Hacker News Reader

>However, this is a very favorable interpretation of the data. Incomes are going up, but so are prices

The data doesn't agree with you.

http://www.tradingeconomics.com/united-states/consumer-price...

(make sure to click for the 5 year chart to see how little prices have changed)

If you are basing your info off of living in Silicon Valley, Silicon Valley isn't reality.

http://www.economist.com/blogs/graphicdetail/2016/08/daily-c...

Silicon Valley prices are inflated because of artificial supply constraints. When housing is so expensive that unskilled labor can't even afford to live 90 minutes from the city, wages will rise until they can move a reasonable distance from the city and thus prices will rise to accommodate the wage increase.

Here's some counter narrative to this article based on data out of gallup http://www.zerohedge.com/news/2016-09-20/we-havent-seen-grea...

We have just started hitting goals for inflation and job growth so it makes perfect sense that a poll from 2015 will indicate that the public is discouraged.

edit: look at the CPI chart I posted and you will notice the period of deflation in 2015. Deflation is bad.

And here are some facts that speak about zerohedge's credibility.

http://www.bloomberg.com/news/articles/2016-04-29/unmasking-...

Zerohedge merely copy-pasted the original article from gallup http://www.gallup.com/opinion/chairman/195680/invisible-amer...

how to avoid the "zerohedge rebuttal", for future reference

1. go to zerohedge article that raised awareness in the most sensational and comical way since Lehman

2. look for the sources in the zerohedge article

3. quote the source instead

Incomes of those that have managed to get a job are rising because of state-mandated increases in minimum wage - not because of natural market forces. Businesses have two ways to compensate for the higher cost of labor that has been imposed on them: they can hire fewer people, and they can raise prices. Some will do both. But prices will rise - they just haven't yet because most of the increases in minimum wage were fairly recent.

You've edited your top-level comment from "Incomes are going up, but so are prices" to "Incomes are going up in large part due to increases in the minimum wage, which will ultimately cause a rise in prices" in response to friendlygrammar's data. Why didn't you mark the edit, which substantially changes your claims?

Testament to the current political reality: ideology trumps facts.

It's an old saying that democracy depends upon an informed citizenry, but what happens when the citizenry doesn't act in accordance with the information?

Do you have any basis for this claim?

There is none.

It's been "wisdom" for so many years that low taxes and low minimum wage results in increased employment and better prosperity for all. Guess what. It hasn't worked.

And it's a stupid argument to make when productivity is such an important measure that never gets factored in. How productive are workers who can't afford to properly live ?

>prices will rise

While the overall impact of minimum wage increases on prices is far from settled, history has not shown it to lead to the catastrohic increases that are oft-foretold by opponents.

For instance, one full year after Washington's wage increase, we aren't seeing marked price increases [0].

If the effects of the wage increase on businesses was as profound as the doom-sayers wanted us to believe, then a year is certainly more than enough time to have seen them.

>they can hire fewer people

An expanding economy (which is partially fueled by higher incomes), helps to offset displacement of workers. Further, it's not as if businesses were seeking to hire workers they didn't need in any case. In fact, the ever-striving for optimal efficiency and productivity combined with automation is largely to blame for the lower labor demand/stagnant wages that precipitated the need for an increased minimum wage in the first place.

[0] http://www.washington.edu/news/2016/04/18/early-analysis-of-...

Indeed, it surprises me how employers are given so much credit for creating jobs when they're responding to demand. The more people who can (or are willing to) spend money on products and services, the more jobs are created. Businesses may start jobs but it's the consumers that make them viable.

>Businesses have two ways to compensate for the higher cost of labor that has been imposed on them: they can hire fewer people, and they can raise prices.

This is the "big lie" about the minimum wage.

Reality is that profits get hit first and profits get hit hardest.

Business lobbies and restaurant associations spend millions lobbying to prevent minimum wage increases. That would be completely irrational behavior if they could just pass on the costs to the consumer.

The article argues that people are leaving poverty by moving to places with higher minimum wages and through places with large populations increasing their minimum wage. Which means expensive-to-live-in places like San Francisco, DC, New York etc because those are the places with the higher minimum wage. It also means that the places they're moving to will become more expensive because of more demand for housing.

I don't like seeing comments like the parent on HN. Instead of adding to a discussion of economics and poverty, it tries to distract everyone with politics and ideology by throwing around (rhetorically) loud, aggressive and unsubstantiated allegations, inviting a response on that level.

Ideology and anger are not substitutes for facts and reason; they are threats to all the latter have built - as they have been for centuries - and a danger to us all.

"Incomes are going up, but so are prices"

The Federal Poverty Threshold is set annually and is tied to the Consumer Price Index, so if prices go up, so does the poverty line.

Like most government measures of inflation the CPI has an interesting way of measuring of pricing changes, especially in technology. For example, suppose that a 2GB USB flash drive in the CPI basket of goods is discontinued and replaced with an 4GB model at a slightly higher price. The BLS compares this to the price of the old 4GB model and counts this as a price decrease even though most consumers end up paying more, and the same with every other aspect of technology. Now factor in the fact that tech has been stuck in a kind of red queen's race where you need higher and higher spec devices to continue, for example, viewing the same web pages and you can probably see the issue here.

