How Big Firms Keep Wages Low
forbes.com
forbes.com
That is a major reason why wages are kept low. The policy started around the 1970s, and surprise surprise, real wage growth has been flat since then.
The fed & US government is the biggest firm out there.
This is not per se a terrible thing (assuming some mythical scenario where wage growth and inflation are nearly balanced), but it certainly shifts the balance of power from inflation to the _rate_ of inflation, and therefore is easy to nickle and dime until your average worker is almost assuredly experiencing wage growth lower than inflation. Small changes here, small changes there, ones nearly impossible for your average person to have any control over or have any lever over, and largely imperceptable to most people, end up being de-facto theft through the back door.
The concept, apart from the genuine support that existed for it, was certainly pushed by the feds, not out of political support but because they knew what the implications were.
They could drive down purchasing power and families could make up for it by having both parents work.
It's true that when an economy is in deep, possibly structural recession, you can increase wages by reducing the number of workers (this was used in Germany in the 1930s -- when they cut the number of people allowed to work in half the employment rate magically and mathematically doubled). But if you think that there is inherently a finite amount of work to be done (the so-called "lump of labor fallacy") you could also "fix" this problem by adding a day (or two!) to the week end. France tried this by lowering the number of non-overtime hours per week from 40, but it had no real effect.
Instead I think there is general consensus that having more people available to do things promotes economic growth and human freedom.
It has had a pernicious effect: household income has increased because the number of people working per household now averages more than 1. Relying on that measurement has masked the overall flattening of wage growth, which has been quite a bad thing.
I don't know what you mean by this policy being "pushed by the feds"; could you give any examples?
I think what people argue is multifold:
- Households tend to pay for things in terms of budget percentages vs something more rational. Ex: People tend to semiconciously target 30% of their income towards housing, and will upgrade and downgrade their housing accordingly as incomes go up and down. A dual income household will therefore pay approx double the normal price if single family households are the norm.
- The cost of things in some markets, especially NIMBY housing markets, are demand sensitive at the margins since the supply isn't responding properly due to rent seeking structures. So if a new more competitive creature called the dual income household lands on the scene, the price norm will adjust to assume a dual income household vs a single income household as the market price
- Employers consider cost of living in pay to make a competitive offer to employees. If the typical household is dual income, the pressure to pay more to cover this norm is reduced. People quickly figure out that you need to be dual income to pay your rent and have a 'family sized' lifestyle.
- Iterate this kind of model several times over a lot of stuff and you need to be a dual income household in many cases to tread water.
So what you are saying and what others say can both be true at the same time. Dual income norms increase total economic output, but also make it very hard to compete as a single income household on the market, which have other knock on effects such as decreased fertility since all of the 'free' household labor has now disappeared.
Go watch "F is for Family" for a 1970s time capsule of how family life was back then. You have a suburban white single family household living in a house on a single lower-middle class income, with 2 cars, the conflicts that arises as the wife starts working and her previous 'free' household labor disappears and more.
Your example (that you need a nonzero level in order to have something to reduce -- else your only alternative is asset sales which is a much worse option for many reasons) is probably the most important. Another is that measuring the economy is quite inexact (or coarse) and has a lot of latency, so you need a little "sloop" and you want that to be positive rather than negative for the reason you gave. This is no different than any other engineering consideration: you want your characteristic error to be slightly small or slightly large depending on how the piece you're making fits with another. Third, a little inflation encourages investment; if you leave all your money in the mattress it will lose (hopefully only a little) value over time, so you are encouraged to at least put it in a bank, if not into some more productive asset.
In general I think the last point is an important and good one, but a downside is that people who do not have much savings (live paycheck to paycheck) and who have no other defence against downward wage pressure do suffer what you nicely refer to as "de-facto theft through the back door" and that is an overlooked source of real misery. I'm not sure what central banks can do about it though; seems like it should be the responsibility of the actual government.
By the way ultimately the Fed's reductio job description (pace the "dual mandate") is to make the money supply match the level of economic activity as closely as possible, nothing more. If you don't issue new currency but more people are born, consuming more haircuts and building more homes, then you end up with deflation, which causes the economy to grind down and makes everyone miserable. If you issue to much you get inflation which causes the economy to grind down and makes everyone miserable. They have a small number of tools to do it and pretty crude observational tools but still have ended up more consistent than when currency was linked to stuff not at all correlated with economic activity (the availability of metals). Just look at the economic crashes (sometimes more than one a decade) of the 19th century triggered by the gold strikes of California, the Yukon and Victoria, as examples.
