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Sticky wage norms and the real wage cost of unexpected inflation
- unnamed76ri 2mo agoThat was bound to happen with the 8-9% inflation we had during the Biden years. 2026 will likely see a similar decline thanks to Trump’s war in Iran.
- cma 2mo agoHow much of inflation during Biden years was from Trump? For instance, Trump agreements to restrict oil production after covid lasted deep into Biden's term. The US still did better on inflation than most comparable peers in the aftermath of covid.
- smallmancontrov 2mo agoWe let Trump print $4T in an election year and Biden print $2T in four years. Trump was going 40mph in the parking lot, Biden slowed down to 5mph, and while there is a legitimate discussion to be had about whether or not the latter was too fast when someone is spazzing out about the 5mph and ignoring the 40mph, it's because they have an agenda. Source: https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL
- deleted 2mo ago[deleted]
- jm4 2mo agoA big part of it was like $5T in covid stimulus, most of which happened under Trump. Biden piled some more on, probably unnecessarily. It felt like we were balancing on a razor's edge and maybe starting to come out of it by the end of 2024. A lot of inflationary policies since then.
- jacobolus 2mo agoThe biggest problems were various supply shocks associated with the pandemic and its aftermath and the Russian invasion of Ukraine. The Biden admin brought down inflation much faster than even optimistic economists predicted, while maintaining full employment and avoiding a recession. The US economy during that period significantly outperformed most other wealthy countries. (As one indicative example, the cover story of The Economist from October 2024 was titled The American economy: The envy of the world.) Since then we've had a wide range of completely self-inflicted policy faceplants, including notably several rounds of illegal tariffs and a war with Iran.
- hamper653 2mo agoThe American president: The laughing stock of the world.
- culi 2mo agoThe inflation was obviously mostly due to Covid and the invasion of Ukraine. Gas prices reached their highest points in 2022. https://www.gasbuddy.com/charts https://www.gasbuddy.com/charts
- energy123 2mo agoBiden's ARP independently caused inflation according to multiple central bank analyses. However, you are also correct that Trump pressuring OPEC to cut oil production at the end of his first term did cause additional inflation in Biden's term.
- hparadiz 2mo agoAll of it. lol
- eru 2mo agoWhy was that bound to happen? Inflation also raises nominal wages. It's not clear what impact inflation has on the relative price of labour vs goods and services.
- missedthecue 2mo agoSo 63% didn't. I wonder what the average netted out to. Increase or decrease and how much?
- jplusequalt 2mo agoThe median worker saw a small wage growth, on the scale of ~.5% a year. However, it does says that 58% of all workers failed to keep up with the real wage growth trend we saw in the years leading up to the pandemic. >So 63% didn't. But more than a third of Americans did. You can't "glass two-thirds full" tens of millions of people seeing their actual purchasing power decrease.
- Dylan16807 2mo agoYou can't glass one third empty it either. It's complicated and needs more numbers.
- jplusequalt 2mo agoFor that 1/3 of Americans, that's a very real statistic to be frowning over.
- Dylan16807 2mo agoMaybe it's very bad. Or maybe it's negligible. And which third of americans is it, the poor the middle or the rich or a mix of everyone? These factors are important before we can draw more than the most shallow of conclusions. There's a chart of the average that looks pretty bad. But also I don't have time to read 78 pages right now.
- GiorgioG 2mo agoI feel like people are blind to the obvious. The price of everything has gone up and it has outpaced most people’s wages.
- lr4444lr 2mo ago
- SoftTalker 2mo agoDuring/immediately after a global pandemic? No!
- culi 2mo agoThe other interesting finding here is that only 57% of these "job stayers" beat or matched inflation, while 43% suffered a real wage cut. A huge chunk of the people who's wages beat inflation only did so due to job hopping
- remusrm 2mo ago[dead]
- typ 2mo agoSaw a theory somewhere that, instead of raising the minimum wage, a policy that enables and incentivizes job hopping is what actually works for increasing the median wage level. The inverse implication of the theory is also interesting: any policy that makes job hopping harder than staying would suppress the wage level.
