaining about the price of a burger or movie ticket. IMHO, it doesn't "lift all boats", it pulls down the middle and upper middle classes. Yeah, the lower wage jobs made more money, but they didn't gain much if anything in affordability, since all of the necessities are produced by people also demanding more money.
    - tossandthrow 1y ago
      All arguments against lower class people getting higher wages are IMHO wildly inappropriate. "you need lower wages to avoid wage compression", "you need lower wage so we can have more employed people"... If wage compression occurs, then companies have to deal with Theo senior employees seeking elsewhere - or pay them fairly.
      - silisili 1y ago
        Today, I'd agree. It felt like a dirty thing to even write. Historically, the lower wage jobs were for kids or bored folk, who'd eventually move onto something better and higher wages. Recently, the economy isn't great and people take what they can find. There's absolutely no shame in that. I know people in tech who were making low to mid 6 figures now doing retail. The jobs just aren't there, and I constantly fear I'll be in the same boat soon. But that inevitably does lead to wage compression, which to be clear isn't the fault of the lower wage earners.
        FirmwareBurner 1y ago
        >I know people in tech who were making low to mid 6 figures now doing retail. But in other threads, people on HN said they don't even get out of bed for a 140k remote job. What gives?
      - ryanjshaw 1y ago
        > All arguments against lower class people getting higher wages are IMHO wildly inappropriate. This kind of emotional reasoning is wildly inappropriate IMHO. The commenter is not making an argument against lifting lower class wages. They’re making an observation of how economic theory may apply to this scenario. > pay them fairly Define “fairly”?
        wat10000 1y ago
        They said it’s bad for one group and neutral for another. How is that not an argument against it?
        ryanjshaw 1y ago
        If I make the observation that some vaccines can have anaphylaxis as a side effect, am I making an argument against vaccinations? Obviously not. In that case, you’d take precautions at vaccination sites: have EpiPens available, make people wait 15min after taking the shot before leaving. In this case, I’m sure you can apply yourself and think of ways we can counter the effects of wage compression now that we’ve unemotionally identified the fact that it occurs.
    - wat10000 1y ago
      [flagged]
      - kingkawn 1y ago
        [flagged]
    - Hikikomori 1y ago
      Somehow Europe can pay fast food workers above poverty, including 5 week paid vacation, healthcare and many other benefits without the middle class not being able to afford a burger. America's obsession with forcing people that work full time to live in squalor is insane.
    - potato3732842 1y ago
      >IMHO, it doesn't "lift all boats", it pulls down the middle and upper middle classes. It's hard to feel particularly bad for the them when the CurrentShitshow(TM) has largely been a result of the top-ish of the middle being comfortable enough that they're happy to peddle (sometimes at the behest of the most wealthy, sometimes organically) all sorts of bad ideas both economic and social that have kneecapped our economies and torn our societies apart. Like it wasn't the Uber Drivers who thought it would be a good idea to sell out the industrial portions of our economy and make race baiting a cornerstone of national politics. I feel much greater sympathy for the cohort that currently works $15-25hr jobs and could have perhaps moved to $30-40 roles over time, bought a house and raised some kids in general economic stability if not for fairly self imposed costs and instability.
Mountain_Skies 1y ago
Activists love to use the Federal Minimum Wage, which has not increased in a long time (16 years), as their basis for that claim, ignoring how few workers are actually paid the Federal Minimum Wage. It's become a worthless metric for anything other than misleading arguments. In addition to state and local governments setting their own minimums, the decline in young people and competition for workers in that sector from food delivery companies, has put wage pressure on fast food companies. Most wouldn't be able to open their doors if they tried to pay the Federal Minimum Wage. Had it been pegged to inflation, it would be $10.90/hour, which is less than what fast food workers are paid almost anywhere.
DanielHB 1y ago
I imagine how cost of living/inflation is calculated became a lot more complex in the past few years which skews the comparison. Especially because of cost of buying homes and cost of renting and greater disparity between rural and urban in the context of increasingly higher urban populations. Also, predatory debt trapping, in part due to social media exposure and student loans, is way bigger thing now.
dns_snek 1y ago