The CPI also makes heavy use of geometric rather than arithmetic means which de-emphasises the goods which have risen most in cost on the assumption that consumers will substitute them for one of the cheaper alternatives, even if they're not substitutes. For example, until 2016 the CPI used the geometric mean for prescription drugs, assuming that if - for example - EpiPens shot up in price consumers would substitute them for other drugs which didn't even treat the same condition. (Notice that this article uses 2015 figures.)

Bring in Robert Reich and Thom Hartman, because the article is yet another piece of low-quality, establishment propaganda aimed at making people feel good about being systematically cheated and glad to incur externalities the rich shift onto everyone else. Furthermore, most new wealth is hyperconcentrating at the very top in a highly unmeritocratic, corrupt fashion, due to advances in technology and the insider-political complex which is able to self-reinforce favorable economic polices at the expense of everyone else, while the middle- and lower-class subsidize the rich with corporate and estate welfare approximately 6x more so than actual welfare. Granted that most jobs and labor can/are being greatly disrupted by technology, people are being freed up to do basically nothing while gains of efficiency aren't being adequately shared to ensure shared survival... there simply isn't enough work to go around any longer while at the same time there is also a massive imbalance in wealth accumulation. I think only a basic guaranteed income, either offered to all citizens voluntarily by the rich or more likely by the state, is one of only a couple of irreducible ways to redistribute money to ensure a minimal standard of living.

I don't find any of your arguments convincing. Despite the off-putting tone of your comment I will address the points you raise.

You suggest that the publication of this article has been timed to coincide with the US election, but the catalyst is clearly the release of the US census data. I don't see any evidence to suggest that the US Census Bureau has a political agenda.

You say that increasing income is going up 'in large part' due to increases in the minimum wage. But this ignores the article's claim that "a main driver behind the impressive 1.2 percentage point decline in the poverty rate ... was that the economy finally hit a tipping point after years of steady, if lukewarm, improvement". Even if we look only at increases in the minimum wage, it seems obvious to me that minimum-wage labour represents a small fraction of total business costs, so such wage increases will only have a small affect on inflation. And the bond market seems to agree: 30-year treasury bonds currently pay 2.33% while the inflation-protected version pays 0.56% [1] so Wall Street expects inflation for the next 30 years will average only 1.77% per year.

You say that the unemployment numbers do not include 2.2 million potential workers who are no longer looking for work. But even if we include these numbers the unemployment rate has still gone from about 11% in 2010 to 6.2% now [2]. That seems perfectly consistent with pulling millions of people out of poverty.

You suggest that 'most' people who have gained insurance under Obamacare cannot afford the high deductibles except for ER visits. But where is the data to back this up?

[1] http://www.bloomberg.com/markets/rates-bonds/government-bond...

[2] The page http://www.epi.org/publication/missing-workers/ says that the 'missing workers' would add 1.3% to the current unemployment rate. Since the number of 'missing workers' is roughly unchanged between 2010 and now I would expect that the difference was also about 1.3% in 2010.

> Most of the "health insurance" this article refers to carries such high deductibles that the people that have these policies can't afford to use them. So they are paying relatively high monthly premiums for coverage that they'll never be able to use except when they go to the ER, which they could have done before Obamacare and without the monthly hit for the premium.

Healthcare in the US is still horribly broken, but Obamacare was a step in the right direction. Many more people now have access to preventative care and though deductibles are still high, hospitalization will be less financially catastrophic than it was without insurance. Overall this should reduce costs as fewer uninsured patients will end up being treated in the ER, reducing costs passed on to everyone else.

A public option would be cheaper than the current compromise.

> Overall this should reduce costs as fewer uninsured patients will end up being treated in the ER, reducing costs passed on to everyone else.

The US has approx. 11 M illegal immigrants (http://www.pewresearch.org/fact-tank/2016/09/20/5-facts-abou...). Can they also access Obamacare coverage? (I seriously hope so!)

The 11 million count is about 10 years old. The feds won't or can't release accurate numbers, though other estimates are at least double that.

> Incomes are going up in large part due to increases in the minimum wage, which will ultimately cause a rise in prices.

Proof of this ?

It's very much debatable that increases in the minimum wage have major inflationary effects.

> go to the ER, which they could have done before Obamacare and without the monthly hit for the premium

This is not a solution. ERs should be for emergencies only.

>However, this is a very favorable interpretation of the data. Incomes are going up in large part due to increases in the minimum wage

This is largely attributable to the fight for 15:

https://en.wikipedia.org/wiki/Fast_food_worker_strikes

Yeah right: TINA, anything left of Reaganism is a rose-tinted delustional pinko socialist infantile temper tantrum. It's all about "poor life choices" and we need to "make whatever your country Great again".

Why did I even wake up this morning to read this?