A large factor of the answer to this problem is in the second paragraph and the author glosses right over it:
"This state of things has left analysts stumped. For nearly a decade, the Federal Reserve has kept interest rates at extraordinarily low levels in order to initiate growth and rising demand, inflation, and ultimately higher wages. But the higher wages have been stubbornly slow to materialize."
Interest rates have been dropped into the ground, and it hasn't increased investment(growth). We have the highest savings in the history of capitalism and the lowest level of investment.
This is the wheel of capitalism literally coming to a halt because the oligarchs are staring each other down waiting for someone to go first.
And I think there is a lot to be said about Wall Street leaching most of the investors' money because it promises better returns than actual investment into actual things with utility.
Wall Street is 'supposed' to be the mechanism for recycling profits into investments so that this wheel keeps spinning. Does anyone honestly still believe it's functional?
It's because the real unemployment rate is higher than the "official rate". U-6 is the best indicator. Workers are still being pulled into the labor force, hence why wages have not risen despite the labor market tightening. We still have a long way to go to "full employment", at which point wage inflation would accelerate.
Interest rates were held low because the Federal Reserve has limited tools to stoke demand (and heh, who doesn't love a good asset bubble
amirite?). It therefore "pushes the string", attempting to use monetary policy when what is really necessary is Congress to act (higher taxes and government spending, or pushing wages up with legislation).
>This is the wheel of capitalism literally coming to a halt because the oligarchs are staring each other down waiting for someone to go first.
This makes a lot of sense. I constantly get the feeling in the US that we don't actually "do" anything anymore. And I don't just mean manufacturing. You look around at the rest of the world and infrastructure programs are at the forefront of every expanding economy. China, India, Turkey. All pouring hundreds of billions into great works at home and abroad.
Where are the massive capital expenditures we saw in the 19th and 20th centuries? America has the largest population of highly skilled, financially endowed consumers on earth yet the most that any genius Venture Capitalist can figure out to do with these billions in free money from the fed is come up with a new skin for IRC.
You've summed up my feelings well: I can't afford to not be in the stock market as all other financial investments pay peanuts on the dollar. And yet I don't trust that the stock market numbers represents actual growth. It's propped up. When does this end?
>Interest rates have been dropped into the ground, and it hasn't increased investment(growth). We have the highest savings in the history of capitalism and the lowest level of investment.
Savings _rates_ in the US are actually low by historical standards: https://tradingeconomics.com/united-states/personal-savings (click the 'MAX' timespan toggle). Low interest rates discourage savings and encourage borrowing. One of the fundamentals of economics is that all other things being equal, in the long term savings is needed for growth: if we consume everything we produce, then nothing remains to be invested, so productivity won't increase. If we save more, then we have more to invest, and this greater investment will increase productivity more.
The key thing to note here is that it is investment of forgone consumption that produces value (at a simple level, compare saving some wheat seeds to plant next season vs eating them all as flour). Lowering interest rates, printing money and similar things don't achieve this: they can create _money_, but not necessarily value. What they can do is increase demand, to address temporary shortfalls in demand, which under a popular form of economic reasoning will produce more growth than letting demand slump. That demand-boosting approach is however meant to be used as an immediate solution to a temporary slump, not an ongoing thing, as few economists deny a long term positive relationship between savings rates and growth.
Basically all current investments are high-risk in the age we live in, because we are "at the brink of the chasm" on all fronts:
- general technology: ...the barriers to market are so low that a startup can spring to being at any moment and eat all your profits away
- (social) media / communication: anything can change anytime, today's Facebook can be tomorrow's Hi5
- biotech: we're getting closer to the "you can do it your garage stage" which will change everything
- world politics: India and China are big players now and their moves can no longer be predicted, also US internal politics is a cauldron of volatility, and in a decade or two we'll have the "New Africa" rising... good luck predicting anything
- ML/AI: we might be at the brink of f Singularity with superhuman-AI around the corner... but we have no idea whether it will be in 5 years or 100 years (!) ...this alone is enough to fuck up all worldwide future prediction on anything... when you're staring up from somewhere around the foot of an exponential curve everything looks like "wtf, nothing makes sense"
And also, the last economic "crisis" increased everyone's aversion to risk, kind of the opposite of what you'd need now to increase level of investment...
