Is There Wage Stagnation?

[Highmark]

  Not long but good read none the less.

https://thenewamerican.com/is-there-wage-stagnation/

Many economists, politicians and pundits assert that median wages have stagnated since the 1970s. That’s a call for government to do something about it. But before we look at the error in their assertion, let’s work through an example that might shed a bit of light on the issue.

Suppose that you paid me a straight $20 an hour in 2004. Ten years later, I’m still earning $20 an hour, but in addition, now I’m receiving job perks such as health insurance, an employer-matched 401(k) plan, paid holidays and vacation, etc. Would it be correct to say that my wages have stagnated and I’m no better off a decade later? I’m guessing that the average person would say, “No, Williams, your wages haven’t stagnated. You forgot to include your non-monetary wages.” My colleagues Donald Boudreaux and Liya Palagashvili discuss some of this in their recent Wall Street Journal op-ed, “The Myth of the Great Wages ‘Decoupling.'”

They start out saying: “Many pundits, politicians and economists claim that wages have fallen behind productivity gains over the last generation…. This story, though, is built on an illusion. There is no great decoupling of worker pay from productivity. Nor have workers’ incomes stagnated over the past four decades.” There are two routinely made mistakes when wages are compared over time. “First, the value of fringe benefits — such as health insurance and pension contributions — is often excluded from calculations of worker pay. Because fringe benefits today make up a larger share of the typical employee’s pay than they did 40 years ago (about 19 percent today compared with 10 percent back then), excluding them fosters the illusion that the workers’ slice of the (bigger) pie is shrinking.”

The second comparison problem is a bit technical, when the consumer price index is used to adjust workers’ pay for inflation while a different measure (the gross domestic product deflator) is used to adjust the value of the nation’s economic output for inflation. Harvard University’s Martin Feldstein noted in a National Bureau of Economic Research paper in 2008 that it is misleading to use different deflators. Boudreaux and Palagashvili point out that when more careful measurements have compared worker pay (including the value of fringe benefits) with productivity using a consistent adjustment for inflation, they move in tandem. The authors say: “The claim that ordinary Americans are stagnating economically while only ‘the rich’ are gaining is also incorrect. True enough, membership in the middle class seems to be declining — but this is because more American households are moving up.”

Many economists and other social scientists determine well-being by looking at income brackets instead of people. When one looks at people, he finds considerable income mobility. According to a report by the Department of the Treasury titled “Income Mobility in the U.S. from 1996 to 2005,” there was considerable income mobility of individuals in the U.S. economy during that period. Using Internal Revenue Service tax return data, the report says that more than half of taxpayers moved to a different income quintile over this period. More than half of those in the bottom income quintile in 1996 had moved to a higher income group by 2005. The mobility also goes in the opposite direction. Of the highest income earners in 1996 — the top one-hundredth of 1 percent — only 25 percent remained in this group in 2005. The percentage increase in the median incomes of those in the lower income groups, between 1996 and 2005, increased more than the median incomes of those initially in the higher income groups.

Boudreaux and Palagashvili conclude that “middle-class stagnation and the ‘decoupling’ of pay and productivity are illusions. Yes, the U.S. economy is in the doldrums, thanks to a variety of factors, most significantly the effect of growth-deadening government policies like ObamaCare and the Dodd-Frank Act. But by any sensible measure, most Americans are today better paid and more prosperous than in the past.”

 

Walter E. Williams is a professor of economics at George Mason University. To find out more about Walter E. Williams and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.

[motonoggin]

Lmao. 

 

[motonoggin]

You know who articles like this really serve? 

Communism. 

This kind of delusional thinking and equivocation will only quicken the demise of capitalism and enhance the inevitably of communism  

This is why communists say capitalists are their own gravediggers. 

[teamgreen02]

40 minutes ago, motonoggin said:

You know who articles like this really serve? 

Communism. 

This kind of delusional thinking and equivocation will only quicken the demise of capitalism and enhance the inevitably of communism  

This is why communists say capitalists are their own gravediggers. 

Go prove the success of communism once in the history of the modern world.  Then maybe we can take a look.

Look at the current list, all Utopia's in your mind I'm sure.

[Catalina]

I think when we talk about wage stagnation, you really want to consider if your buying power is higher or lower over time. If I get a 3% raise each year, but my contribution to health insurance went up 8% every year, I am not going to get very far ahead. It is one step forward, one step back. 