- testing22321 2mo ago> any policy that makes job hopping harder than staying would suppress the wage level Like healthcare being tied to employment?
- Avicebron 2mo agoOr hiring practices that can remain irrational longer than you can stay solvent?
- eru 2mo agoThe way to benefit from irrational hiring practices is by starting your own company that's less irrational, and thus can scoop up good workers for relatively cheap (while still paying them more than they get in the rest of the market.) Worked for Alan Greenspan and his consulting firm Townsend-Greenspan. If you run your own company like that, then the longer the market stays irrational the bigger your gain.
- 2mo ago
- mikert89 2mo agoWould love to see this calculated in high cost of living areas (NY, CA), pretty sure some people have seen 20% wage declines since covid (in terms of how far your income goes)
- luckydata 2mo agoMe for example.
- remusrm 2mo ago[dead]
- cyansands 2mo agoDot Com 2.0 was 2008-2016 These youngsters talking about 2020s have no idea!
- kev009 2mo agoWho would have guessed printing a bunch of money would be a working class tax
- deleted 2mo ago[deleted]
- eru 2mo agoThe working class doesn't hold that much in cash, do they? Competition in the labour market means nominal wages go up when inflation goes up. Many working class people have mortgages (though I'm not sure whether they have fixed rate mortgages?)
- 9x39 2mo agoWorking class typically rely solely on wages and have little to no wealth. So any purchasing power decrease is often referred to as a hidden tax on wages. https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite... Competition as a sellers’ market drives wages up, like anything AI connected today. Buyers’ markets drive wages down - GFC, H1Bs. Working class mortgages got obliterated after the GFC and never recovered. https://fred.stlouisfed.org/series/WFRBSB50210 https://fred.stlouisfed.org/series/WFRBSB50210 Mortgages are about 92% fixed rate (vs ARM). https://www.stlouisfed.org/on-the-economy/2024/feb/which-households-prefer-arms-fixed-rate-mortgages https://www.stlouisfed.org/on-the-economy/2024/feb/which-hou...
- eru 2mo agoThanks for looking up the data. > Working class typically rely solely on wages and have little to no wealth. So any purchasing power decrease is often referred to as a hidden tax on wages. That's only true if wages are fixed. They typically aren't, especially when people move jobs. Kevin Erdmann has some good writing about mortgages before and after the GFC.
- GiorgioG 2mo agoAbout fucking time someone called bullshit.
- mjihgggoiii 2mo agoYou'll never believe what happened next LOL
- ChrisArchitect 2mo agoTitle is: Sticky Wage Norms and the Real Wage Cost of Unexpected Inflation Interactive brief: https://bfidatastudio.org/project/sticky-wage-norms-and-the-real-wage-cost-of-inflation/ https://bfidatastudio.org/project/sticky-wage-norms-and-the-...
- WalterBright 2mo agoThe paper only mentions total compensation as: "total compensation (base wages plus bonuses)" Total compensation includes stock options, stock grants, health insurance premiums, 401k contributions, so-called "employer social security contributions", retirement contributions, time off with pay, etc. Total compensation averages 146% of wages. This is not a triviality. The paper doesn't cover this, and so the conclusions don't have merit.
- lotsofpulp 2mo agoHealth insurance premium subsidies being the big one. 90% of US workers probably are not getting any or any increase in the other ones.
- kraken_cult 2mo agoRiding the boom times doesn't have merit either.
- castwide 2mo agoNothing you include in "total compensation" is guaranteed by employment.
- WalterBright 2mo agoEmployer contributions to SS taxes are guaranteed by employment. Also other payroll taxes added on by states.
