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Comment by kaycebasques | Hacker News Reader

Now that I’m a bit older (29) it’s fascinating to reflect back on my childhood and teenage years in the context of economic trends. I’ve been interviewing my grandpa to make a biography of his life and it’s mind-blowing to hear about how different the 50s were. A teacher (grandpa) and a part-time worker (grandma) supporting 2 babies and a senior (great grandma), yet still able to buy a home in Millbrae and a plot of land in Tahoe (which my family still has to this day). And then the decline of the 70s, 80s, and 90s, and I put the histories of my mom and dad and their generation into that context. It brings a whole new dimension to my understanding of them.

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The article is misleading in an important respect. While real wages haven't budged much (they certainly haven't declined), benefits, which are tax-advantaged relative to wages, have increased quite a bit. For example, while wages rose 3% since 2000, benefits rose 22%: https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us....

The changes you're talking about regarding quality of life more have to do with increased costs for housing in developed coastal areas. A teacher and a part-time worker can still afford to raise a family today, they're just doing it in Texas or Iowa rather than the Bay Area. You can buy a beautiful 3BR house in a good school district in Des Moines (and frankly, tons of other places in America) for a bit over $200k.

This is key. Total compensation is way up compared to 1973. It's just real average wages that haven't budged much.

Ummmm no. Healthcare costs have gone up dramatically, completely negating the increase in benefits coverage: https://www.healthsystemtracker.org/chart-collection/u-s-spe...

If anything, including benefits, you have less than you did at the start of the millennium.

Though reading the article you linked, I'd be pretty surprised if insurance costs in the USA are not suppressing wages.

In other words, the health care industry in the USA is doubly stealing from those in it. It's flat out affordable, and may be why you didn't get a raise...

> The article is misleading in an important respect. While real wages haven't budged much (they certainly haven't declined), benefits, which are tax-advantaged relative to wages, have increased quite a bit. For example, while wages rose 3% since 2000, benefits rose 22%: https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us....

Despite the article not mentioning benefits, the primary reason for the increase in benefit costs is the skyrocketing increase in cost of healthcare (which is mentioned in the article you provided), which we know has inflated faster than the CPI for decades:

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

The only other significant component of employer-provided benefits, retirement contributions, has if anything been cut back via defined contribution plans of today (i.e. 401ks), rather the generous defined-benefit (AKA pension) plans of the past.

And things like transportation subsidies, etc are marginal compared to healthcare expenditures.

So it's not as if the increase in employers' benefit spending is being experienced by most workers as in increase in utility. Therefore, the spirit of the article, which is that workers have received little real[1] value from the GDP increases of the last 40 years, is still correct.

What the article doesn't address, but your article does, is the fact that wages are recovering unequally, with most of the gains going to the highest earners.

1. I'm not counting ever cheaper electronics and entertainment in my definition of "real".

"Increases in labor compensation are being eaten up by increases in benefits costs" is a different statement than "labor compensation isn't increasing." From the employer's point of view, whether they're spending 22% more because of higher salaries or more expensive benefits doesn't make a difference.

And the implications are different for policy. If labor compensation isn't going up, that suggests a structural problem in the economy. If labor compensation is going up, but it's being eaten up by increasing healthcare, education, and housing costs, then that suggests targeted reforms are necessary in those sectors.

> If labor compensation isn't going up, that suggests a structural problem in the economy. If labor compensation is going up, but it's being eaten up by increasing healthcare, education, and housing costs, then that suggests targeted reforms are necessary in those sectors.

Both are true, simultaneously.

For the majority of workers, wages are historically static despite rising GDP, and that requires reconsidering the structure of the economy (in particular how it has changed in recent decades).

And indeed we need targeted reforms of the highly inflationary sectors.

That is not necessarily true. There is data showing that total compensation is rising at the same level as labor productivity, and the percentage of national income going to labor, when accounting for benefits, has been extremely consistent since 1970: https://www.nber.org/digest/oct08/w13953.html.

If we assume the status quo in 1970 was acceptable, then the data shows no need for "reconsidering the structure fo the economy." Rather, labor compensation grew just as fast as it was "supposed to" but that growth was eaten up by a handful of sectors.

That paper switches out the CPI for a statistic of its own invention, "implicit price deflator for the output of the nonfarm business", which is far more charitable to its conclusion that workers have taken home a consistent percentage of economic growth since the 1970s.

But the paper completely avoids the problem of how those gains are distributed across workers in the economy, that is, it doesn't address income inequality trends at all (the author was an economist for Reagan, so that's not terribly surprising).

Even if the paper's statistics are taken at face value (that labor share of GDP has been consistent since the 1970s) it's simultaneously true that the majority of GDP growth has gone to those at the high end of the income distribution in the time period it covers. You might not call that an economic structure problem, or even consider it a problem at all, but many would reasonably disagree.

A teacher (grandpa) and a part-time worker (grandma) supporting 2 babies and a senior (great grandma), yet still able to buy a home in Millbrae and a plot of land in Tahoe (which my family still has to this day)

I can guarantee you right now, you could buy a home and a plot of land that will be out of reach for most people 40 years from now.