What needs to change is the attitude of people with money towards risk! I'd love to see people like Elon Musk succeed long-term, not because I like them or what they are doing, but because they are the only ones with an attitude that can create growth right now.
We should really re-learn thinking and working with volatility, maybe starting from what Nassim Taleb says in his Antifragile (https://www.amazon.com/Antifragile-Things-That-Disorder-Ince...) and his talks like How to Live in a World we Don't Understand (https://www.youtube.com/watch?v=iEnmjMgP_Jo - warning: he's a terrible speaker... and not a great writer either, so getting to the root of his ideas will take time). Maybe not. But current "risk reduction" attitude cannot work (hint why: even if you reduce Infinity by 20% you still have f Infinity!).
Labor income has stagnated because we have a glut of labor.
Corporate profitability continues to grow because of increased productivity (increasing the surplus), which they haven't shared with their investors, employees, or government (taxes).
Corporate savings continue to accrue because their (effective) tax rate is low.
Whatever can be said about (low) interest rates, its effect on wage stagnation is second-order, at best.
Interest rates were kept low to bail out wall street, banks, auto industry, housing industry, etc. It was used to reinflate stock, housing, etc bubbles.
If low interest rates boosted wages, the japanese worker would be the highest paid worker in the world. Instead, the japanese wage has declined for 20+ years.
Reminds me of an article in Aviation Week recently bemoaning the lack of new pilots coming into the profession and saying how this was completely baffling to the companies involved.
A few paragraphs down they mentioned the starting salary at regional airlines: $26000.
I think I can solve your mystery
When the wage of the person responsible for 40+ lives and millions of dollars worth of equipment isn't enough to feed a family (many pilots are on food stamps) you aren't paying them enough. Never mind that they also have to pay for their own education and that includes several thousand hours of Pilot in Command time. Renting a plane is typically > $100/h. Which is why flight instructors are often cheaper than tennis instructors: the main benefit for the instructor is that the student pays for the plane.
And that's one of the main reasons why Sully said he can't recommend the profession to anyone.
Yep, the crazy thing is that being a copilot in a regional airline isn't even an entry level job. In the US, you have to somehow manage to finance your pilot licenses AND 1500 hours of flying, before you can even apply to airlines.
And even if you make it that far into this career, being a copilot in a regional airlines sucks. It's not just bad pay, but also really bad schedules. Long days with short turnarounds in-between flights. Many young copilots even have an obscenely long commute to their first flight and back home after their last one. All for the hope of being picked up by one of the major airlines.
> A few paragraphs down they mentioned the starting salary at regional airlines: $26000
That may be the starting salary in some places, but keep in mind that median salary is closer to $100-120k. Starting pilots either are unaware of the longer-term salary, or that longer-term salary is still too low in comparison to other professions with similar characteristics.
The most obvious answer seems to be that the workforce keeps growing relative to the demand for that work. Wage stagnation began at the same time the number of women in the workplace started to grow. While a corresponding increase in demand with the supply of workers would have kept incomes moving upward, women were actually already consumers. They had to eat, be sheltered and clothed, etc. even when men made up the vast majority of the workforce.
The rate of the growing female workforce itself started to stagnant around the 90s and 2000s, but a new worker had fully emerged on the scene by that point: The robot. It's a slight misconception that robots eliminate jobs. In reality, they compete for them just like people do. They are another worker in the supply of workers. And while robots bring new demand, as they didn't exist before, it is not proportional to what they can create like with humans.
And so, increasing supply over the rate of what increases to demand exist, and you get downward price pressure.
Wage stagnation began at the same time the number of women in the workplace started to grow ... The rate of the growing female workforce itself started to stagnant around the 90s and 2000s...
The US ratio of female/male employment experienced a strong long-term upward trend during and after WWII (1940s), and the absolute number of women working jobs in the US has climbed steadily right to the present day.