- nrr 2mo agoNot so. I'm part of a religious community for whom FICA is something we can opt out of via IRS Form 4029, and I can avoid contributions to FICA more broadly (not just SS taxes!) by handing HR the approved 4029 that I receive in response to filing. I don't know how available this is to folks who aren't Mennonite or Mennonite-adjacent, but it's there.
- WalterBright 2mo ago
- yanhangyhy 2mo ago[dead]
- Kuyawa 2mo ago...and the money printer went brrrr
- dukeofdoom 2mo agoTied to immigration levels, more cheap labor, more labor competition, wages go down. Immigrants willing to live 2 to a bedroom, rise in rent prices.
- p_j_w 2mo agoThe paper does not say this.
- dukeofdoom 2mo agoBased on lived experience in Canada. 5 million new immigrants added to the 36 million population from 10 years ago. So 14% of the total population. Record immigration, crazy increase in housing prices, stagnant wages and youth unemployment. If the paper came from Academia, it already went through lots of political allegiance filters, and taboo topics like being critical of immigration. Article debunks itself, when source can't be trusted.
- p_j_w 2mo agoYou’re welcome to do your own scientific study. “Lived experience in Canada” doesn’t cut it.
- m4ck_ 2mo agoI thought Trump fixed that? Shouldn't caging/deporting 2000+ people a day have a dent at some point? What do you blame when the immigrants are all gone? Personally I'm pretty sure it's more about the value of property and the limitations on construction that wealthy property owners put in place to block development (which would lower property values.) Property values go up -> costs rise (taxes, insurance) -> rent increases. That and the fact that the government and corporate america (same thing really) want all development to happen within existing major metro areas. There's plenty of cities and towns with cheap housing, but they lack employment opportunities.
- dukeofdoom 2mo ago
- ancorevard 2mo ago[flagged]
- spike021 2mo agoI guess RSUs aren't really "real wages" but mine vested over four years to the extent that by the time I left they were worth barely 25% of what they had been when I signed the offer. Happened over time, too, so quarterly vests took a decent hit in that timeframe.
- Anon1096 2mo agoRSUs are great for workers because if the value dips 75% you can just leave and get a new job and get new RSUs at a reasonable price. Of course it's not trivial to switch jobs but at a 75% cut it's surely worth at least looking around. I don't think you can really consider it a fault of the economy if you didn't.
- _dark_matter_ 2mo agoI did that once. The company doubled rsus the next quarter (still didn't make up for it), then the stock price 5xed over the next 3 years. By the end of it, if I had stayed, I would have cleared 1.2M per year. Although I heard they also fired some of those people with high rsus! So it goes both ways.
- jknoepfler 2mo agoI'm sure you know this but RSUs are such a fraction of a percent of real world compensation that they might as well round to zero.
- selestify 2mo agoThis was not my experience working at FAANG. RSU's started out as 30% of my comp and ended up well over 60% by the time I left. Either way, definitely not "might as well round to zero". I have never worked anywhere where that was the case.
- yieldcrv 2mo agoThey’re saying that few workers get RSUs
- jeffbee 2mo agoIn terms of GB of DRAM it looks even worse.
- diogenescynic 2mo agoI haven't had a pay raise since about 2021 so yes, that makes sense. Purchasing power is definitely down.
- moumou0532 2mo ago[flagged]
- phyzix5761 2mo agoThis was at the tail end of Covid where a lot of in-person workers were out of a job.
- sssilver 2mo agoWhat 2021-2024? Check the prices of the flagship 1975 Ferrari, the flagship 1975 Hasselblad camera, or, I don't know, a 1975 Cessna 182 in reference to median 1975 household income. Then check it again for 2026. Oh, but we have GPS, Amazon Prime, and doomscrolling now. Thanks, I'd rather take the Cessna.
- saxenaabhi 2mo agowith a much higher chance of dying in 1975 Cessna 182? I suspect most rational consumers won't. Because of safety improvement they aren't comparable goods.
- Tostino 2mo agoWhat improvements in GA since 1975? They are very slow to change from what I understand. There are a ton of airframes from that era still flying today. I mean, yeah at the top end things have gotten nicer.