The question is - where will that be? Your grandparents probably had no idea Millbrae and Lake Tahoe would be as popular as they are today.

Hell, in the 1970's, people were leaving SF in droves as people wanted to get out of big cities.

> Hell, in the 1970's, people were leaving SF in droves as people wanted to get out of big cities.

Yeah but they were moving to the peninsula and the south bay, e.g. Millbrae, San Mateo, and San Jose. That's what my family did in the post-WWII period along with many others.

Lake Tahoe has been popular way longer than you are giving it credit for. It's had tourists for over a hundred years, and Squaw Valley hosted the Olympics in 1960.

I don’t disagree, but the wealth in the Bay Area has increased significantly just in the past 20 years.

That probably took Lake Tahoe from “expensive” to “astronomical”.

For sure. Millbrae was farmland back then. My grandpa grew up in SF and had never heard of it. And it took 8 hours to get to Tahoe from SF.

One difference is they didn’t have to think about whether it would pan out in the long run. They needed a bigger house. They could get one 15 minutes away from SF, where my grandpa was stationed at the time.

My grandfather supported nine kids on a single government salary and he took them on a vacation to Cape Cod every year. He was a compliance auditor for a federal agency. He wasn't the only person like this. His experience is totally unremarkable. It's just amazing how well off everyone was back then.

Had a grandfather who was a cookie salesman and lived comfortably, even buying a cottage and boat.

I suspect it was just a bubble though since his parent's generation were mostly farmers working 12 hour days.

My grandpa became a multi-millionaire even though he dropped out of middle school. Born into a working class German family where no one really valued education. Good luck doing that now.

Grammar edit, guess we still don't value education.

He became a multi-millionaire in middle school?

Most certainly meant to write 'even though he dropped out...'. Though that would certainly be something.

> He became a multi-millionaire in middle school?

Quite doable now for the enterprising middle-schoolers making ASMR and unwrapping videos.

I don't think I understand your point. The majority of multi-millionaires aren't that way because they got a good education and worked a standard job. Most are because they made good investments, started a company, or were born into money. Dropping out of middle school is pretty unrelated to this if you're a smart, enterprising person.

Don't forget luck!

I guess I find the shock that this worked out rather strange. My parents immigrated to this country 30 something years ago. My dad was a salesman and my mother a teacher and they managed to raise two children, send us to private school (catholic, so cheaper than others), pay for music lessons, support my grandparents and aunt who lived with us for a while, and sponsor my entire family. And they owned their home and bought land.

The fact is that americans are not very frugal people and waste their money. If immigrants who came to this country in the 80s managed to do this, there is no excuse for a native born American. My mother even went to college again because her degree wasnt accepted and she wanted to be a teacher. Thrift and sacrifice go a long way

>no excuse for a native born American

Racial disparities along with systemic racism could provide an explanation. Attained education levels as well. Just some thoughts.

Immigrants' racial makeup would, on average, predispose them to more systematic racism (in the negative direction) than native-born Americans, no? Unless I'm misunderstanding what you're trying to say.

The comment is vague, but I interpreted systemic racism as a function of slavery > failed reconstruction > black codes > sharecropping > 100-year effort to legislate the 13th, 14th and 15th Amendments > Civil Rights Act of 1965 > manipulating property titles/deeds to circumvent legal protections around right to own property > mass incarceration... small points debatable, but clear historical and empirical through line since late 18th century.

EDIT: All of these things affect immigrants of color (who may come from worst circumstance) but they have a “blank slate”, not fighting a legacy.

A friend of mine's grandparents retired quite comfortably after selling the Chinese food restaurant they ran for many years. They were farmers in China but after the second time an invading army took everything they decided not to stick around for the third strike. They showed up in a dying rust belt city without the ability to read and write English, say nothing of cultural differences and they did just fine.

The point of this anecdote is to point out what we often take for granted. Even if a sizable minority of Americans are subject to systemic racism native born Americans at least have the ability to transact business in English which gives them a pretty good head start and I think that on average that more than make up for a systemic disadvantage applied to a fraction of the population.

Worth remembering that housing (and I presume land) is far more expensive than it used to be.

https://www.census.gov/hhes/www/housing/census/historic/valu...

Perhaps that's true, but given my parents immigrated here at 30 with no money, and managed to do it, I don't feel that is really an excuse for me, since I have an 8 year head start.

Like I said, thrift. We were certainly poorer than our friends and had less stuff. Americans do not like that idea.

We also got this little thing called Prop 13 in California between then and now.

That and we figured out how to make really tiny transistors and the entirely new industry set up shop here.

For sure, there’s myriad factors. And the Bay Area has its own unique history. My main idea is that studying economic history has provided a rich layer of new understanding about the lives of my family.

A teacher in 1950 is not the same as a teacher in 2019. There were less teacher's then, the value was more. We will be saying the same for programmer's too. In 2019 a programmer made a lot of money, but in 2089 a programmer can't afford a roof over their head...

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