The modern era of wage stagnation relative to productivity started in the 1970s, somewhat before the strongest growth in the female/male employment ratio, and continuing even after that ratio flattened out.
But what about extra discretionary income which would stimulate extra demand (another car, another vacation, another gadget, home services now that both partners are working)?
How does this answer the question the author brings up in the first paragraph?
>An airline canceled flights because it couldn’t find enough pilots to steer them. Despite high demand, homebuilders in Colorado are throttling back activity because they can’t find the workers to erect frames. Farmers in Alabama are fretting that crops may rot in the ground for a lack of workers to bring in the harvest.
Robots can't do all those jobs, and yet the wages for those jobs haven't increased enough.
i think a large part is that companies are hoarding money and wealth goes there to die. if we stepped up pressure on companies to spend their money (one way or another), i think more jobs and higher wages would follow.
It seems oversimplifying to say that robots are "just another worker." When women entered the workforce, they came with similar costs to their male counterparts; wanted breaks, expected time off, lunch break, commuting time, various facilities. Robots require...well, power. They don't need breaks or bathrooms, they don't even need to go home. Hell, if you really wanted to, you could run an entire auto plant with little/no climate control in complete darkness and the robots wouldn't mind one bit.
There's simply no competition between robots and humans, that's why I'm a firm believer that automation will take all the jobs and we need to figure out how to handle a post-work future before we start riots.
> The most obvious answer seems to be that the workforce keeps growing relative to the demand for that work.
Interesting, and very plausible as well. Please don't get me wrong, but you happen to have any source that supports that hypothesis? I don't doubt any of what you've said and I do believe you're on to something, but I would like to read more on the subject.
Another fundamental issue is that business has never been structured for high wage elasticity. When the market clearing price for wages becomes volatile, which seems to be increasingly the case, it is generally very difficult for business to track the market because their operating models are predicated on the relatively non-volatility of wages. Adjusting to that is generally not easy or quick as it often forces companies to change the way they do business at a pretty fundamental level.
I've seen this play out at companies big and small when changes in market wages force them to change the way they think about hiring. Ironically, the replacement strategy is often to eliminate positions from the bottom half of the wage pool and to add a much smaller number of positions in the top half, at least in my experience. (It is increasingly widely believed that this latter strategy is superior in any case and there is evidence to at least suggest this is true.)
If a business was structured to deal with wages elastically, that's great for business, but can you imagine working for such a corporation? In theory, the reason we allow business to profit is because we all share in the benefits, but if a significant chunk of the market were structured like this, a large benefit to ordinary people (i.e. the ability to stabilly eat and shelter themselves) would be removed, removing a large chunk of legitimacy from the economic system.
It's really silly to think of labor prices as just being a matter of "people knowing what they're worth." The example given was painting jobs. If you're someone that maybe could offer such a job, there's a price at which it makes more sense for you to do it yourself. That price is a hard limit to the amount you can offer for such a job. If someone demands more, then you can't satisfy them because then you're losing out on the deal.
Only growing commercial concerns can afford to hire new employees. The world used to have a way of keeping people who would otherwise be economically impotent engaged, and that is cheap service work, but we've decided as a society that such things are not politically palatable.
So instead we just place more and more expectations on the people that participate usefully in society, and less and less on those who can't. The older I get, the less sympathetic I get to this viewpoint, but I suppose that's a quite common moral journey so I won't belabor the point too much.
They hit the nail on the head right here: "Companies are psychologically and emotionally geared not to raise wages as a matter of course." Our current business culture is basically to maximize profits and minimize expenditures.
Those employers don't want employees, they want CHEAP employees. If you pay $100/hour, you will get employees. So, the only question is "where is that wage number?"
Employers aren't stupid. If they could make more money by hiring employees, they would. What this tells me is that demand isn't high enough for an employer to calculate an increased return from hiring someone.
So, what this tells us is that demand is dead. That's what happens when you hollow out the middle class.
The issue is that even with all these hires there is still a fairly large pool of people that want to work that don't currently have jobs. This is why wages aren't rising.
