Everything Is Booming Except for Wages
bloomberg.com
bloomberg.com
This wouldn't explain all of the times throughout history when companies did increase wages during times of economic growth and low unemployment.
This sounds like taking something that looks like a market failure and trying to frame it as a governmental failure.
It can be both a market failure and governmental failure, either because it allowed it or because it is applying bandage solutions that actually do not work long term and not trying to figure out real ones. Alternatively it is bought by the actors causing the market failure.
Just the exploitation of certain properties of the imperfect markets that actually exist is enough for the current situation to occur in absence of arbitrage. Market could be working exactly as modeled given a full model with big information inequality and low labour elasticity.
Maybe the press should focus on U6, who knows.
(except U3 is preferred by employers because it more directly predicts the marginal slack in the labor force...)
Well, to make unemployment vanish by sleight of hand is a choice. That doesn't mean it's not also a trick.
I used the more loaded word "trick" because I believe that they are human scum interested in hiding the problem, not people "making choices about what to measure" in order to better measure it.
If you look at labor force participation and underemployment you'll see those stats have remained the same or even improved in recent years.
https://tradingeconomics.com/united-states/labor-force-parti...
https://www.statista.com/statistics/205240/us-underemploymen...
http://www.stateofworkingamerica.org/charts/underemployment-...
Taking these into consideration that means unemployment dropping seems pretty good.
Yes.
Compared to the previous high ? (2007)
No.
Meaning we're even at the level when I entered the workforce (~2000) ?
No.
Meaning compared to when I was born ? (~1980)
Oh my God, no.
And then we're not even getting into why people use the term "secular stagnation".
So I guess it depends on how you look at it. Or rather it depends on how you pick your comparison. Given that most of the people that lost their jobs in the 90s, 00s are only now, after 10 years of serious problems, exiting the workforce into retirement, I'd say a lot of folks are thoroughly f-cked.
Not that anyone minded - QE was considered a success and allowed the businesses it protected to stay afloat
But I do think it could setup the next recession to be harsher.
Recessions in the 70s and 80s were bad, but pretty short. Businesses went bust, assets were dumped for pennies, and then 18 months later it was done.
There’s some healthy clean up and fresh starts that happen after a typical recession. I guess time will tell what works best.
Personally I don’t think the business cycle of boom and bust can be solved with debt in the long run.
Consider the bloodbath in retail. Amazon possesses so many structural advantages at this point that other retail companies are forced to do everything they can to keep costs low. A raise in wages could very easily make them even more uncompetitive with Amazon.
In retail, consider Costco, who are known for paying decent wages and benefits. As a result of that, they have less shrink/theft and are able to compete.
In technology, consider any big name tech firm. Chances are they understand what skills they need to be competitive and are willing to pay for them - creating upwards pressure for tech folks.
What good are increasing wages if it is accompanied by inflation that negates those increases?
The truth is that the minimum wage worker today is able to purchase a LOT more than they could in the past.
The only two costs that have gone up disproportionately are housing and healthcare. The former is due to bad government policy that encourages homeownership as an investment. The latter is due to cost disease.
Except for energy, housing, health care, and education. But besides that sure, android phones are cheap!
It's not just electronics that are cheaper. Things we take for granted now - owning a refrigerator, a car, heck even things like electricity and plumbing - were out of reach for many people a matter of decades ago. Sure many of these things were made in good old 'Murica back then and created low-skilled jobs - but these products also cost a much larger percentage of the average household's available income.
You're also ignoring the immense benefit that free global markets provide for countries other those in the First World. China's shift to a free market economy singlehandedly halved global poverty. We tend to index heavily on the American that needs to change fields when his job is "shipped overseas". Rarely do litanies against free markets consider those overseas - almost always in a more precarious financial position than the country that is losing low skilled jobs - who get a chance to improve their lives due to free global markets.
I think it's important to view the trajectory of progress not in how is lines up with how reality lines up with our expectations (because any optimistic society will - and should - strive for better), but by seeing how our reality lines with with what used to be reality.
Yes we get it, it's great that we have antibiotics and electricity, but it's completely missing the point. Food, shelter, education, and health are not luxury goods, they are the foundation of a functioning civilization.
Personally, I think free market belongs to a class of spherical cow models.
Nothing. But that’s not the situation we’re in. The implication that your “if” would come true is an argument against any increase in wages ever. but it assumes that we’re in some sort of equilibrium where everyone spends 100% of their money and spends it on the same things.
To get an FHA loan, all sorts of stuff has to be present and in good condition. Zoning requirements, building codes, and the ADA have all jacked up prices. You can't just build yourself a shack anymore.
Example location: Sommerville Massachusetts, where you can't legally build the city today. Nearly everything is in violation. The same applies in Manhattan.
Example feature: We now have to have arc fault interrupters and wired-together fire alarms, even if you can't stand them. For decades we got by with low-cost circuit breakers and battery-powered fire alarms.
People who are living well start to see expensive things as being important, and so they feel that the features should be mandated, and it seems like only a trivial cost... but just like software bloat, it adds up over time. Sellers of the features push for it too. We end up pricing less-well-off people out of the market.