If overall inflation is right about 3%, and I get a 3% raise, I am treading water at best in terms of buying power and my ability to improve my lifestyle. 

 

That is how I would define wage stagnation. 

[Mainecat]

Anyone notice when talk is of raising the minimum wage it’s the minimum wage earners fault for rising costs. It’s never the engineer whos salary has risen 50% over the last 10 years.

Yeah your fast food burger will now cost you 4.50 instead of 4.00 ….it’s the end of the world.

[Roosting]

1 hour ago, Mainecat said:

Anyone notice when talk is of raising the minimum wage it’s the minimum wage earners fault for rising costs. It’s never the engineer whos salary has risen 50% over the last 10 years.

Yeah your fast food burger will now cost you 4.50 instead of 4.00 ….it’s the end of the world.

do you understand any topic above the grade 3 level?

[motonoggin]

43 minutes ago, teamgreen02 said:

Go prove the success of communism once in the history of the modern world.  Then maybe we can take a look.

Look at the current list, all Utopia's in your mind I'm sure.

I'm not here to debate your ill informed opinions and propagandized perceptions. 

I'm literally telling you how to avoid communism, and here you are trying to prove how shitty it is. This neither rebuts nor disproves anything I've said. 

 

[Mainecat]

1 hour ago, Roosting said:

do you understand any topic above the grade 3 level?

it’s simple…..you pay what it takes to hire someone. Even you can understand that Einstein.

Many here ask why we have minimum wage laws. The same bitch 7.50 is too much.

 

[Catalina]

I'm not sure that there are many engineers who have seen a 50% wage increase over the last 10 years (barring promotions/job changes). Most companies have locked in the average wage increase for the same job titles at 2 - 3% per year for quite a while now. 

 

I am all for increasing the minimum a bit. But doubling it will only drive inflation. If the minimum goes (for example) from $10 to $15, the people who are making $15 now are going to expect to get $21. The ones getting $21 are going to want $26, and so on. By that time that ripples through the system, the burger has to be 50% more expensive to pay for all of the increased salaries (not just the minimum wage ones). The minimum wage worker still has to work the same number of hours to buy the burger, or anything else. 

Also - please remember that min wage was never expected to be able to support a family. It is a 'get started' wage. If you are any good at your job, you will likely get more pay after 6 months, then another raise after a year. Couple that with a promotion or two, and you are on your way to a decent pay. 

My first job was in a grocery store. Started bagging groceries, and chasing carriages in the parking lot. After a while I moved up to running the register. Then, stocking shelves. As you got more experience, showed you could treat customers right, and gained trust, they let you handle the money, and move to doing something where they were not watching over your shoulder all the time. Each move included a pay increase. 

I don't thin anyone who is doing a decent job stays at minimum for long. 

[motonoggin]

7 minutes ago, Catalina said:

I'm not sure that there are many engineers who have seen a 50% wage increase over the last 10 years (barring promotions/job changes). Most companies have locked in the average wage increase for the same job titles at 2 - 3% per year for quite a while now. 

 

I am all for increasing the minimum a bit. But doubling it will only drive inflation. If the minimum goes (for example) from $10 to $15, the people who are making $15 now are going to expect to get $21. The ones getting $21 are going to want $26, and so on. By that time that ripples through the system, the burger has to be 50% more expensive to pay for all of the increased salaries (not just the minimum wage ones). The minimum wage worker still has to work the same number of hours to buy the burger, or anything else. 

Also - please remember that min wage was never expected to be able to support a family. It is a 'get started' wage. If you are any good at your job, you will likely get more pay after 6 months, then another raise after a year. Couple that with a promotion or two, and you are on your way to a decent pay. 

My first job was in a grocery store. Started bagging groceries, and chasing carriages in the parking lot. After a while I moved up to running the register. Then, stocking shelves. As you got more experience, showed you could treat customers right, and gained trust, they let you handle the money, and move to doing something where they were not watching over your shoulder all the time. Each move included a pay increase. 

I don't thin anyone who is doing a decent job stays at minimum for long. 

This post is yet another demonstration of economic illiteracy. 

[steve from amherst]

20 minutes ago, Catalina said:

I'm not sure that there are many engineers who have seen a 50% wage increase over the last 10 years (barring promotions/job changes). Most companies have locked in the average wage increase for the same job titles at 2 - 3% per year for quite a while now. 