I think this is part of the equation about illegal immigrants which nobody in the US seem to talk about. They dont talk about all the companies exploiting illegal workers. We had a situation in Norway with exploited Polish workers. It was when Norwegian unions started targetting polish workers when things turned around. With polish info about workers rights, salaries and conditions improved. If you get unions more actively involved in the US you might not need big walls. Businesses are not going to hire mexicans if they cant pay them shitty salaries. If salaries and conditions are better americans are going to take those jobs instead.
Getting a raise and bargaining for a starting pay, and offering a default pay for a job, these are three different things, I think.
Most people don't ask for raises, or draw no consequences from being mad about not getting a raise. So after a few generations companies adapted and simply don't offer raises anymore as default.
People who really want to make more money, still get more money. Just not in the same job. While working less in their current job they start to look for other jobs with better pay, and since they have a current job they can proactively bargain for the pay they want. If they don't get it they just don't switch.
And last but not least, but I hope at least here people have noticed that now we have a method called Start-up. That is a way to get a lot of raises in a very short time frame as well. The only requirement is the cruel real life fairness of having a growing marketshare.
So we have everything, non-increasing incomes for lazy people, regular raises by job switching from dedicated people, and fast-lane high-risers for people who can really take a risk.
And of course we also have a problem. But that problem has nothing to do with any of the three things (raises, job offer bargaining, default pay): We have more and more jobs that are automated and replaced by machines. If you have autopilots in airplanes that do a well enough job, you simply don't really need the pilots any more, for instance. I honestly don't know if we can find a solution for that, or if we are heading for another period like feudalism where only a small percentage of people actually have a good life.
But, well, as long as we don't talk about that problem we certainly won't resolve it.
When healthcare premiums are rising double digits annually, there is no money to increase salary.
We have to decide a basic level of healthcare every Citizen is entitled too and if you want more, the individual pays for it.
Cutting taxes on the already wealthy isn't a stimulus, but putting $18k ( avg annual HC premium ) back into pockets the middles classes will stimulate the economy because they will spend it all.
Cutting taxes on the wealthy just slows the Velocity of Money.
My observation in the US is that there is a pretty big gap in perception of how professionals or managers should be paid versus ordinary workers. You'll find people who would never consider paying workers more than minimum wage, and yet consider the bills from lawyers and consultants perfectly reasonable.
Part of it seems to be a general belief that some sorts of expensive professionals are better, much like how people assume pricey wine tastes better, but I suspect most of it's just class issues.
Remember, if you do end up quitting your job, be sure to tell your employer that they weren't paying enough. Then when they hire to fill your position, they may be more likely to offer a better wage.
Perhaps the phrase "six-figure salary" has caused wage stagnation.
Once a manager, for example, hits their personal goal of "six-figures", they feel they have hit an important milestone. So they are content year after year to privately make $100,001 but publicly/subconsciously use the misleading phrase of "six-figures". A manager's salary is implicitly the upper bound of their subordinates' pay so the whole work-force suffers.
If the goal is inspire a higher paid workforce, let's stop with the "six-figures" vagueness and use concrete income milestones (e.g., $250k a year, $10k a week, etc.) instead.
Part of the problem is that people are much more reluctant to move for a new job, because job security is now so low. Also, moving to a town with one major non-union employer is like signing up for indentured servitude.
In the industry I work in it's a skills gap. I work for an Industrial Electrical Contractor. We cannot find enough skilled electricians out there. The good ones have jobs and don't seem to look to change. We've had to start our own 5 year apprentice program because of lack of qualified candidates. A real problem is too many school counselors and society in general tell people you can't make a living doing skilled blue collar work.
I'm just glad I have a way out potentially as a developer. Starting to build up client base still far from being able to be self employed but I'm grateful to be aware/know where to look to learn.
I'm not a fan of my day job with regard to, regardless of their customer input (say they did a lot of business) I don't get a bump or tip or anything. No incentive to try harder also my day job any kid off the street can do so what can I say.