- cucumber3732842 2mo ago>What improvements in GA since 1975? They are very slow to change from what I understand. Which is exactly why they make a great comparison point. Harder to get bad faith sidetracked by "but your modern car has airbags" and "but your modern house is marginally bigger" type commentary when the actual product has barely changed.
- sssilver 2mo agoMy friend, the 2026 Cessna 182 is basically the same airplane as it was in 1975, with digital screens instead of analog gauges, except now it costs about $750,000. That's a whopping $735,000 increase over its base price of ~$15,000 USD back in 1975 for a brand-new airplane. I promise, those avionics aren't worth $735,000. We've just gotten much, much poorer. EDIT: Heck, if this doesn't convince you, here's another set of numbers: 1. $15,000 of 1975 dollars is about ~$95,000 of 2026 dollars 2. A heavily used 1975 Cessna 182 today costs about $150,000
- 2mo ago
- AIorNot 2mo agoNo big surprise- were making mess money and terrified of losing our jobs, afraid of losing healthcare and can’t afford our homes, less social because of doom scrolling Welcome to the progress and “better world” that Tech Bros promised while they reaped billions of the VC/PE economy
- Yhippa 2mo agoCount me in the unlucky 37%. I job hopped for more stability in 2022. I got more comp but then proceeded to get 2% raises. I'm making less now adjusted for inflation than I did in 2022.
- dozerly 2mo agoSounds like it’s time to hop again then
- dnautics 2mo agothis is just a regular reminder that this is by design. https://archive.nytimes.com/krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-inflation/ https://archive.nytimes.com/krugman.blogs.nytimes.com/2010/0... "in the long run, its really really hard to cut nominal wages. [without] inflation, a significant number of workers take wage cuts" basically, inflation is a way to cheat all laborers out of their earned wealth so that the management class doesn't have to make hard decisions about who to keep.
- mritterhoff 2mo agoThat might be a side effect, but I'm doubtful it's the cause. The main cause as I understand it is that the govt prints money to offset the gap between what it collects in taxes and what it spends.
- dnautics 2mo agoThat's not really right either. think about it this way: what would happen if the budget was balanced and the us suddenly had a surplus? you HAVE to print money, where is the interest on debt going to come from.
- dang 2mo agoThe submitted title ("New paper shows that 37% of workers in US saw real wages decline from 2021-2024 [pdf]") broke the site guidelines, which ask: "Please use the original title, unless it is misleading or linkbait; don't editorialize." =- https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html Submitters: If you want to say what you think is important about an article, that's fine, but do it by adding a comment to the thread. Then your view will be on a level playing field with everyone else's: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&sort=byDate&type=comment&query=%22level%20playing%20field%22%20by:dang https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
- cyb_ 2mo agohttps://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q > Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over > 1982-84 CPI Adjusted Dollars, Seasonally Adjusted > Data measure usual weekly earnings of wage and salary workers. Wage and salary workers are workers who receive wages, salaries, commissions, tips, payment in kind, or piece rates.
- bjt12345 2mo agoFor the Tech sector, inflation speeds up companies crashes as staff leave for startups due to wages being extraordinarily "sticky-up" in large companies.
- kilna 2mo agoInflation is not just an increase in prices, it's basically a money pump. Under weakened labor it is redistribution from workers to the parasite class.
- commandlinefan 2mo ago> from workers to the parasite class I hope to retire some day - to do that, I'm going to have to save up enough money in a brokerage account that it generates enough money for me to live off of. Will that make me a member of the parasite class? I'm willing to be a worker for as long as I can, but at some point I will be too physically old to keep doing it (plus which, nobody really wants to hire old people).
- mikestaub 2mo agoIn your plan is an implicit assumption that those that cannot work do not deserve to have housing and food. This is a political choice made by a society.
- WorseIsBetter 2mo ago[flagged]