If these reports say that things are better for low income people, why do people living that reality overwhelmingly disagree? Any statistics derived from inflation figures are doomed to be wrong when the inflation data was wrong to begin with. I'm not in the US, but our inflation data was just as wrong as I've heard the US data was. Official numbers were 10% but literally everything went up at least 20%. Everyone I spoke to had their cost of living increase by significantly more than the official inflation figures. And when "real wage growth" over 4 years is deemed to be just 13%, it's essentially guaranteed that real wage growth was in fact negative when you consider the disparity between real and official inflation figures. Statistics such as food insecurity rate, personal savings rate, and credit card delinquency rate would certainly support that.
- vineyardmike 1y ago
  > why do people living that reality overwhelmingly disagree Because a hard life feels harder when prices rise. If you're at the bottom of the wage statistics, even a large increase in salary (eg. 20%) will still leave you struggling day to day, before inflation in your costs. > Official numbers were 10% but literally everything went up at least 20% Inflation numbers consider a wide variety of things. It's probably at least partially the reality that the necessities are rising faster than discretionary purchases. As an example, iPhones are "cheaper" today accounting for inflation since Apple hasn't raised prices much, especially on the high end. Obviously the poorest X% of people aren't buying new iPhones, so they don't get those savings. Anecdotally, my grocery bill for packaged goods has risen dramatically, while my produce costs are flat. I'm a vegetarian so IDK about meat costs. My utilities have risen, my housing costs have risen, and my subscription prices have risen. Meanwhile, most of my other non-travel spending (eg. home goods like towels, electronics, etc) is pretty flat for years.
  - iinnPP 1y ago
    Ingredients household here. My grocery bill doubled in 7 years without any packages of anything. Largest increase has been on every fresh food item grown in our many greenhouses. Such as lettuce (increased 200% from ~1 to ~3 for iceberg lettuce) and tomatoes. I keep a decent memory of pricing at multiple stores and can agree with part of your comment, packaged food got it worse. Edit: Ontario Canada
smolder 1y ago
That's a study that underestimates growth in cost of living, i.e. gouging by rent seekers and businesses, and ignores changes in status, i.e. people leaving the job market or moving down to something worse. It's not surprising that the lowest income earners got a substantial boost in that period, since life is getting substantially more expensive. Importantly, I don't think their "real wage" inflation adjusted values are fair. People being told inflation was one amount when their actual CoL was vastly outpacing that was part of what fueled the anger that got Trump elected again, not that he has helped (or will help) anything since '23 where that analysis ends. Anecdotally, many people I know would be in dire straits if they didn't own appreciating real property, because their cost of living adjustments at work aren't coming close to matching inflation. Others I know are actually in dire straits. Some are doing fine and getting the benefit of profitable work. Overall things have been awful economically post-COVID, and there are a lot of causal factors, from the policy decisions of the last decade, to the surprises of COVID, natural disasters and geopolitics, to the AI investment bubble and the changing zeitgeist. (Oh and let's not forget simple demographics, birth rate, etc...)
Gareth321 1y ago
The problem with comparing wages by cohort and average inflation is that inflation doesn't affect each cohort evenly. By and large, necessities continue to outpace top line inflation, and they have done so for decades. These include food, healthcare, housing, daycare, and education. Lower income people spend more of their income as a proportion on necessities, so they are impacted more than average by inflation. In order to tell if these lower income people have indeed received wage increases in line with inflation, we would need a model which uses a lower income basket of goods and services. If I had to put on my tinfoil hat, I presume we don't do this because it would illustrate how badly the poorest are affected by inflation, and validate the frustrations they feel and which are clearly reflected in economic sentiment surveys.
- roywiggins 1y ago
  One thing is that 10th percentile wages did barely keep up with inflation from 1979-2019 (0.1% growth annualized), it's only since then that it showed an increase (3.1% annualized). So it seems to me that any effects along those lines strong enough to exactly negate the apparent real wage growth in recent years must have either 1) been basically constant, so effective wages in this group actually declined 3.1% every year on average for forty years, making 2019 10th-percentile workers reduced to 28.4% of their forbears' wages, or 2) the inflation numbers were about representative for the 10th percentile worker from 1979-2019 and then suddenly and abruptly weren't, or 3) some combination of the two. (or of course 4), the effect is real, nonzero, but not big enough to wipe out 3.1% apparent wage growth)