A lot of employers try to offer so little for unskilled jobs that it costs more to commute to the job than you could make. Those jobs will go unfilled because no rational human is going to pay someone to be their employee even if they dropped out of high school most people can do enough basic math to know whether a job will cost more to commute to than they can make.
No new markets where to expand. Since Russia got re-grouped with Putin, the Russian (and former USSR) markets started to close for US exports. Chinese had their own dynamics. The labor participation rate is at the 70-ties rate again. Go for the maiximal time period here to see the dynamics. https://tradingeconomics.com/united-states/labor-force-parti...
Also check who's getting all the gold recently
https://tradingeconomics.com/russia/gold-reserves
Labor has no pricing power in the USA and it's partially responsible for the candidacy of Donald Trump & Bernie Sanders - for what it's worth.
All the spigots for cheap labor in the USA are turned on full blast and have been increasingly so since the late 1970's when labor power was at its zenith. Those spigots are: free-trade agreements with other countries, automation, anti-union actions, flow of illegal labor, flow of legal immigrant labor, globalization.
It's the cause of social turmoil, but that's not much of a concern (in fact it's something to be harnessed and consumed) for the ruling (and chattering) classes.
[+] [-] LMYahooTFY|8 years ago|reply
"This state of things has left analysts stumped. For nearly a decade, the Federal Reserve has kept interest rates at extraordinarily low levels in order to initiate growth and rising demand, inflation, and ultimately higher wages. But the higher wages have been stubbornly slow to materialize."
Interest rates have been dropped into the ground, and it hasn't increased investment(growth). We have the highest savings in the history of capitalism and the lowest level of investment.
This is the wheel of capitalism literally coming to a halt because the oligarchs are staring each other down waiting for someone to go first.
And I think there is a lot to be said about Wall Street leaching most of the investors' money because it promises better returns than actual investment into actual things with utility.
Wall Street is 'supposed' to be the mechanism for recycling profits into investments so that this wheel keeps spinning. Does anyone honestly still believe it's functional?
[+] [-] toomuchtodo|8 years ago|reply
Interest rates were held low because the Federal Reserve has limited tools to stoke demand (and heh, who doesn't love a good asset bubble amirite?). It therefore "pushes the string", attempting to use monetary policy when what is really necessary is Congress to act (higher taxes and government spending, or pushing wages up with legislation).
Call your representatives.
[+] [-] aphextron|8 years ago|reply
This makes a lot of sense. I constantly get the feeling in the US that we don't actually "do" anything anymore. And I don't just mean manufacturing. You look around at the rest of the world and infrastructure programs are at the forefront of every expanding economy. China, India, Turkey. All pouring hundreds of billions into great works at home and abroad.
Where are the massive capital expenditures we saw in the 19th and 20th centuries? America has the largest population of highly skilled, financially endowed consumers on earth yet the most that any genius Venture Capitalist can figure out to do with these billions in free money from the fed is come up with a new skin for IRC.
[+] [-] caesarshift|8 years ago|reply
[+] [-] logicchains|8 years ago|reply
Savings _rates_ in the US are actually low by historical standards: https://tradingeconomics.com/united-states/personal-savings (click the 'MAX' timespan toggle). Low interest rates discourage savings and encourage borrowing. One of the fundamentals of economics is that all other things being equal, in the long term savings is needed for growth: if we consume everything we produce, then nothing remains to be invested, so productivity won't increase. If we save more, then we have more to invest, and this greater investment will increase productivity more.
The key thing to note here is that it is investment of forgone consumption that produces value (at a simple level, compare saving some wheat seeds to plant next season vs eating them all as flour). Lowering interest rates, printing money and similar things don't achieve this: they can create _money_, but not necessarily value. What they can do is increase demand, to address temporary shortfalls in demand, which under a popular form of economic reasoning will produce more growth than letting demand slump. That demand-boosting approach is however meant to be used as an immediate solution to a temporary slump, not an ongoing thing, as few economists deny a long term positive relationship between savings rates and growth.
There've actually been attempts to model what the ideal savings rate would be: https://en.wikipedia.org/wiki/Golden_Rule_savings_rate. Such models seem to have little influence on interest rate policy, however.