I am simply prohibited from building a house that would have been good-quality construction in medieval times. I can't even build an ordinary house of the 1980s... and even last year's design is often illegal to build. There is a ratchet effect here. Requirements keep getting added, but none are ever removed.
Just because it’s disproportionate doesn’t mean my statement isn’t true.
We need more nuance in our policy than "always incentivise lower prices".
Also, they "can't increase wages if it makes them uncompetitive" doesn't square with "Everything Is Booming[...]" bit.
It’s been like 30+ years. When does the trickle begin?
*Just to clarify, this issue is definitely more complicated than an S&D curve and it is not my intention for this issue to become mired in politics. However it's worth having a discussion about domestic wage stagnation and the decline of the middle class in the US, and how it relates to the past 30 years of trade liberalization and increased immigration rates.
What an amazing and completely original scapegoat. Even if it were true, using a 7th grade economics to describe the entirety of U.S. employment economics has to be a joke, right?
How is it not a scapegoat to say immigration is the cause of flat wages?
Flood your economy with low skilled labor at the same time that average GDP growth is at an all-time low and productivity growth is at an all-time low. See what happens.
If your economy isn't growing fast enough to absorb the amount of low skill labor that you're importing, you're going to considerably depress wages.
In more realistic terms, 1.5% to 2% GDP growth isn't going to get you anywhere. You have a stagnant economy at those growth rates. Finally then the mistake is being made of throwing a lot of new unskilled labor on top of that at exactly the historical time when you need a lot of new unskilled labor the least.
I am not an economist but immigration rates and the relaxing of barriers of trade between nations would seem to be the most impactful policies on domestic wage growth. You can always argue that these policies have helped to lift the rest of the world out of poverty, but it doesn't belie the fact that increased immigration rates impact on wage growth for American workers. Maybe someone could shed more light on this issue, but I would suspect that both issues are inexorably tied.
Immigrants also contribute to the economy. Depending on how much they contribute, immigration can raise or lower wages. The issue is how much do they contribute? Immigration doves argue they are a net gain, while immigration hawks argue they are a net detriment.
Historically, in the long run, immigration has always been a net gain.
An increase in supply will result in an increased supply. But as I've said in another response--adding people to the economy also tends to increase the aggregate demand for labor. It's not a simple function.
I agree, but the contention is the lag between growth in demand and new immigration. More people will consume more and increase aggregate demand, this we agree on. Most new immigrants don't add a lot to domestic consumption especially if they come from a background of relative poverty. So finding that balance is important.
Just to state, I am more for increasing immigration for people with advanced degrees, but when it comes to low skilled immigration I feel that as a nation we owe it to our poorest to look out for their interests as long as wages remain stagnant for their income strata.
Generally this indicates that the effect is too small to overcome statistical noise.
In the long term however, we have good evidence to support that immigration of all kinds is a net benefit to the economy.
> I feel that as a nation we owe it to our poorest to look out for their interests as long as wages remain stagnant for their income strata.
And if immigration is likely beneficial long term, and the short term impact is unknown or at least too small to easily measure, then decreasing immigration isn't necessarily looking out for their interests (or the interests of their children).
Automation will likely play a much bigger role in wage growth over the next decades, but no popular politicians are calling for an ban on self-checkout lines.
What’s the evidence that it is beneficial in the long term?
We have had decades of flat wage growth and large l increases in cost of living.
In the short term it’s clearly negative when you take into account not just wages but increased pressure on housing and infrastructure.
This is the consensus view among economists. If you do some searching it's going to be hard to find anyone outside of far right ethno-state proponents who doesn't believe that long term immigration is a net benefit.
"Economic analysis finds little support for the view that inflows of foreign labor have reduced jobs or Americans’ wages. Economic theory predictions and the bulk of academic research confirms that wages are unaffected by immigration over the long-term and that the economic effects of immigration are mostly positive for natives and for the overall economy." [1]
>In the short term it’s very clearly negative when you take into account not just wages but increased pressure on housing and infrastructure.
This is not very clear. If you take it to the extreme, sure there is some amount of immigration could cause enough such a strain on housing supply and infrastructure that it would be a net detriment. We don't know what the number is, and there is no consensus view that we've come anywhere close to reaching it.
[1] http://budgetmodel.wharton.upenn.edu/issues/2016/1/27/the-ef...
Economists are the modern day equivalent of seers reading tea leaves.
> who doesn't believe that long term immigration is a net benefit.
1) Well the first problem is they are lumping all long term immigration together.
Yet it’s clear that not all immigration is alike. For example:
“the estimated fiscal burden of immigration is five times higher for native residents of California than of New Jersey”
2) The second problem is the focus on wages instead of total economic gain:
“They find a small but positive effect, equal to about half a percentage point, on the average wages of native workers”
And they go on to state the key reason for the lack of wage decline is because native workers are pushed out of lower skilled jobs and go into jobs that immigrants lack the skills for.