 

I am all for increasing the minimum a bit. But doubling it will only drive inflation. If the minimum goes (for example) from $10 to $15, the people who are making $15 now are going to expect to get $21. The ones getting $21 are going to want $26, and so on. By that time that ripples through the system, the burger has to be 50% more expensive to pay for all of the increased salaries (not just the minimum wage ones). The minimum wage worker still has to work the same number of hours to buy the burger, or anything else. 

Also - please remember that min wage was never expected to be able to support a family. It is a 'get started' wage. If you are any good at your job, you will likely get more pay after 6 months, then another raise after a year. Couple that with a promotion or two, and you are on your way to a decent pay. 

My first job was in a grocery store. Started bagging groceries, and chasing carriages in the parking lot. After a while I moved up to running the register. Then, stocking shelves. As you got more experience, showed you could treat customers right, and gained trust, they let you handle the money, and move to doing something where they were not watching over your shoulder all the time. Each move included a pay increase. 

I don't thin anyone who is doing a decent job stays at minimum for long. 

nailed it

[motonoggin]

5 minutes ago, steve from amherst said:

nailed it

So you're economically illiterate too, eh? 

 

[motonoggin]

Wages have been stagnant for 40 years, yet over that same 40 years, inflation and prices have steadily risen. 

It's almost as if wages have little to no effect on inflation...

Edited June 11, 2021 by motonoggin

[steve from amherst]

14 minutes ago, motonoggin said:

So you're economically illiterate too, eh? 

 

No, I have common sense. unlike you.

[Zambroski]

Damn!  Moto, @f7ben and MC getting owns like frig in here!!!!!!!!

 

[motonoggin]

11 minutes ago, steve from amherst said:

No, I have common sense. unlike you.

How do you explain that inflation has steadily increased despite stagnant wages, with all your supposed common sense?

[steve from amherst]

33 minutes ago, motonoggin said:

How do you explain that inflation has steadily increased despite stagnant wages, with all your supposed common sense?

Because wages are not stagnant. 40 yrs ago I was a laborer on a prevailing wage job. Earning less then $8 an hr 

Does a prevailing wage laborer earn $8 an hr these days? I think not. 

25 yrs ago a decent framer made 15-17 an hr . Now they earn $30 + . 

Wages are stagnant is a liberal hoax , and you bought it, hook , line and motherfucking sinker.

[f7ben]

37 minutes ago, steve from amherst said:

Because wages are not stagnant. 40 yrs ago I was a laborer on a prevailing wage job. Earning less then $8 an hr 

Does a prevailing wage laborer earn $8 an hr these days? I think not. 

25 yrs ago a decent framer made 15-17 an hr . Now they earn $30 + . 

Wages are stagnant is a liberal hoax , and you bought it, hook , line and motherfucking sinker.

Wage stagnation does not mean the number was static...,it means it didnt keep pace with inflation or even close

Edited June 12, 2021 by f7ben

[motonoggin]

2 minutes ago, f7ben said:

Wage stagnation does not mean the number was static...,it means it didnt keep pace with inflation or even close

Exactly. You'd think someone with some common sense would get that. 

[motonoggin]

1 hour ago, steve from amherst said:

Because wages are not stagnant. 40 yrs ago I was a laborer on a prevailing wage job. Earning less then $8 an hr 

Does a prevailing wage laborer earn $8 an hr these days? I think not. 

25 yrs ago a decent framer made 15-17 an hr . Now they earn $30 + . 

Wages are stagnant is a liberal hoax , and you bought it, hook , line and motherfucking sinker.

Economic statistics have a well known liberal bias...

[motonoggin]

[Ez ryder]

1 minute ago, motonoggin said:

How much of that productivity is automation.  My guess over over 3/4 of it is because if automation and tools 

[motonoggin]

If worker wages had kept pace with worker productivity, we wouldn't have massive debt propping up the economy and the economy would instead be running on real wage based demand instead of all this phony debt.

[f7ben]

4 minutes ago, motonoggin said:

Economic statistics have a well known liberal bias...

My god....if you even so much as hint at experiencing any displeasure with any part of right wing nutballs crystal American castles of their red white and blue sacred cows........well it’s like you lit their fucking grandma on fire.