But this has become less important, since we now have more direct indicators of what the market itself is forecasting about future inflation - things have improved a lot since the 1970s!
Hold on, I think you're conflating two things. The fed doesn't have the ability to affect wages directly in any way, but it is supposed to use the tools it has to "promote maximum employment, stable prices, and moderate long term interest rates" (called "dual mandate" because "maximize employment" was added in the 70s to the price & interest rate goals; most central banks don't have an explicit employment goal at all.
Indeed the employment mandate was added in the 70s at a time when wage contracts (not something the fed has control over) were often indexed to inflation, which caused a feedback loop.
So 1> the General Theory posits a linkage between interest rates and unemployment, so to some degree changing interest rates will impact wages, depending on what else is going on in the economy, which will affect to some degree hiring and layoff. 2> while wages are taken into account when looking into the economy, they aren't themselves a knob available to the Fed.
The fed basically has only two tools: it can control, indirectly, how much interest banks charge on loans, by setting the rate at which it charges banks to borrow money from them and, more controversially, to actually buy assets. Ideally there's just the right amount of "money" (broadly defined) to match the size of the economy, and they can control the rate of which money is added as economy grows by adjusting their own interest rate to banks. In some emergency situations (e.g 2008 crisis you correctly cite) that mechanism binds up and they actually inject liquidity by buying things (govt bonds) but nobody thinks this is a preferable way to go.
Asset price inflation is not considered preferable to wage inflation in any way.
Source for this: years of reading actual Fed reports and minutes. This isn't secret knowledge, but it is somewhat arcane.
> since 1979, the Federal Reserve has raised interest rates whenever it looked like wages were going to rise faster than inflation. The Federal Reserve, in other words, has crushed wages.
https://www.ianwelsh.net/trumps-continued-collision-with-the...
While you don't see similar raising of interest rates when we have record multi year growth in stock prices
The rates started going up as far as I can see in reaction to wage growth:
https://www.bloomberg.com/opinion/articles/2018-05-17/fed-sh...
The inverse of the current situation happened, ie: If we have record multi year wage growth and the fed only starts ramping up interest rates in response to a recent increase in stock prices, then I would believe what is nominally said about the fed a bit more :p
[1] https://www.npr.org/2018/06/07/617863204/one-in-10-workers-a...
[2] https://thehill.com/opinion/finance/409876-the-hidden-culpri...
I worked for KPMG previously (within 12 months) and made 140k as an AWS Architect (designing the environment and then building it out in the GUI).
This was in Dallas, Texas so good amount of money.
If you’re going into any consulting company as a cloud person or devops person with more than 2 years experience, anything less than 120k isn’t acceptable if you’re a US citizen.
These are the top salaries I’ve seen if you’re committed to living somewhere inexpensive like I am.
This assumes 3 years+ of experience. DevOps is harder experience to get sometimes so just study cloud architecture and engineering which is similar. That whole field lends itself to self-study.
Really I’m a “major cloud provider sysadmin” who learned a few DevOps things over a couple of months (Docker, Kubernetes, a good amount of PHP) to take jobs that offered big salaries...
Cloud Architect / Engineer roles usually will pay at least 20k less than whatever has DevOps in the title.
(Somewhat kidding)
That "DevOps" is supposed to be so easy that an ordinary full-stack developer can pick it up and there is no need for expensive senior system administrators and especially DBAs (="the cloud will handle it for us").
True: when one relies on cloud-provided databases (Amazon RDS), the need for a DBA goes down a bit, especially with a decent support contract from the cloud provider.
But the other part, like how to configure a machine for maximum throughput, how to properly implement failover networking, how to do OS upgrades (and especially with Docker containers, how to keep the stuff in the images updated!) and most importantly how to write a Docker image that does not "just work" but is performant, upgradeable and doesn't place stuff around everywhere totally ignoring LSB... this needs Linux administration experience.
tl;dr: companies label it "devops" to save money for Linux/DB Admins, but this gamble can really fuck up when you suddenly do need the skillset of a real admin.