They aren’t taking into account the additional costs (whether they be additional study, higher stress, lack of flexibility, etc) to the native born.
E.g. A half percentage point pay rise from a new job is a financial net negative if I have to go to college to get the new job.
3) The third and biggest problem is they give no indication that the kind of immigration the US has is sustainable.
For example can natives continue shifting to communication heavy and education heavy roles without limit?
And if they can’t the article makes it clear that immigration will likely result in wage decline:
“both studies find that earlier immigrants experienced wage declines, on average, of 4 to 7 percent” [from new immigrants competing for their jobs]
Edit: Worse still they don’t even compare low skilled immigrants to the next best alternative. It reeks of bias.
Econ models are good, but their pretty useless to normal people.
For example In this scenario the reason that economist say that immigration is a net positive, is because those immigrants also need
Food Water Clothes Shelter
So the addition of those people ends up increasing total demand.
Econ is brought up to win arguments, while policy is hidden away.
The fact is that wages will go down because automation is crushing it and firms now have the ability to set prices for the market.
Immigration is a convenient concept, but ultimately useless in diagnosing or dealing with the problem.
Problem is America has a lack of good jobs, humans are hard to retrain and most of your welfare and support systems have been systematically gutted.
So the experts are useless because the data is just too complex to make accurate models, but the data isn't too complex for you to use to make accurate predictions?
Or are you saying that the expert consensus is wrong because it's a product of ideological bias, but your conclusions are correct because for some unknown reason you are free from bias?
> but your conclusions are correct because for some unknown reason you are free from bias?
Who said my predictions would be better or free from bias? I also can’t read the tea leaves!
Instead since there is a great deal of uncertainty we should treat immigration as a risk management game.
Low skilled immigration can clearly have major costs to our society and from all available data provides a very limited upside.
And once you invite people into your country it is extraordinarily difficult and in many cases immoral to kick them out.
Basic risk management techniques tell us don’t take high risk low reward actions that you can’t back out of.
I thought you couldn't read the tea leaves? But here you are doing just that.
>high risk low reward
You're the one saying it's high risk low reward. That requires you to do a bit of prognosticating, and if you're predictions are admittedly know better then why should we trust you over the majority of economists?
America has been accepting high rates of non-merit based immigrants for our entire history. The majority of experts say that this has been beneficial. Why should we change the status quo now based on your unsupported and by your own admission, unsupportable predictions?
No I’m not. I’m talking about a possible outcome. I’m not assigning a likelihood to that outcome.
In theory there is some overlap in that I’m saying the odds are not so ridiculous that they can be dismissed out of hand.
> why should we trust you over the majority of economists?
I think you are misrepresenting the majority economic view which as far as I can tell is “more likely positive than not”.
What kind of guarantee do you think economists are offering?
> America has been accepting high rates of non-merit based immigrants for our entire history.
America is a dynamic system.
What would have happened if the Irish who couldn’t get jobs here went on welfare instead of going home?
Could you guarantee the same outcome?
The truth is in the real world lots of things are fine until suddenly they aren’t anymore.
> Why should we change the status quo now
I’m suggesting we apply basic risk management techniques.
The same techniques you would apply on a software project.
The same techniques doctors apply when recommending treatment options. Etc
I’m saying let’s apply a best practice used in medicine, law, engineering, and finance to government policy.
Why do you take issue with that?
With no likelihood, this is completely pointless. You don't know the odds of any outcome, you're just arbitrarily deciding "high risk low reward".
I can bring up possible outcomes as well. Here's one: We don't know what will happen if population growth reverses. The native born American birth rate is below replacement, so without substantial immigration, our population will begin to quickly decline. We don't know how that will affect our economy, but it will likely cause massive damage even if we reverse our immigration policies once we are aware of the damage.
You don't get to arbitrarily decide what the inputs are to the cost benefit analysis and then declare that you're "just applying basic risk management techniques".
I've outlined a possible negative outcome to severely restricting immigration, you've outlined a possible negative outcome to staying with the status quo.
The only way to know which is more likely is to create models and predictions, which you think is futile, but economists tend to agree that my outcome is more likely than yours.
How do you feel about other issues with unknown outcomes? The clathrate gun hypothesis? AI taking over and killing us all?
Should we ban all software development just to be safe....just until we’re sure? Once the genie is out of the bottle, it’s too late to go back. It’s just basic risk management.
Risk management is useless if you insist that all predictions are just reading tea leaves and there is no way to know which outcome is more likely.
Would you play a round of Russian Roulette for $100? The most likely outcome is positive.
> Should we ban all software development just to be safe....
Why do you keep trying to reduce the argument to the absurd?
I haven’t made any mention of banning immigration and yet you are contrasting my position to banning software development... like somebody working on a web browser will magically invent a new master AI.
>Why do you keep trying to reduce the argument to the absurd?
Really?
In your Russian Roulette example, we know the risk, we know the rewards, and we know the probabilities of both.
With regards to immigration, you believe you can't estimate the probabilities, so you've arbitrarily decided that expected the risk outweighs the expected reward.