[+] [-] nnq|8 years ago|reply
Basically all current investments are high-risk in the age we live in, because we are "at the brink of the chasm" on all fronts:
- general technology: ...the barriers to market are so low that a startup can spring to being at any moment and eat all your profits away
- (social) media / communication: anything can change anytime, today's Facebook can be tomorrow's Hi5
- biotech: we're getting closer to the "you can do it your garage stage" which will change everything
- world politics: India and China are big players now and their moves can no longer be predicted, also US internal politics is a cauldron of volatility, and in a decade or two we'll have the "New Africa" rising... good luck predicting anything
- ML/AI: we might be at the brink of f Singularity with superhuman-AI around the corner... but we have no idea whether it will be in 5 years or 100 years (!) ...this alone is enough to fuck up all worldwide future prediction on anything... when you're staring up from somewhere around the foot of an exponential curve everything looks like "wtf, nothing makes sense"
And also, the last economic "crisis" increased everyone's aversion to risk, kind of the opposite of what you'd need now to increase level of investment...
What needs to change is the attitude of people with money towards risk! I'd love to see people like Elon Musk succeed long-term, not because I like them or what they are doing, but because they are the only ones with an attitude that can create growth right now.
We should really re-learn thinking and working with volatility, maybe starting from what Nassim Taleb says in his Antifragile (https://www.amazon.com/Antifragile-Things-That-Disorder-Ince...) and his talks like How to Live in a World we Don't Understand (https://www.youtube.com/watch?v=iEnmjMgP_Jo - warning: he's a terrible speaker... and not a great writer either, so getting to the root of his ideas will take time). Maybe not. But current "risk reduction" attitude cannot work (hint why: even if you reduce Infinity by 20% you still have f Infinity!).
[+] [-] specialist|8 years ago|reply
Corporate profitability continues to grow because of increased productivity (increasing the surplus), which they haven't shared with their investors, employees, or government (taxes).
Corporate savings continue to accrue because their (effective) tax rate is low.
Whatever can be said about (low) interest rates, its effect on wage stagnation is second-order, at best.
[+] [-] NTDF9|8 years ago|reply
There are corner cases to it but the underlying reasoning is, if your investment is just lying around accruing wealth, it's bullshit wealth.
[+] [-] luckydata|8 years ago|reply
[+] [-] basicplus2|8 years ago|reply
'This is the wheel of capitalism literally coming to a halt because the oligarchs are staring each other down waiting for someone to go first.'
[+] [-] Spooky23|8 years ago|reply
[+] [-] awkwarddaturtle|8 years ago|reply
If low interest rates boosted wages, the japanese worker would be the highest paid worker in the world. Instead, the japanese wage has declined for 20+ years.
[+] [-] mpweiher|8 years ago|reply
A few paragraphs down they mentioned the starting salary at regional airlines: $26000.
I think I can solve your mystery
When the wage of the person responsible for 40+ lives and millions of dollars worth of equipment isn't enough to feed a family (many pilots are on food stamps) you aren't paying them enough. Never mind that they also have to pay for their own education and that includes several thousand hours of Pilot in Command time. Renting a plane is typically > $100/h. Which is why flight instructors are often cheaper than tennis instructors: the main benefit for the instructor is that the student pays for the plane.
And that's one of the main reasons why Sully said he can't recommend the profession to anyone.
[+] [-] skgoa|8 years ago|reply
And even if you make it that far into this career, being a copilot in a regional airlines sucks. It's not just bad pay, but also really bad schedules. Long days with short turnarounds in-between flights. Many young copilots even have an obscenely long commute to their first flight and back home after their last one. All for the hope of being picked up by one of the major airlines.
[+] [-] Scaevolus|8 years ago|reply
And they get to see their families every day!
[+] [-] unknown|8 years ago|reply
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[+] [-] panzer_wyrm|8 years ago|reply
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[+] [-] em3rgent0rdr|8 years ago|reply
[+] [-] coryfklein|8 years ago|reply
That may be the starting salary in some places, but keep in mind that median salary is closer to $100-120k. Starting pilots either are unaware of the longer-term salary, or that longer-term salary is still too low in comparison to other professions with similar characteristics.