silisili 1y ago

I'm obviously not an expert, but assumed the same thing. I watched a fast food joint near me go from 9/hr to 21/hr in just a few years. Maybe that was just pandemic pricing, I don't know. But getting >2x salary in such short order is outpacing pretty much everyone else, percentage wise.

bluefirebrand 1y ago
This probably means that those wages were being suppressed hard for years and they finally weren't able to hire people at that wage anymore
- silisili 1y ago
  You're probably right, but it ultimately leads to wage compression which is for most of the middle class a disaster. You don't have to look far to see everyday people complaining about the price of a burger or movie ticket. IMHO, it doesn't "lift all boats", it pulls down the middle and upper middle classes. Yeah, the lower wage jobs made more money, but they didn't gain much if anything in affordability, since all of the necessities are produced by people also demanding more money.
  - tossandthrow 1y ago
    All arguments against lower class people getting higher wages are IMHO wildly inappropriate. "you need lower wages to avoid wage compression", "you need lower wage so we can have more employed people"... If wage compression occurs, then companies have to deal with Theo senior employees seeking elsewhere - or pay them fairly.
    - silisili 1y ago
      Today, I'd agree. It felt like a dirty thing to even write. Historically, the lower wage jobs were for kids or bored folk, who'd eventually move onto something better and higher wages. Recently, the economy isn't great and people take what they can find. There's absolutely no shame in that. I know people in tech who were making low to mid 6 figures now doing retail. The jobs just aren't there, and I constantly fear I'll be in the same boat soon. But that inevitably does lead to wage compression, which to be clear isn't the fault of the lower wage earners.
      - FirmwareBurner 1y ago
        >I know people in tech who were making low to mid 6 figures now doing retail. But in other threads, people on HN said they don't even get out of bed for a 140k remote job. What gives?
    - ryanjshaw 1y ago
      > All arguments against lower class people getting higher wages are IMHO wildly inappropriate. This kind of emotional reasoning is wildly inappropriate IMHO. The commenter is not making an argument against lifting lower class wages. They’re making an observation of how economic theory may apply to this scenario. > pay them fairly Define “fairly”?
      - wat10000 1y ago
        They said it’s bad for one group and neutral for another. How is that not an argument against it?
        ryanjshaw 1y ago
        If I make the observation that some vaccines can have anaphylaxis as a side effect, am I making an argument against vaccinations? Obviously not. In that case, you’d take precautions at vaccination sites: have EpiPens available, make people wait 15min after taking the shot before leaving. In this case, I’m sure you can apply yourself and think of ways we can counter the effects of wage compression now that we’ve unemotionally identified the fact that it occurs.
  - wat10000 1y ago
    [flagged]
    - kingkawn 1y ago
      [flagged]
  - Hikikomori 1y ago
    Somehow Europe can pay fast food workers above poverty, including 5 week paid vacation, healthcare and many other benefits without the middle class not being able to afford a burger. America's obsession with forcing people that work full time to live in squalor is insane.
  - potato3732842 1y ago
    >IMHO, it doesn't "lift all boats", it pulls down the middle and upper middle classes. It's hard to feel particularly bad for the them when the CurrentShitshow(TM) has largely been a result of the top-ish of the middle being comfortable enough that they're happy to peddle (sometimes at the behest of the most wealthy, sometimes organically) all sorts of bad ideas both economic and social that have kneecapped our economies and torn our societies apart. Like it wasn't the Uber Drivers who thought it would be a good idea to sell out the industrial portions of our economy and make race baiting a cornerstone of national politics. I feel much greater sympathy for the cohort that currently works $15-25hr jobs and could have perhaps moved to $30-40 roles over time, bought a house and raised some kids in general economic stability if not for fairly self imposed costs and instability.

Mountain_Skies 1y ago

Activists love to use the Federal Minimum Wage, which has not increased in a long time (16 years), as their basis for that claim, ignoring how few workers are actually paid the Federal Minimum Wage. It's become a worthless metric for anything other than misleading arguments. In addition to state and local governments setting their own minimums, the decline in young people and competition for workers in that sector from food delivery companies, has put wage pressure on fast food companies. Most wouldn't be able to open their doors if they tried to pay the Federal Minimum Wage. Had it been pegged to inflation, it would be $10.90/hour, which is less than what fast food workers are paid almost anywhere.