>I haven’t made any mention of banning immigration and yet you are contrasting my position to banning software development... like somebody working on a web browser will magically invent a new master AI.
So if that's the problem you have with the argument I’ll change it to just banning just AI research?
Let's go another route. Automation through software development has the potential to cause very similar problems to what you think immigration will cause--depressed wages, high unemployment etc…
There’s a big potential downside, we can’t realistically undo it once it’s done. We don’t know the probabilities because the experts can't be trusted. The sheepmullet doctrine says we should ban it (or severely restrict it?).
Think about what you are saying.
What probability of serious harm are you willing to accept in return for a half percentage point pay rise?
You must be certain the chance of things going wrong is almost nil.
What gives you such certainty? Your economics experts certainly aren’t claiming to offer such certainty.
> Automation through software development has the potential to cause very similar problems
At the end of the day it’s a significantly easier problem to manage.
Software can’t vote, get welfare, etc. Software doesn’t have any rights.
And of course even on this much simpler problem we should still apply risk management techniques.
Again, you're completely ignoring the potential negative consequences of severely restricted immigration, and understating the likely positive benefits.
How is that working out for Sweden at the moment?
2. You realize you were replying to a statement that said "In the long term"?
This is not the effect that the term "trickle-down", or "supply-side" economics refers to. Trickle-down economics is a fallacious concept that says if you make rich people or corporations even richer, they will in turn re-invest their riches in things that employ wage-earners. There is no empirical support for this concept, and much empirical evidence that the reverse is true - a vibrant economy requires most of the economic activity to be enriching the lower/middle class wage earners.
The massive flow of capital to e.g. China is simply wage arbitrage combined with structural disadvantage, e.g., no worker safety protection, environmental protection, etc costs.
If you leave out unskilled workers (whose share of capital went offshore), wage growth among skilled American laborers has been very high... which is also what you'd expect from trickle-down.
From the Chinese central bank, which has massively expanded the economy through low interest rates and easy credit.
Wealthy people are are investing their windfalls, but not in production, but rather in rent-seeking FIRE assets. Those assets do not create middle- and lower-class wage jobs, in fact they suck income out of those classes.
> wage growth among skilled American laborers has been very high
You will have to support this with more than just an assertion. The wages for skilled trades, for instance, have not nearly kept up with inflation. Skilled manufacturing, same. Some of the professional categories, like software development, have seen some growth - but the outliers in SF/NY are outliers, not the median nationwide. Doctors net less, lawyers are mostly destitute unless they are in the 10% who make it in biglaw, and so on and so on.
[1] https://www.ft.com/content/45bd8052-59dc-11e8-bdb7-f6677d2e1...
Supply-side economics seems kind of flawed then.
How does it account for automation taking jobs?
The inflation adjusted per capita income transfer for welfare programs has nearly tripled since 1979.
The US welfare state has massively expanded over 30 and 40 years. The rich are paying for that social safety net expansion. The top 20% pay 87% of all income taxes in the US.
Nobody ever wants to talk about these facts because it's unpopular and deflates the propaganda.
US poverty is near an all-time low. Homelessness is at an all-time low. The poor now have near universal healthcare coverage.
The US spends more on welfare programs as a share of GDP than what Australia and Canada do. It'll surpass Switzerland on that metric within a couple of years. The US has a lower homelessness rate than Canada or France and a poverty rate as low as those.
If the rest of the unfounded assertions above are as incorrect as this one, we should completely disregard this comment.
In many republican-controlled states, for instance, it is impossible for a non-disabled male living in poverty to obtain health coverage.
The top 20% pays more taxes because they make 80% of the money and own 80% of the assets in the country. That's how it's SUPPOSED to work.
As a PERCENTAGE of their income they pay much less that the middle and lower class.
The poor have universal health care? WAT. Cant even justify this with a response.
The US spends more on welfare programs as a share of GDP than what Australia and Canada do...but we're behind like 20 other countries. Bizzare cherry picking there.
https://en.m.wikipedia.org/wiki/List_of_countries_by_social_...
This article is from February. Wages, at that point, were increasing a little faster than inflation. They’re now increasing considerably faster than inflation outside manufacturing, which is confronting the twin headwinds of automation and export...erm...difficulties. Fortunately, a solid (and shrinking) minority of Americans work are exposed.
From February 2009, the year after the crisis, through February 2018, when this article was published, average seasonally-adjusted hourly earnings of American private-sector employees rose by 2.2% per year [1][a]. From February through July, the same statistic rose at an annualized rate of 5.9% [b]. The former approximates inflation; the latter dramatically exceeds it.
[1] https://fred.stlouisfed.org/series/CES0500000003
[a] (26.74 / 22) ^ (1 / 9) - 1
[b] (27.05 / 26.74) ^ (1 / (1 / 5)) - 1
The 2007-09 "bear market...lasted from October 9th 2007 to March 9th 2009" [1]. Using the same data as before [2] we find similarly-paltry 2.2% annualized wage growth between October 2007 and October 2017 [a].
