In arguing that we should take a simple average, this seems to be trying to make wage growth seem better by putting more emphasis on the top ranks that have seen most of the growth over the past few decades. However the wording seems to imply the problem is that higher earners have slower growth because they're later in their careers. Are they talking about a different thing or just being weaselly?
It's being weaselly, I believe the article is saying that the current record keeping means that if high earner growth slowed down in relation to low earner growth it would be (all other things equal) recorded as a decrease in growth (or absolute value even).
But it doesn't offer numbers about an unweighted average because the unweighted average is -worse-. Tech workers' mid & high level salaries have been keeping a good pace with inflation (even after adjusting to the CoL effects in areas like silicon valley) it's low income workers who have been hit the worst by our modern economy with their hourly wages well behind simple inflation adjusted figures from three decades ago.
This is just... a terribly written article sadly. It's like if you were to say "Global warming is going to be 2-3 deg C" and I argued "No, you're wrong, your numbers are highly suspect and thus I deny climate change (because I am getting figures closer to 4.5 deg C)"... can we classify this type of article as "kicking over the other's kids toys"?
On the first read, I didn't understand the article. On a second read, I feel that they have a good point. However, let's not miss the forest for the trees: "higher than we think" doesn't mean wage growth is high enough for a healthy, prospering middle class-- especially in an era where housing, education, and health care continually exceed inflation, coupled with the fact that most workers get a 1-2% raise (if any) per year.
The headline is completely deceptive in the sense that it implies overall wages were increasing more than BLS statistic showed.
They make a correct observation that the average worker experiences more wage growth than is shown by growth in average wage. But this does not in any way show "what we thought was right is actually wrong" (a naive person might incorrectly their wages will average follow statistical average wages and the observation debunks that, however that's not the conception they claim to debunk). It is more of an apple to oranges comparison. Yes, the average worker experiences both wage growth based on increased averages and wage growth from moving from moving up in their occupation but this second part isn't relevant for any policy discussion of wages, any evaluation of overall benefits people get from society, etc. Averages are average wages, changed each year indeed roughly by continuing workers getting a raise, new workers entering the workforce and older workers retiring - this rough average is what families deal with.
And, of course, their "remarkable" statistical observation isn't a situation that began yesterday but has been true for a long time (including times when inflation-adjust wages were higher, etc).
I didn't understand it even on the third read. What are they measuring? An individuals wage growth through their career, or the growth of the US mean or median wage over time? And what of the mentioned weighting - other than that it's 'different' between the two methods, I'm utterly confused as to what it actually is, or why there is weighting at all.
Now subtract 3 (or 6) percent to account for what money does under inflation (or market growth). If you don't geometric average a growth that outpaces at least 3%, you are working for less than you were when you started. If it's between 3% and 6%, you are being outpaced by institutional investors because your capacity for savings are extremely limited in comparison.
This is the only sane way to look at it. If you compare it with historical correlations between compensation and productivity[1], then things look pretty bleak.
Over the last decade, engineer pay certainly hasn't kept up with increases in cost of living expenses, especially in places like SF or NYC.
It's hard to get anything from this article. Does this factor in the Uber drivers making over 100k a year but paying for gas/insurance/health out of pocket? I'd be interested to see data on real income or percentage of income that is put into savings/investments. Other data sources paint a far less optimistic picture of the current state of affairs (https://datausa.io/profile/geo/01000US/#economy)
This not news and doesn't merit being called research.
This is a statistical effect that has always existed and is fairly well known. Yes, the average worker experiences more wage growth than the statistical value of "growth in average wages" because the average workers starts at the lowest salary in their and gradually progresses higher. That's how individuals experience things but that does not in any way mean that median wages and growth median wages is a flawed statistic. It's reminder for anyone looking multiple measures of income and wealth to look carefully (I've seen economic professors incompetent enough to ignore these but that's a different issue).
It makes sense that US wage is growing if you look at the macroeconomic environment. Money is flowing into US at an unprecedented rate due to:
a.) Fed raising interest rates to a normal level. Government bonds are now earning close to some of the faster developing countries, without the risks.
b.) Brexit impacting the growth of EU. Germany narrowly avoids recession....for now. But grew only 1.5% in 2018. There's still the matter of a possible US tariff on EU automobiles. And Italy/Greece/Spain debts are still a thing.
c.) Chinese economy is crumbling. GM dropped crashed 15% in China in 2018. Ford dropped 36%. iPhone sales dropped 13%. Louis Vuitton dropped 20%. Overall car sales dropped 13%. Stock market dropped 22%. Real estate sales in January 2019 dropped 44%.
d.) Asian countries impacted by China's fall. South Korea's export to China dropped 14% in 2018. Japan dropped 8%. Taiwan dropped 10%. Singapore dropped 8%.
e.) Uncertainties and high debt ratio in developing countries, prompting money to seek safe harbor. Tariff and protectionism impacts.
I don't know how C) fits in the narrative. I think we could flush this out a little more.
