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Comment by TheBeardKing | Hacker News Reader

This bullshit article tries to paint a rosy picture of the economy by dismissing proportional median income gains between quintiles and instead argues that absolute income gains of individuals over time is enough evidence to suggest everything is actually great. This chart [1] seems to be the crux of their argument, as in - Surprise! Over 30 years poor people gained an average of almost $30k in income! I sure fucking hope someone who started at minimum wage in 1980 is making $30k more today.

And even though the median income of the top 1% went from $189,000 to $843,000 in that sime timeframe, that's not important because in our sample, the average income of those in the top QUINTILE actually FELL $7k. Guess you couldn't find any 1%ers for your study?

Bottom line - if the economy can't support a living wage for the working class, it's not doing all that great.

[1] https://cdn-images-1.medium.com/max/2000/1*Z5rBoco1CtNVHYZdh...

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Thank you for writing this comment so that I don't feel like a crazy person after reading this article. It came across to me as so obviously flawed that it's hard to even apply Hanlon's Razor to it.

Not once does he mention of any correction for the obvious bias that people make different amounts at different points in their careers.

Using his exact same process, you could also show that the average height of Americans has increased significantly in the past thirty years, possibly up to a foot! Because, duh, people are shorter when they're kids.

If you're trying to measure how the economy is doing over time, you don't want panels, you want to compare equivalent people at different points in time. Comparing a 20 year old in 1980 to a 50 year old in 2010 confounds the differences between 1980 and 2010 with the differences between being 20 and being 50.

There are reasonable criticisms that identifying representative "equal" people over time is hard, but the author's solution seems dramatically worse than all of them.

One huge blind spot in using panel data over a 34 year period is that a lot of the people you are initially looking at are retired, and so do not typically pay as much tax or otherwise need to make the same amount of income to have the same standard of living.

The article is very poorly framed and argued.

Hanlon's razor is an aphorism expressed in various ways, including:

Never attribute to malice that which is adequately explained by stupidity

https://en.wikipedia.org/wiki/Hanlon%27s_razor

From the article: "The study looks at people who were 35–40 in 1987 and then looks at how they were doing 20 years later, when they are 55–60. The median income of the people in the top 20% in 1987 ended up 5% lower twenty years later. The people in the middle 20% ended up with median income that was 27% higher. And if you started in the bottom 20%, your income doubled. If you were in the top 1% in 1987, 20 years later, median income was 29% lower."

In other words, regression to the mean. Of course the poorest people are more likely to gain in income -- when you start at the bottom, there's really only one direction you can go.

You can still have regression to the mean among individuals while society itself is becoming horrifyingly unequal.

Would you please elaborate on this:

> society itself is becoming horrifyingly unequal

https://www.cnbc.com/2018/07/19/income-inequality-continues-...

https://inequality.stanford.edu/publications/20-facts-about-...

https://www.businessinsider.com/inequality-is-deepening-us-e...

Will that do, or do you need more elaboration?

Thanks, I'll check these out. Inequality seems like a fact of life, so I'm wondering what's so horrifying about it.

Edit:

I was really hopeful for this Stanford resource, but I'm not even sure these "are facts that everyone should know".

> 10. Residential Segregation

tldr: Rich people and poor people don't live in the same areas.

> 13. Bad Jobs

tldr: Some people have bad jobs, and if you don't work full-time somewhere you're more likely to have a bad job.

This just seems like common sense. Was anyone surprised by this?

Certainly not horrified.

Not horrifying: When your refrigerator dies and you can go buy another without blinking.

Horrifying: When you misplace a $20 bill and now you can't pay your rent.

It's really simple to understand.

Okay, being poor can be horrifying. But I don't see what's horrifying about the fact that some people have more wealth than others.

The fact that inequality exists is not the problem, it's the severity of the inequality that is the problem.

Take an extreme example - out of a population of 1000 people you have 1 person owning 99% of the wealth, with the other 1% distributed to the other 999. Does that seem like an efficient, properly operating economy to you?

Obviously there is some balancing needs to happen, the trick is figuring out where the fulcrum should sit for the most efficiency.