Your counterargument is not only inaccurate, it also makes no sense. My argument relies on the former number being smaller than the latter. Picking a low baseline presents my evidence in its most conservative form.
[1] https://en.wikipedia.org/wiki/United_States_bear_market_of_2...
[2] https://fred.stlouisfed.org/series/CES0500000003
[a] (26.47 / 21.06) ^ (1 / 10) - 1
Comparing down is not helpful. The government is supposed to be striving up and not letting things settle compared to a low baseline or slide down.
If you're arguing that the situation is within bounds of some sort of cycle or variance, you get to show evidence for bounded variance (e.g. bands) and arguments on how much of it is normal.
My argument was that wage growth in the last few months has been significant; before that it was insignificant. So yes, the average American is earning more (in real terms) than in the 1800s, 1950s or even mid-2000s. But that wasn’t the argument.
Data on BLS shows wages going from $26.34 in July 2017 to $27.05 in July 2018 [1]. That is 2.7% wage growth.
CPI data from July 2017 to July 2018 shows 2.9% increase for all items [2].
This is negative real wage growth over the past 12-months. It's also worth keeping in mind that these are average wages, so they would be susceptible to wage movements at the higher-end (as there is no upper-bound).
[1] https://www.bls.gov/news.release/empsit.b.htm [2] https://www.bls.gov/news.release/cpi.nr0.htm
(27.05 / 26.74) ^ (1 / (5 / 12)) - 1 = 2.8%
An improvement, but hardly a spectacular one, and nowhere near 5.9%.
Certainly if everyone doubled the wages here more people would come from other states, and more people would come from an hour away that would not otherwise.
It would also bring a lot of people to the workforce that are already here but not willing to work for half of what it costs to live. Whether that is considered magical or not I suppose depends on where you stand as an employer who is losing money because they are not able to be open their posted hours (steak and shake here for example) - or an employee willing to work, but literally can not afford rent, food and transportation, or someone who is being objective and not really affected by any of these things.
Everything is booming indeed, rents, cost of housing and cars, taxes. I think a lot of people want to participate that can not afford to.
But that's the requirement, apparently. At that wage.
Corporations reportedly enjoy a stellar recovery from the great recession. So they can go quite some time without raising wages; it's worked very well for them so far, by demonstration.
Unions are the obvious easy fix [1]. Give the workers some real bargaining power and ability to stand up for themselves.
https://www.epi.org/news/union-membership-declines-inequalit...
Those people who have skills worth money like to negociate.
The great thing about that is everone can better themselves and be worth more.
What makes you say that?
According to the first report I found via Google [1], workers who earn minimum wage make up about 2.3% of the labor force. Wouldn't that imply that almost all employees have at least some bargaining power?
Note: the report seems to only talk about workers paid hourly, I assume the statistic is no worse for full-time employees.
[1]: https://www.bls.gov/opub/reports/minimum-wage/2017/home.htm
So yes, if you can go to your boss and demonstrate your value to your organization and your value above and beyond any replacement they can find, then you shouldn't need a union. But if that's not the case and your work is in any way fungible, then a union can definitely help tip the balance of power between employees and businesses that try to hoard all the profits for the owners.
The second unfolding union-bribery corruption scandal involves the former head of Volkswagen’s (VW) works council Klaus Volkert, a member of the IG Metall. (VW is Europe’s largest automobile manufacturer.) The former director of the VW labor relations department, Peter Hartz, admitted this past January to employing illegal spending accounts for prostitution and luxury trips to Brazil in which Volkert was a principal recipient of the payments. Documents show that Albert Schunk, an IG Metall member of the joint VW-IG Metall labor-management committee and responsible for international relationships for the union, also benefited from the illegal spending account for his trip to Brazil, including monies used for prostitutes. Keep in mind that Hartz was the architect of a set of neo-liberal reforms in Germany which reduced unemployment insurance for German workers. The reform is called Hartz IV and was enacted last year by the SPD-Green government.
Robert Fitch, who was interviewed by Michael Yates in Monthly Review, minimized the first VW corruption scandal as a kind of anomaly within the European labor movement. But such scandals are hardly new: former head of the IG Metall Klaus Zwickel resigned his post in 2003 in the midst of a criminal proceeding lodged against him. His unsavory role on the Board of Directors of the Mannesmann corporation in which departing executives were paid severance payments totaling 57 Million Euros was the source of great media attention, largely because the case involved the most devastating white-collar economic criminal case in the history of Germany. Zwickel agreed to pay a 60,000 Euro settlement and is, according to German law, free of criminal guilt. The timing of Zwickel’s resignation in 2003 coincided with the IG Metall’s first strike defeat in over 50 years.