There is DevOps the practice and philosophy(think agile) in which people with software engineering and systems administration experience work on "the same team" to deliver and operate product and/or services. They form a matrix team with complimentary and overlapping skills.
Then there is DevOps the team. These are typically also staffed with people who have experience in both developing and operating systems. Typically they will not work so directly with the product developers though, and they will be more focused on developer tooling, system automation, and operations.
Finally there is the role DevOps. Most places envision this as a person with both systems and software development experience to work in any of the aforementioned teams. For many they were called "systems engineers" previously and simply go with the title flow. Often they are full-full-stack developers; they also work at the systems/operations level.
Some places have DevOps assembly lines though, and they are staffed and run like a technical support call center.. Or a ticket mill.. You get the idea.
Currently a sys admin in a standard large microsoft server environment with VMware, DHCP, dns and AD as my typical daily tools.
Change jobs to a role that will get you the experience you want. This may seem paradoxical, but no training is like on-the-job training. If you search around for a while you'll find somebody who you can convince that you're capable of doing the job.
I didn't have the background, experience, or credentials that mean most large places won't even look at your resume, but I found a startup that needed the strange role-straddling niche I was interested in and it's amazing. I like almost every part of my job, and the org is still small enough that I can see my work have a significant impact (good and bad).
There are lots of non-remote jobs that pay higher than my current salary, but I don't see that many remote jobs in the $180k to $200k range.
(Apparently this is an unpopular opinion)
An individual’s compensation is dependent on how much people with similar skills, backgrounds, and experiences will accept.
Is this fair?
Nope, and that’s why we have minimum wage. No matter how low the wage is, people will accept the job for the money.
It would be hard(if not impossible) to implement an effective universal minimum wage for international workers, but I don’t see any other solutions.
Some countries implement the above, some don't.
Actually, it's the law... but nobody bothers following it because nobody bothers enforcing it.
https://www.ineteconomics.org/perspectives/blog/how-why-gove...
excerpt:
>That study was a key link in a chain of evidence leading to an entirely different view of the real origins of the Immigration Act of 1990s and the H1-B visa classification. In this alternative account, American industry and Big Science convinced official Washington to put in place a series of policies that had little to do with any demographic concerns. Their aims instead were to keep American scientific employers from having to pay the full US market price of high skilled labor. They hoped to keep the US research system staffed with employees classified as “trainees,” “students,” and “post-docs” for the benefit of employers. The result would be to render the US scientific workforce more docile and pliable to authority and senior researchers by attempting to ensure this labor market sector is always flooded largely by employer-friendly visa holders who lack full rights to respond to wage signals in the US labor market.
Given this view of H1-Bs and general immigration policy it seems quite obvious that they are not intended to have the same salaries as citizens, but rather to be used as a cudgel to keep the citizens in line and not be able to demand higher wages.
I want to be clear, I'm not arguing against your position of what might be fair or moral. I'm certainly not going to argue against equal pay for equal work. I just wanted to add some context along the lines of... I think it's working as intended.
I love immigration, I think immigration is a good thing, I think however immigration policy that encourages lower payments to foreigners working in the united states is bad for everyone but the employers, corporations are not citizens, and shouldn't be the primary beneficiaries of laws like these.
I have a fairly libertarian view on both immigration and income inequality. I'm generally ok with both. I have a harder time understanding people who support fairly liberal immigration while also being concerned about domestic income inequality. You didn't mention the latter, but it seems to me these positions are incompatible.
If you look at the parts of the labor market with the greatest mobility (mostly affordability to relocate), you'll find the highest wages, and I'm reasonably certain this is a causation thing, not merely correlation. Labor mobility will go a long way to fix income inequality.
Well, there is obviously a causal link from higher wages to greater ability to relocate; causation in the other direction is less clear. Intuitively, the employee pool being more free to relocate should create a broader geographic market with common prices, but that means small increases are more effective at drawing in more candidates just as much as it means small decreases will tend to dry up the pool. Assuming merit is easily determined in the field, it probably means wages nationally reflect merit better rather than geography, if merit can't be measured it probably means that wages reflect whatever rough-cut filters employers use to keep hiring manageable. But, still, I don't think it means industry wide better pay.