Inequality is great really. It incentivizes people to give extra effort for a reward. But gone too far, the efficiency of humanity will drop. There needs to be (and there probably is) shifts in wealth to keep things moving. Let's get those moon bases going.

Inequality isn't a problem. Fairness is the problem when it comes to economic growth. People want to have a fair chance, not just one half taking all the benefits.

The fact that it's growing is a problem.

Why?

I don't think it's healthy for a society to split into haves and have-nots. At some point the have-nots will realize that something is not fair there.

Inequality is indeed inevitable, but inequality to this degree is relatively recent. You must have a short memory.

"Of course the poorest people are more likely to gain in income -- when you start at the bottom, there's really only one direction you can go."

But doesn't this claim in itself refute the thesis that all the income gains are going to the top? If we find people at the bottom gaining income far faster than people at the top, which is what my quote claims, isn't that evidence that we live in a just society, not an unjust one?

Firstly as pointed out in other comments they were measuring income. People at higher incomes in the 80s were probably more likely to retire early or "on time". A more representative number would be wealth which I would imagine is probably horrifying in the vein that the parent and grandparent meant. People living hand to mouth in the 80s were probably doing the same in 2014. People who could save probably weren't.

Even just from the numbers presented imagine the lower percentile person who was making say 10k in constant dollars in the 80s. They're making 20k (100% increase) in same dollars in 2014.

Imagining the person in top was making 1,000,000 dollars in constant dollars they dropped 29% so they're now "only" making 750kish.

I know which group I'd rather be in.

No, because what you’re measuring is rate of change vs volume. If you made $1 and now you make $2, that is 100% growth in income. If you made $1M and now make $1.2M that is 20% growth, but in absolute dollars you make way more.

Not from the article: people who were in the top quintile or 1% in 1987 are far more likely to have retired early than those in middle or bottom quintile. Tell me about their wealth, not their income.

> Surprise! Over 30 years poor people gained an average of almost $30k in income! I sure fucking hope someone who started at minimum wage in 1980 is making $30k more today.

Well this is an important part of his argument. The people's wages are not stagnant, but rather they went up an 30K (including inflation). That fact this their wages went up is not trivial.

Not to the overall structure of the economy.

Imagine this: at one high school, there's a 80% literacy rate in the 2008 class. Then it drops to a 60% rate for the 2018 class.

Even if the 2008 cohort may now have a 90% literacy rate, that doesn't change the fact that the school is declining in literacy, and trying to argue otherwise verges on duplicitous.

But that's not a useful fact. People are going to get older regardless of what economic policy choices you make, so observing that people go through economic changes as they age isn't actionable.

By analogy, if you're trying to choose effective dietary policy, a study that shows people got taller over the past twenty years isn't helpful if you measure the same people. All it shows you is that children grow larger as they become adults.

What is the connection between aging and wages? Sure, most people make more money when they get older, but this was looking at ~40 to retirement when people are already at their peak earnings.

I wouldn't take it for granted that the older you are the more you make.

I make less than I did as a junior engineer 18 years ago after accounting for inflation and COLA. Assuming my accumulated experience is worth nothing or I guess it apparently has negative value. Not all ships rise.

Was that large junior wage due to the 2000's cyber boom and was later readjusted to the new reality? Or has your wage actually remained stagnant / rose slower than inflation since that time?

I started at $55K in 2000. That was in line with normal and not part of the dotcom boom.

So you make $80k now or so? What has your career path been like? I can't imagine a senior engineer only making 80k/yr

I make more than that but living in a higher cost of living area nullifies that gain.

It's supply and demand 101, illegal immigration combined with offshoring lowers wages and increases profit margin for the wealthy. Low wage jobs are taken by illegal immigrants, forcing US citizens to take on debt to go to college, where wages are also lowered because there are now thousands of college grads desperate to pay off their debt that can't be eliminated through bankruptcy due to congress being lobbied. A wonderful scam. Same thing with big tech companies pushing for more H1B to push down engineering wages and lower standard of living. This stuff shouldn't even be left vs right, it should be common sense.

Here's bernie sanders talking about how open boarders is pushed by the koch brothers to give them cheap labor

https://www.youtube.com/watch?v=vf-k6qOfXz0

We're rapidly heading towards feudalism 2.0. You can already see it in the Bay Area(and essentially any major urban area) where only the wealthy can afford a home. The majority pay a large chunk of their income to their landlord

Cant see the video now but is Bernie Sanders in favor of the wall then?