Fitch moreover maintained that there is “no comparison between European and American corruption. No one has ever charged a European union with being a criminal enterprise.” The recent collapse of the union-controlled bank BAWAG (Bank für Arbeit und Wirtschaft) in Austria, however, would certainly qualify as an example of fundamental union corruption comparable to or surpassing American labor corruption. One German commentator described the scandal as “the downfall of the Austrian worker’s movement.” The BAWAG, the fourth largest bank in Austria, engaged in speculative business dealings in the Caribbean, which resulted in the loss of approximately 1 billion Euros. The Austrian Labor Federation (ÖGB) oversaw the bank, and the running shopping list of inept and criminal activities of the ÖGB could be attributed to a union leadership who were more interested in a wannabe-capitalist banker lifestyle rather than protecting the assets of ordinary rank-and-file members. The ÖGB turned the BAWAG into a criminal enterprise. The illegal practices of the BAWAG have resulted in the loss of the strike fund, an education fund for the children of union members, and an emergency assistance program for members who are experiencing a financial crisis. Union expenditures in Europe are not as transparent as in the United States. Consequently, union corruption in Germany is simply better disguised and therefore unregistered by many American labor journalists and commentators.
https://mronline.org/2007/02/21/where-is-the-german-trade-un...
In 2007, an attempt of a company to influence unions became publicly known that had been unprecedented in the history of German unions.
Already in the late 1970s, the Siemens AG made arrangements to weaken the impact of the DGB. The first goal was to reduce the power of the DGB in the board of directors. The essential execution of this plan started in the 1980s. The Association of Independent Employees (German: Arbeitsgemeinschaft Unabhängiger Betriebsangehöriger, AUB) was founded. As "the other union", the AUB positions itself today deliberately against "traditional unions". Although the AUB has only about 32,000 members, the AUB chairman Schelsky said in 2003: "In ten years, we will be the only competitor in Germany to the DGB." And then his organization was supposed to have stronger political power. After it became public that Siemens had made payments of about 14 million euro to Wilhelm Schelsky, a business consultant and AUB chairman, the offices of Schelsky, Siemens and the AUB were searched by police. On February 14, 2007, Schelsy was arrested on suspicion of offenses in connection with taxes. The payments from Siemens to Schelsky are now estimated to be about 54 million euros. However, direct payments from Siemens to the AUB could not be proven.
https://en.wikipedia.org/wiki/Trade_unions_in_Germany#Weaken...
Trade Union Congress (TUC) puts real wage growth in germany at 0.9%, and real wage growth in the USA at 1.2%
Source: https://www.tuc.org.uk/news/national/uk-be-bottom-wage-growt...
Does that take into account all wage earners? The lower 40% of the country has seen -2.4% real wage growth since the 70's, and the 40%-60% have only seen an increase of 0.5%. These numbers can be severely offset by including all salary ranges, the higher levels of course having actual wage growth but the lower 60% haven't seen anything.
https://www.businessinsider.com/record-median-household-inco...
Enough, it's so misleading and mathematically illiterate it's frustrating especially because it comes from people who pretend they are "data driven."
> One possible reason is that employers are growing increasingly powerful.
For at least half of the 20th century, unions had out of control corruption and cronyism. The biggest unions (Teamsters, etc) were totally controlled by organized crime.
Unions solve a few problems but introduce many others. Unions are also subject to the Shirky Principle[1]
If you are proposing a superior solution, you are supposed to show it is superior. If it is neutral, you should also show it actually is neutral and not inferior.
I'd say that unions provide a controllable and governance alternative to employer wild west. If they are corrupt and crony, this is seen and can be fixed. Markets are not as easily controllable, even with laws.
I am cautiously optimistic that unions can be a net good, but I'm also worried there aren't enough checks to balance them.
I've seen good union leaders, but most of them were corrupt and actively harmed the workers they purported to defend (when they weren't embezzling - and Argentina is even worse).
BTW, I've seen enough handwaving and half-truths about unions peddled by those trying to further degrade them I've stopped seeing arguments against unions as being in good faith.
This is not an argument for or against unions. As I mentioned, it’s likely in your personal interest to unionize if you can.
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Block reference ID: 2f6bf840-a96b-11e8-8a1f-91588296f859Additionally I would probably add "shove your tos where the sun doesn't shine"
An equally simple explanation is that for the majority of jobs there is essentially a wage monopoly/cartel keeping wages low, and workers have significant barriers to moving to different areas. [1][2][3][4]
[1] https://www.vox.com/the-big-idea/2018/4/6/17204808/wages-emp...
[2] https://www.thenation.com/article/does-monopoly-power-explai...
[3] https://ilsr.org/monopsony-labor-blp-episode-42/
[4] https://www.epi.org/publication/its-not-just-monopoly-and-mo...
The point people often overlook is that, by and large, people cannot be easily trained into most kinds of roles that are experiencing strong wage growth. There is no easy way to satisfy a labor shortage that requires several years of training and experience to gain competency. But that is the reality.
Consequently, you have large numbers of $300k jobs that no one can fill and large numbers of people that can't find a job at $50k. These are separate markets.
EDIT: thanks for the correction.
Current inequality involves a larger pie, but with an ever smaller number of people getting the majority of the cake, so that others get the same old portions or less (despite working even harder than a company-man or union worker in the 50s and 60s).