DanielHB 1y ago

I imagine how cost of living/inflation is calculated became a lot more complex in the past few years which skews the comparison. Especially because of cost of buying homes and cost of renting and greater disparity between rural and urban in the context of increasingly higher urban populations. Also, predatory debt trapping, in part due to social media exposure and student loans, is way bigger thing now.

dns_snek 1y ago

If these reports say that things are better for low income people, why do people living that reality overwhelmingly disagree? Any statistics derived from inflation figures are doomed to be wrong when the inflation data was wrong to begin with. I'm not in the US, but our inflation data was just as wrong as I've heard the US data was. Official numbers were 10% but literally everything went up at least 20%. Everyone I spoke to had their cost of living increase by significantly more than the official inflation figures. And when "real wage growth" over 4 years is deemed to be just 13%, it's essentially guaranteed that real wage growth was in fact negative when you consider the disparity between real and official inflation figures. Statistics such as food insecurity rate, personal savings rate, and credit card delinquency rate would certainly support that.

vineyardmike 1y ago
> why do people living that reality overwhelmingly disagree Because a hard life feels harder when prices rise. If you're at the bottom of the wage statistics, even a large increase in salary (eg. 20%) will still leave you struggling day to day, before inflation in your costs. > Official numbers were 10% but literally everything went up at least 20% Inflation numbers consider a wide variety of things. It's probably at least partially the reality that the necessities are rising faster than discretionary purchases. As an example, iPhones are "cheaper" today accounting for inflation since Apple hasn't raised prices much, especially on the high end. Obviously the poorest X% of people aren't buying new iPhones, so they don't get those savings. Anecdotally, my grocery bill for packaged goods has risen dramatically, while my produce costs are flat. I'm a vegetarian so IDK about meat costs. My utilities have risen, my housing costs have risen, and my subscription prices have risen. Meanwhile, most of my other non-travel spending (eg. home goods like towels, electronics, etc) is pretty flat for years.
- iinnPP 1y ago
  Ingredients household here. My grocery bill doubled in 7 years without any packages of anything. Largest increase has been on every fresh food item grown in our many greenhouses. Such as lettuce (increased 200% from ~1 to ~3 for iceberg lettuce) and tomatoes. I keep a decent memory of pricing at multiple stores and can agree with part of your comment, packaged food got it worse. Edit: Ontario Canada

smolder 1y ago

That's a study that underestimates growth in cost of living, i.e. gouging by rent seekers and businesses, and ignores changes in status, i.e. people leaving the job market or moving down to something worse. It's not surprising that the lowest income earners got a substantial boost in that period, since life is getting substantially more expensive. Importantly, I don't think their "real wage" inflation adjusted values are fair. People being told inflation was one amount when their actual CoL was vastly outpacing that was part of what fueled the anger that got Trump elected again, not that he has helped (or will help) anything since '23 where that analysis ends. Anecdotally, many people I know would be in dire straits if they didn't own appreciating real property, because their cost of living adjustments at work aren't coming close to matching inflation. Others I know are actually in dire straits. Some are doing fine and getting the benefit of profitable work. Overall things have been awful economically post-COVID, and there are a lot of causal factors, from the policy decisions of the last decade, to the surprises of COVID, natural disasters and geopolitics, to the AI investment bubble and the changing zeitgeist. (Oh and let's not forget simple demographics, birth rate, etc...)

Gareth321 1y ago

The problem with comparing wages by cohort and average inflation is that inflation doesn't affect each cohort evenly. By and large, necessities continue to outpace top line inflation, and they have done so for decades. These include food, healthcare, housing, daycare, and education. Lower income people spend more of their income as a proportion on necessities, so they are impacted more than average by inflation. In order to tell if these lower income people have indeed received wage increases in line with inflation, we would need a model which uses a lower income basket of goods and services. If I had to put on my tinfoil hat, I presume we don't do this because it would illustrate how badly the poorest are affected by inflation, and validate the frustrations they feel and which are clearly reflected in economic sentiment surveys.

roywiggins 1y ago
One thing is that 10th percentile wages did barely keep up with inflation from 1979-2019 (0.1% growth annualized), it's only since then that it showed an increase (3.1% annualized). So it seems to me that any effects along those lines strong enough to exactly negate the apparent real wage growth in recent years must have either 1) been basically constant, so effective wages in this group actually declined 3.1% every year on average for forty years, making 2019 10th-percentile workers reduced to 28.4% of their forbears' wages, or 2) the inflation numbers were about representative for the 10th percentile worker from 1979-2019 and then suddenly and abruptly weren't, or 3) some combination of the two. (or of course 4), the effect is real, nonzero, but not big enough to wipe out 3.1% apparent wage growth)