Eh.. it's not that obvious to me. H1B is a result of America having widespread problems producing well educated Americans.

My point is that we should be offering citizenship to these people instead of H1B, which is glorified indentured servitude that only benefits giant corporations. Not to mention the blatant fraud in hiring practices companies use to justify more, ie: nobody in the US has 15 years of experience with ReactJS, tensorflow, or another technology that hasn't even existed that long, so we need more visas.

If it was actually about getting talent and not driving down wages we would be giving these people citizenship.

I'd like you to actually cite those claims you've made, because so far you've just repeated a lot of nonsense I hear from people that refuse to back up their arguments with empirical evidence.

Immigration is hardly the issue. Low-wage jobs exist because of the lack of labor protections for workers resulting in companies looking for the cheapest and most efficient labor they can, even if it means tapping desperate people who have no other options.

If you want to fix the problem, you start by increasing the minimum wage and having proper healthcare. Any other complaints about illegal immigration driving down wages is in my opinion deflection. Because if you remove illegal immigration, they'll just move to exploiting the next most vulnerable population (prison labor, people with disabilities etc)

> I'd like you to actually cite those claims you've made

You're making a claim in face of evidence. YOU back it up.

Choose an urban area at random... https://www.payscale.com/cost-of-living-calculator/Washingto... https://www.payscale.com/cost-of-living-calculator/New-York-...

etc - Go wild.

That's not how arguments work. He made a claim without evidence and I called him out on it.

Also effectively telling people to just find the results themselves is not an argument either.

> That's not how arguments work

Saying you believe something in spite of the data, isn't how arguments work. You have the burden. I await your next deflection.

even worse; absolute household income gains over time, not accounting for the increase in person-hours worked outside of the home, nor the corresponding increases in yard work, housekeeping, child care, meal preparation costs....

Well... To be fair - people that use this inaccurate measure dig their own grave. It's not a good metric, by far.

>Bottom line - if the economy can't support a living wage for the working class, it's not doing all that great.

Hasn't the standard of living risen for the working class over the 30 years?

This is an absolute position, has it ever been better the case in the past?

I think you're missing the point of the article.

When you actually follow the same people, the poor see the greater increase in income than the most wealthy. You may poo-poo a $30K inflation-adjusted increase in pay, but that moves someone from the lower class to the middle class.

Isn't that the goal?

That's social mobility, not wage growth. Those are not the same thing.

It's akin to arguing that wage growth is looking at income of a person that was flipping burgers while in school 10 years ago now leads an engineering team.

It's not the same job, not the adequate comparison.

I presume you work in IT related field, so imagine you decided to take a break and be a parking lot attendant... You cannot then quote your own example as an instance of falling wages for IT workers.

You can't have social mobility without wage growth, so I'm not sure what you're getting at.

And it doesn't matter if it's not the same job. The argument has always been about opportunity and the key point of this article is for people who start out in the lowest income quintile, the average wages doubles over time.

That's opportunity.

But this isn't wage growth. When you switch between different socioeconomic profession groups, the wage of your previous socioeconomic group doesn't change because your wages have changed. Socioeconomic group isn't for life, you know. Once you become rich, you stop being poor.

Except that wage growth debate isn't about opportunity. He's trying to argue about oranges, when the initial issue is about apples.

Arguments about wage growth are about costs, productivity and compensation.

As in - if you're 2x more productive at doing the same job, then the gains are deposited somewhere.

The argument in the end is that productivity gains are not distributed at a fair level. Equal isn't ever a requirement for a stable society, fair is enough.

It's just as much wage growth as the typical "wages haven't grown for the lowest quintile", which doesn't track what the actual job was either.

And the folks tracked in this study were from 40 to retirement, so I don't see a change in career being a major driver for the income growth.

Yeah right? I read this and thought 'Yes, wealthy people stay quite wealthy throughout their lives, while poor people work their way into higher salaries.'

Yeah, but this runs exactly counter to the common story that the "rich get richer and the poor get poorer".

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