Global economies are linked. If China isn't doing well, there's a risk that could spill over into other countries (point D), and that includes the US.
Are we saying that the US is doing well, but China is doing poorly because, all else equal, if the China-US trade discussions do not end well, it harms China more than it harms the US? It would certainly hurt both economies. Costs for goods would rise in the US. US Consumers buy less, consumer confidence slides, 70% of economic activity is consumer spending, etc.
US is doing just fine. It's countries like China that is now facing a combination of subprime mortgage of sorts, except it is not limited to only residential real estate but entire state owned corporations which can no longer just be bailed out as before.
[+] [-] svachalek|7 years ago|reply
[+] [-] munk-a|7 years ago|reply
But it doesn't offer numbers about an unweighted average because the unweighted average is -worse-. Tech workers' mid & high level salaries have been keeping a good pace with inflation (even after adjusting to the CoL effects in areas like silicon valley) it's low income workers who have been hit the worst by our modern economy with their hourly wages well behind simple inflation adjusted figures from three decades ago.
This is just... a terribly written article sadly. It's like if you were to say "Global warming is going to be 2-3 deg C" and I argued "No, you're wrong, your numbers are highly suspect and thus I deny climate change (because I am getting figures closer to 4.5 deg C)"... can we classify this type of article as "kicking over the other's kids toys"?
[+] [-] JMTQp8lwXL|7 years ago|reply
[+] [-] joe_the_user|7 years ago|reply
They make a correct observation that the average worker experiences more wage growth than is shown by growth in average wage. But this does not in any way show "what we thought was right is actually wrong" (a naive person might incorrectly their wages will average follow statistical average wages and the observation debunks that, however that's not the conception they claim to debunk). It is more of an apple to oranges comparison. Yes, the average worker experiences both wage growth based on increased averages and wage growth from moving from moving up in their occupation but this second part isn't relevant for any policy discussion of wages, any evaluation of overall benefits people get from society, etc. Averages are average wages, changed each year indeed roughly by continuing workers getting a raise, new workers entering the workforce and older workers retiring - this rough average is what families deal with.
And, of course, their "remarkable" statistical observation isn't a situation that began yesterday but has been true for a long time (including times when inflation-adjust wages were higher, etc).
[+] [-] deogeo|7 years ago|reply
[+] [-] rbkillea|7 years ago|reply
[+] [-] fucking_tragedy|7 years ago|reply
Over the last decade, engineer pay certainly hasn't kept up with increases in cost of living expenses, especially in places like SF or NYC.
[1] https://thumbor.forbes.com/thumbor/960x0/https%3A%2F%2Fblogs...
[+] [-] primitivesuave|7 years ago|reply
[+] [-] joe_the_user|7 years ago|reply
This is a statistical effect that has always existed and is fairly well known. Yes, the average worker experiences more wage growth than the statistical value of "growth in average wages" because the average workers starts at the lowest salary in their and gradually progresses higher. That's how individuals experience things but that does not in any way mean that median wages and growth median wages is a flawed statistic. It's reminder for anyone looking multiple measures of income and wealth to look carefully (I've seen economic professors incompetent enough to ignore these but that's a different issue).
[+] [-] witcherchaos|7 years ago|reply
a.) Fed raising interest rates to a normal level. Government bonds are now earning close to some of the faster developing countries, without the risks.
b.) Brexit impacting the growth of EU. Germany narrowly avoids recession....for now. But grew only 1.5% in 2018. There's still the matter of a possible US tariff on EU automobiles. And Italy/Greece/Spain debts are still a thing.
c.) Chinese economy is crumbling. GM dropped crashed 15% in China in 2018. Ford dropped 36%. iPhone sales dropped 13%. Louis Vuitton dropped 20%. Overall car sales dropped 13%. Stock market dropped 22%. Real estate sales in January 2019 dropped 44%.
d.) Asian countries impacted by China's fall. South Korea's export to China dropped 14% in 2018. Japan dropped 8%. Taiwan dropped 10%. Singapore dropped 8%.
e.) Uncertainties and high debt ratio in developing countries, prompting money to seek safe harbor. Tariff and protectionism impacts.
f.) lastly, US is growing at a healthy 3% in 2018
[+] [-] JMTQp8lwXL|7 years ago|reply
Global economies are linked. If China isn't doing well, there's a risk that could spill over into other countries (point D), and that includes the US.
Are we saying that the US is doing well, but China is doing poorly because, all else equal, if the China-US trade discussions do not end well, it harms China more than it harms the US? It would certainly hurt both economies. Costs for goods would rise in the US. US Consumers buy less, consumer confidence slides, 70% of economic activity is consumer spending, etc.
[+] [-] etaty|7 years ago|reply
[+] [-] joncrane|7 years ago|reply
[+] [-] scarface74|7 years ago|reply
[+] [-] munk-a|7 years ago|reply
[+] [-] jaytaylor|7 years ago|reply
[+] [-] appsonify|7 years ago|reply