Everywhere I've worked, non-US persons (i.e. noncitizen and non-green-card) get paid the same or more than us persons. In fact they cost a lot more to hire not just because of the paperwork but all the damned time to get the paperwork processed. If you can find someone local who can start soon why would you choose anything else? FWIW this has all been H-1 and E3.
I understand there are various ways some big companies game the system (various schemes involving contracting out work to other companies in some way). But in 30 years of working in the Valley my experience has only been as I described above.
If $140k was your base, that's good for the area, roughly in the top 10-15% eyeballing it from the salary curve.
Here's mine... Base pay: $127k Real pay: $156k My location: Orlando Employer location: Phoenix Weeks vacation: 6
I will say those numbers on websites are lowered by the vast number of H1-B’s.
Also Indeed is rolling out a salary estimate tool and they’ve had companies call in to complain the estimate is too low and scaring away candidates lol.
I would really really like to know what this is!
This is so fucked
One of the largest problems towards this is the 40 year smear campaign that neoliberals have been on against unions. Somehow they got the working class to believe that each special individual is better on his own when bargaining against a massive corporation.
There's a great book about this effort called Selling Free Enterprise: The Business Assault on Labor and Liberalism, 1945-60.
edit: Here's a snippet from the summary: "In Selling Free Enterprise, Elizabeth Fones-Wolf describes how conservative business leaders strove to reorient workers away from their loyalties to organized labor and government, teaching that prosperity could be achieved through reliance on individual initiative, increased productivity, and the protection of personal liberty."
Just one example - Caesar Chavez's United Farm Workers was destroyed by the Teamsters, since the Teamsters were aligned with farmers (who are mostly big multinationals - hope you don't believe that "small farmer" myth.) So the Teamsters agreed to undermine the UFW actions (by taking away members and offering a short-term sweeter deal, criticizing UFW, then later giving them much worse deals after the Farmers gave them benefits to keep the truckers happy. Keeping Teamster management fat and happy.)
It comes with the territory. I rarely post popular opinions or popular facts. In this case I posted unpopular facts :-)
Organized labor benefits the majority of workers, but not all workers (the top X% would be better served by a free market allowing them to exploit their competitive advantages for personal gain). I just don't believe most people are exceptional (that's sort of the definition of "exceptional") and I'm fine with this outcome.
TL;dr- Doesn't look like anything to me.
However, American Businesses successfully lobbied to change the ways the anti-monopoly laws are used - now the anti-monopoly laws are focused primarily on avoiding consumer price increases and are blind to things like accumulating power to be an abusive monopoly (a la Amazon) or monopsony.
It used to be that I couldn't read a Forbes article without javascript and without either disabling adblocking or trying to circumvent its anti-adblocking attempts, and now reading a Forbes article without javascript is not a problem.
Or perhaps it's been noticed that it is better to reign in some excesses of rising inequality rather than potentially face the annihilation of wealth and chaos of the 1930s and 40s.
No country has ever succeeded in improving the lot of the poor by destroying the wealthy.
Inequality causes dangerous levels of political instability which should be of concern to Forbes' and everyone else.
Does it? I think that's just a hypothesis. I haven't seen any careful research justifying it.
It is clear that when people are literally starving, instability results. But that isn't the same as inequality. Remember that Hillary lost the election despite outspending Trump 2:1. We still live in a democracy, 1 man 1 vote.
You can literally google it and find an innumerable number of papers. Here's one[1] with over 3,000 citations.
>We still live in a democracy, 1 man 1 vote.
You do know she won a majority of votes cast.
More votes than Bush beat Kerry. More than well loved Kennedy beat Nixon who ended up resigning rather than be impeached.
Even more than Gore beat Bush.
So more of a flawed democracy[2] with 1 man, 1-ish vote
[1]https://www.nber.org/papers/w4486 [2]https://en.wikipedia.org/wiki/Democracy_Index
And yet, investment in America has never been higher. Prosperity is up, unemployment is at very low levels, employment of minorities is at record levels.
As for the Electoral College system, that's been around since the US was founded. We've always had a republic. It's irrelevant, anyway, since rich people don't have any more votes than poor people. There was little to no evidence of voter fraud in the last election.
no, but they do have more money, which, thanks to citizens united equals more speech (money equals free speech)
so, iow, they don’t need to vote, just use thier resources to conveniently/trick/extol others to vote the way they want... nice little workaround they found...