[+] [-] randomdata|8 years ago|reply
The rate of the growing female workforce itself started to stagnant around the 90s and 2000s, but a new worker had fully emerged on the scene by that point: The robot. It's a slight misconception that robots eliminate jobs. In reality, they compete for them just like people do. They are another worker in the supply of workers. And while robots bring new demand, as they didn't exist before, it is not proportional to what they can create like with humans.
And so, increasing supply over the rate of what increases to demand exist, and you get downward price pressure.
[+] [-] sharemywin|8 years ago|reply
-Farmers in Alabama are fretting that crops may rot in the ground for a lack of workers to bring in the harvest.
-Despite high demand, home builders in Colorado are throttling back activity because they can’t find the workers to erect frames.
-An airline canceled flights because it couldn’t find enough pilots to steer them.
Those aren't demand problem but supply problems.
[+] [-] Lagged2Death|8 years ago|reply
Have a look over here:
https://www.dol.gov/wb/stats/facts_over_time.htm
The US ratio of female/male employment experienced a strong long-term upward trend during and after WWII (1940s), and the absolute number of women working jobs in the US has climbed steadily right to the present day.
The modern era of wage stagnation relative to productivity started in the 1970s, somewhat before the strongest growth in the female/male employment ratio, and continuing even after that ratio flattened out.
http://www.epi.org/files/2013/ib388-figurea.jpg.538 http://www.epi.org/publication/charting-wage-stagnation/
...a corresponding increase in demand with the supply of workers would have kept incomes moving upward...
Or it could send jobs overseas to poor countries with low wages and little in the way of labor or environmental regulation.
[+] [-] RestlessMind|8 years ago|reply
But what about extra discretionary income which would stimulate extra demand (another car, another vacation, another gadget, home services now that both partners are working)?
[+] [-] kerbalspacepro|8 years ago|reply
>An airline canceled flights because it couldn’t find enough pilots to steer them. Despite high demand, homebuilders in Colorado are throttling back activity because they can’t find the workers to erect frames. Farmers in Alabama are fretting that crops may rot in the ground for a lack of workers to bring in the harvest.
Robots can't do all those jobs, and yet the wages for those jobs haven't increased enough.
[+] [-] autokad|8 years ago|reply
[+] [-] FussyZeus|8 years ago|reply
There's simply no competition between robots and humans, that's why I'm a firm believer that automation will take all the jobs and we need to figure out how to handle a post-work future before we start riots.
[+] [-] hashkb|8 years ago|reply
[+] [-] geezerjay|8 years ago|reply
Interesting, and very plausible as well. Please don't get me wrong, but you happen to have any source that supports that hypothesis? I don't doubt any of what you've said and I do believe you're on to something, but I would like to read more on the subject.
[+] [-] DiNovi|8 years ago|reply
[+] [-] jandrewrogers|8 years ago|reply
I've seen this play out at companies big and small when changes in market wages force them to change the way they think about hiring. Ironically, the replacement strategy is often to eliminate positions from the bottom half of the wage pool and to add a much smaller number of positions in the top half, at least in my experience. (It is increasingly widely believed that this latter strategy is superior in any case and there is evidence to at least suggest this is true.)
[+] [-] SapphireSun|8 years ago|reply
[+] [-] vinceguidry|8 years ago|reply
Only growing commercial concerns can afford to hire new employees. The world used to have a way of keeping people who would otherwise be economically impotent engaged, and that is cheap service work, but we've decided as a society that such things are not politically palatable.
So instead we just place more and more expectations on the people that participate usefully in society, and less and less on those who can't. The older I get, the less sympathetic I get to this viewpoint, but I suppose that's a quite common moral journey so I won't belabor the point too much.
[+] [-] kalleboo|8 years ago|reply
Service work is up over the decades. What we used to have was manual labor/manufacturing jobs. https://cdn.static-economist.com/sites/default/files/images/... http://www.zerohedge.com/sites/default/files/images/user5/im...