It is far more fruitful to game the disability system than to pursue an actual productive career. - Anecdote: 2 personal fitness instructors with 100% disability. That is $3000 non-taxable dollars a month. For life. -- It is far more fruitful to game a bureaucratic machine than to put your mind and imagination towards fruitful work ~ This is not the same as saying "Throw them out in the street and let God sort 'em out". This is saying that a great and fruitful strategy for future vets is to rape the VA's disability system
: Temporary observations on dynamics that could be gamed to sustainability and ruin by over 10% of the possible working population ~ This is not a mere case of the ruin of commons. This is (at least) partially a manipulation by war planners to grossly underestimate the costs of constant war and constant operations. The costs of the VA are either not calculated in or are grossly distorted/underestimated by planners. It is not an organization for vets. It is an organization to cover the DoD's ass by bribing the living casualties of bureaucratic malfeasance and the normal living casualties in even the most competently executed wars.
I think part of the blame is the regulation around employees. It’s hard to run a small business. Even trying to do something like offer reasonable health insurance can destroy huge amounts of profit. You need to make a lot per employee for it to work.
How do you negotiate for a pay increase when the pay increase is controlled centrally? Every year my increase is not negotiable because it has been handed down to my boss from central HR 5-6 layers of management away.
This has to be a common issue; and the solution is not to simply change companies.
Unions (organize) [1]. Politics (labor regulations) [2]. If you're on a shorter timeline, and regulatory capture isn't in effect, leave with some of your coworkers and cannibalize some of your employer's business. Last option is to simply suffer in silence. That option sucks, don't take it.
(Note: If you're reading HN, this most likely doesn't apply to you. You're a privileged tech worker not facing the same perils of most of the US workforce. You're not my audience. Engage your fellow citizen and learn some empathy and compassion.)
[1] https://www.theatlantic.com/business/archive/2016/08/union-i...
PS: the answer is "because the market has moved and values me at that higher price now", which needs to be backed up with something such as a job offer (dangerous), or better, evidence (my friends with similar resumes are getting offers at that price).
(In other words, it can get you shortlisted and potentially flagged as a troublemaker. Say bye to references. Employers talk sometimes.)
Then you either take that offer or get a decent counteroffer from your current place.
It's a lot of work and inconvenience, which is one reason it actually works.
This is only for a fairly limited amount of jobs.
As a side point I've seen if people have an 'alternate offer' that gets over bid to stay, they'll probably be gone in 6 months anyway so unless there is a specific short-term reason to hold someone I'd not encourage this, but hope companies give generous pay rises as default to underpaid value producing employees. People looking to leave may cite money but there are normally greater reasons the start this path.
Secondly, start looking for another job. Once you have an offer in hand that you'd be willing to accept, you'll be in a better place to negotiate a raise.
As I understand it, in any organization with formalized job classifications, each job classification has a compensation range attached to it. To keep things simple, let's say that each position has a fixed salary attached to it, and that salary is automatically adjusted upwards to match increases in the cost of living. So if you're a Software Engineer 1 (SE-1), and you want to get a raise, you need to become a Software Engineer 2 or higher (SE-2+).
So how do you go from an SE-1 to SE-2+? Figure that out, and you'll have figured out a path to predictably negotiating a higher salary. If you find yourself in a position where the company will is actively help you advance your career, consider yourself fortunate :) . It's not uncommon to work for an employer who doesn't help much with career advancement, and it's often easier to get a pay bump by moving to another company.
What is more of an issue is that the fed will kill the economy to ensure wages don't rise. As soon as there is the slightest sign that wages are rising interest rates will be jacked up - it is only inflation when wages rise, not asset prices.
That's what strikes and things like that are for
It's very interesting how some of the most highly paid contract-based workers in the USA have the strongest unions - actors and professional athletes.
If everyone joined the trades, the supply of trade workers would increase and their hourly wages would go down.
People are not "willing", they are desperate to not end up sleeping under a bridge.
It's much cleaner to tax the employer class's excess income, however it's earned, and redistribute it to "gross up" the worker class to whatever the minimum wage would be. Then employers don't have the option of shifting their investment to automation, self-service, less labor-intensive industries, etc. to avoid the concession.
(minimal wage doesn't work either for the same reason)
Both measures impact smaller employers more too and cause problems for local employers but not global ones.
The good solution would be to either tax local revenue of global companies, hunt the dodges and tariff the imported products (again problematic) as well as imported labour. This stinks of mercantilism of course and could have higher order effects.
What's the alternative? Starving?
A lot of people can’t work or educate themselves out of the circumstances that put them in poverty, and it’s no fault of their own.
That needs several things to fall into place, including lots of perspective from a young age.
Ever tried being born in a single parent family, where the parent is also not the greatest role model (or doesn't have the time, working to feed you) to be?
Heck, who said you can even afford taking time off and going to university or even trade school? Or that you've had enough quality education early on to get through it? And what if you're really not that smart to begin with (which is perfectly normal too)?
Many of my friends from undergrad ended up graduating with a mountain of debt, but unable to find jobs requiring a college degree. This forces them to compete for low income jobs (that traditionally don't require a degree), while in the weak bargaining position of being desperate for money just to stay afloat and short on experience.
Many of my friends from who used to live with their parents ended up moving into a low-end apartment that cost market rates, but unable to find housing that they could actually afford. This forces them to compete for available rentals units (that traditionally don't require an outsized down-payments), while in the weak bargaining position of being desperate for any thing considered a luxury just to stay alive and short on money.
OK, sorry for the crappy rewrite. I'm just upset about the idea that we might look at reducing the levels of education in the United States because our employers don't need them.
Whereas workers needed wage increases to buy TVs, cars, and homes... today just about everything can be financed.
The long-term impact of this is lower savings and delayed retirement (if retiring at all).
It was not possible 20 years to get instantly approved for most credit lines.
Went from $353 -> $345 -> $351 at end of second quarter this year.
The overall trend is still very much up. That being said, even if wages do continue to increase, the fact that only half of real growth is making it to workers is still problematic and could be related to other reasons mentioned in the article.
[1] https://econographics.files.wordpress.com/2013/03/corporate-...
From the perspective of creating a better society, that long term trend of capital increasingly consolidating and rentiering is still dangerous and likely has a breaking point, but so long as real-wages rise for people, it's not as immediately or obviously devastating. Yet, the evidence presented in the article seemed to be pointing to real-wages not increasing, and I'm not sure that's true.
2. Wages != Compensation
Now that low hanging economic fruit has been picked, and almost all land has been found and developed to some level, it's technology that drives growth.
Technology is developed by a small minority of the population with special skills and high intelligence. The median human is not developing technology, and therefore not significantly contributing to growth. You can only capture some amount of the new value that you are creating.
EDIT - why the downvotes? This isn't a political statement, it's an observation.
Those jobs still need to be done. Someone needs to stock your shelves, someone still needs to pick up your garbage, someone still needs to flip your burgers.
What's more likely is the continued political push towards socialism that we're seeing in North America. Whether or not it will alleviate the situation as I see it, I can't say.
You think that's a joke? Or trolling?
History says no, time and time again.
And don't drag Canada in with your crazy politics (I'm not even Canadian :) ).
Examples: Germany after WW1, Russian bolshevik revolution. Probably a few more.
Edit: more simply, anyone working full time in a first world country should not be living in poverty. Once you lose this, you begin falling down the path towards losing "first world country" status.
That's the point. With automation, there are a) more unskilled workers available for hire, and their work is less and less valuable because b) it's going to be automated soon as well and c) because of governmental regulations that make it increasingly hard to employ people in general and make automation even more attractive.
> Edit: more simply, anyone working full time in a first world country should not be living in poverty.
They are free to learn new skills. If they can't because of mental of physical problems, there are options available today.
Better ones: Someone needs to educate your kids, someone still needs to provide physical therapy after your accident, someone still needs to defend you in court.
Anyone can do it, and Amazon disagrees.
The world used to be inefficient, run on paper and phone calls. More and more is being outsourced to tech or foreign soil so less and lis as remains for The “guy that can stick shelves” to do.
We’re left with service or simple labor, which anyone can do, so prices will fall.
It shouldn’t be surprising that the more intelligent always have and always will continue to be more successful and drive discovery and innovation. We actually used to hold these people (scientists, inventors, philosophers, writers, etc) in a high regard. Now that the bar is lower and entry is easier (tech), thenperspective seems to have changed.
What we need now is a balance or redistribution since it’s becoming impossible for those that didn’t win the genetic lottery to prosper. But we need to stay realistic and honest, those with higher intelligence more knowledge (degrees or experience) are preospering and those that don’t aren’t.
I think grandparents comment was distasteful, but let’s talk about the concepts rather than downvote.
We have a lack of growth and economic value added for the majority of the population. This was my original observation. I'm not saying I know what's next or what should be done.
You seriously doubt that’s where things are headed, and yet Venezuela is in that phase currently. Things are stable until they’re not. It is a result of leaving a populace with no other recourse.
If they retreat to islands and citadels, perhaps instead retribution will be taken against the perceived proxies of the tech tyrants who ate the world, the tech workers.
Like Google busses being blocked in SF and Apple vans having their windows shot out on the highway? We’re closer to your prediction than you think.
There are more armed robberies around our town the past couple years, and many more thefts. Sometimes by those who can't afford the area using a rock in hand, sometimes by people working at the establishment.
Sometimes it's the cars and other property in the area, however I've seen more news lately where people are following managers from and to banks to hit the bigger deposits. (recent story shows video of woman being dragged by a car) - and more reporting on how to avoid being "jugged" (I think that was the term)
IT would appear that more and more people are going for higher up the business money chain. Having items fall off the truck and stealing the pittance in the cash drawer is not enough these days,
so indeed, the needle may be moving closer to the pitchforks that people really realize.
I think most people have figured out that it doesn't matter how much you write your politician, or which party you vote for, in most places the cost of living is growing faster than wages.
Squeezing friends and family for living funds only goes so far, and so many groups are going further to the criminal side to get theirs it seems.