[+] [-] chank|8 years ago|reply
[+] [-] bsder|8 years ago|reply
Employers aren't stupid. If they could make more money by hiring employees, they would. What this tells me is that demand isn't high enough for an employer to calculate an increased return from hiring someone.
So, what this tells us is that demand is dead. That's what happens when you hollow out the middle class.
[+] [-] harryh|8 years ago|reply
https://data.bls.gov/timeseries/CES0000000001?output_view=ne...
The issue is that even with all these hires there is still a fairly large pool of people that want to work that don't currently have jobs. This is why wages aren't rising.
[+] [-] ScottBurson|8 years ago|reply
That's not so clear: https://news.ycombinator.com/item?id=13017766
[+] [-] jernfrost|8 years ago|reply
[+] [-] erikb|8 years ago|reply
Most people don't ask for raises, or draw no consequences from being mad about not getting a raise. So after a few generations companies adapted and simply don't offer raises anymore as default.
People who really want to make more money, still get more money. Just not in the same job. While working less in their current job they start to look for other jobs with better pay, and since they have a current job they can proactively bargain for the pay they want. If they don't get it they just don't switch.
And last but not least, but I hope at least here people have noticed that now we have a method called Start-up. That is a way to get a lot of raises in a very short time frame as well. The only requirement is the cruel real life fairness of having a growing marketshare.
So we have everything, non-increasing incomes for lazy people, regular raises by job switching from dedicated people, and fast-lane high-risers for people who can really take a risk.
And of course we also have a problem. But that problem has nothing to do with any of the three things (raises, job offer bargaining, default pay): We have more and more jobs that are automated and replaced by machines. If you have autopilots in airplanes that do a well enough job, you simply don't really need the pilots any more, for instance. I honestly don't know if we can find a solution for that, or if we are heading for another period like feudalism where only a small percentage of people actually have a good life.
But, well, as long as we don't talk about that problem we certainly won't resolve it.
[+] [-] MrFantastic|8 years ago|reply
We have to decide a basic level of healthcare every Citizen is entitled too and if you want more, the individual pays for it.
Cutting taxes on the already wealthy isn't a stimulus, but putting $18k ( avg annual HC premium ) back into pockets the middles classes will stimulate the economy because they will spend it all.
Cutting taxes on the wealthy just slows the Velocity of Money.
[+] [-] nitwit005|8 years ago|reply
Part of it seems to be a general belief that some sorts of expensive professionals are better, much like how people assume pricey wine tastes better, but I suspect most of it's just class issues.
[+] [-] lsiebert|8 years ago|reply
[+] [-] projectileboy|8 years ago|reply
[+] [-] louprado|8 years ago|reply
Once a manager, for example, hits their personal goal of "six-figures", they feel they have hit an important milestone. So they are content year after year to privately make $100,001 but publicly/subconsciously use the misleading phrase of "six-figures". A manager's salary is implicitly the upper bound of their subordinates' pay so the whole work-force suffers.
If the goal is inspire a higher paid workforce, let's stop with the "six-figures" vagueness and use concrete income milestones (e.g., $250k a year, $10k a week, etc.) instead.
[+] [-] Animats|8 years ago|reply
[+] [-] philcyr|8 years ago|reply
[+] [-] ge96|8 years ago|reply
I'm not a fan of my day job with regard to, regardless of their customer input (say they did a lot of business) I don't get a bump or tip or anything. No incentive to try harder also my day job any kid off the street can do so what can I say.
[+] [-] shams93|8 years ago|reply
[+] [-] flatfilefan|8 years ago|reply
[+] [-] justforFranz|8 years ago|reply
All the spigots for cheap labor in the USA are turned on full blast and have been increasingly so since the late 1970's when labor power was at its zenith. Those spigots are: free-trade agreements with other countries, automation, anti-union actions, flow of illegal labor, flow of legal immigrant labor, globalization.
It's the cause of social turmoil, but that's not much of a concern (in fact it's something to be harnessed and consumed) for the ruling (and chattering) classes.