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Comment by rocketbop | Hacker News Reader

> ...a 6.9% increase since 2020, the report found. But inflation is over 11% since 2020. This isn't an increase. The

I have heard this point made a couple of times recently. Is there any reason why these two values should be the same? It is a point of concern for those on very low incomes who spent all their income and are not able to save anythiny, but if you are on a six figure income and only a portion of that income is spent on groceries and housing then I assume you can still end up wealthier than the previous year.

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The employer is the one taking that extra value, so why wouldn’t the “you already have enough money” argument cut both ways? I also assume management is wealthier than the previous year.

Management is employees, too..

Sure, but can management unionize and get protection? They’re clearly a different class of employee.

So management is employees with worse legal options?..

(A quick search seems to say that managers can't join most unions, but there might be some they can join. There seems to be no legal barrier, but rather that existing unions don't want them, and that managers seldom ask to join.)

There are some unions that allow supervisory employees to join, like AFSMCE (the largest public sector union in the US).

> The employer is the one taking that extra value

I'm not sure that's a reasonable conclusion for most cases. Inflation is not uniform across the board, depending on who your employer is they may not have raised their prices by whatever the average inflation rate was, meaning the company as a whole is taking in less value (based on their prices hikes vs. the inflation rate). So the new value from the inflation rate is not "going" anywhere, it's just not there.

That's not to say you shouldn't argue for raises anyway, but just that it's not like every company is suddenly taking in X% more dollars because the average inflation rate is X%.

"Is there any reason why these two values should be the same?"

Are you producing the same value for the company as you did last year? If inflation is higher, then you are receiving less value via your pay from producing the same or more value for the company.

Is your work in tech supposed to hold a sacred scalar linear multiple of the average labor cost ( read: salary of people who produce food and goods) of life’s necessities?

So many entitled people arguing for an economic caste system…

Arguing that your wage should always match or beat inflation is arguing for defacto permanent income inequality. You’re literally saying your work is always the same amount more valuable than the average labor cost increase incorporated into inflation numbers.

"So many entitled people arguing for an economic caste system…"

I don't see that anywhere in my argument.

"Arguing that your wage should always match or beat inflation is arguing for defacto permanent income inequality."

Do you have an alternative approach? I have not heard any mainstream argument for setting all salaries/wages to be equal.

You have to define income inequality and then determine what level of inequality is acceptable. Should a CEO make more than a worker? In my opinion, probably. Should they make 100x more? I don't think so. If I could make the same money flipping burgers as I can working as a dev (let's say around the median salary of $40k), I'd quit today and most other devs would too. Why should I go to college? Why should I endure the longer hours/on-call? Why deal with the frustration and office BS?

Different jobs make different money because the work carries different value. We should protect those at the bottom and try to make it fair. But fair doesn't mean literal income equality with everyone making $20/hr regardless of job, performance, etc (ie equal and equitable are different).

The fact that workers are seeing real wages decline since the 70s is the problem. If you adjusted them for inflation, then income inequality is not as much of an issue. (You'd still have to adjust capital gains taxes and the real increase in things like executive pay, but at least indexing wages to inflation would have benefited things on the worker side.)

"You’re literally saying your work is always the same amount more valuable than the average labor cost increase incorporated into inflation numbers"

Not if everyone gets the inflation adjustment as they do in that other country - Denmark maybe? The discrepancy can be adjusted by increasing the floor, as that impact will raise the lower end more than the rest of the market (eg the people that need the raise most get the biggest impact while those not at the bottom see minimal effect upto a certain level).

You're literally arguing against yourself. You're saying that workers should not get inflation adjustments. Where do you think that money goes? It goes into the pockets of the executives and the investors (capital instead of labor).

On top of all this, you wrongly assume I'm some high earning person. I make less than $100k and live in a moderately high cost of living area.

Ok, time to put your money where your mouth is. In-N-Out pays its store managers over $100K/year. Their workers make around $25/hour which scales out to $50k/year for a full-time employee.

And trust me, most devs I know couldn't handle flipping burgers. Dealing with customers, dealing with managers, dealing with cleaning restrooms, dealing with late nights/early mornings.

So don't shit on burger flippers...

"So don't shit on burger flippers..."

I'm not. I'm saying if everything paid the same (true income "equality", really equity), then why wouldn't I want to do a job, that is stereotyped as easy and typically low paid? There are tons of burnt out devs who want to quit and do something else.

There aren't any In-N-Out in my state. If I could get a manager position, then I'd consider it (although the range starts below $100k, especially outside of CA).

"And trust me, most devs I know couldn't handle flipping burgers."

Maybe. Many of the devs I know seem like the could (or have). But there are some that seem like they would struggle. I've worked in a warehouse, I've worked in billing, I've worked as a janitor, I've worked retail sales, and I've worked as a house painter. I've even done a weekend gig as a good worker at a BBQ stand. Food service is not my main choice (I'd take that over painting though), but your example pays much better than any of these did. Every job has tough stuff and everyone likes to assume others couldn't do it because they don't have as much grit or whatever, including devs. I think this is mostly just bias.

I switched careers from fast food and restaurant ownership to IT. Almost every dev/engineer/sysadmin I know would last about a week before walking out. We whine about having to do daily standups. Try standing on your feet for 8 hour shifts. I think the people who are stereotyping these jobs as easy are idiots who don't know what they're talking about. The work is tedious, usually hot, with few breaks, with crappy uniforms, with bosses that generally are bad, and with few or crappy benefits.

I brought up In-N-Out because while the job is hot, and probably tedious, the employees seem to genuinely enjoy their jobs. Either that or the management has done an incredible job of brainwashing them.

But for other places, it's not that the employees are any worse than in IT. When I worked fast food in high school, one of my coworkers was the valedictorian in my class who became a doctor on the Navy's dime. Another scored a perfect SAT (in 1982) and got a full ride to Caltech. One guy was so smart, he reverse engineered the displays on some of the kitchen computers to mock the management. We had a real mix of people, both economically and socially diverse. Times have changed, and the US doesn't have as much social or economic mobility, but it was an interesting time.

The only difference I see between the people I work with now, and the people I worked with in my previous life is how much we're paid, and the working conditions. There are assholes in my current company, and assholes in fast food.

I'm saying that if you give everyone a raise matching inflation (all things being equal), the people's wages who rose naturally (and contributed to CPI by virtue of raising labor cost of goods) are no better off than they were before.

My software engineering salary buying less of car/house/food than it did last year is a reflection (in an abstract sense) that my total share of "value" is relatively smaller by comparison to the factory worker, farmer, etc.

In other words: the economy is putting more of a premium on people who make things that everyone buys than it did the year prior. My take is that this is totally ok. The value of goods, services, and labor relative to one another change over time. Raising my salary in precise lockstep with the increase in cost of goods will only lead (indirectly) to more inflation.

Put another way: The company isn't compensating you in Abstract Adjusted-for-Buying-Power Compensation Units. They aren't guaranteeing your work entitles you to the same lifestyle every year, year after year.

They're compensating you in dollars. If your best argument for an 11% raise is that "stuff is more expensive", it's a lot less convincing than "I'm 11% more productive".

It sucks that things are more expensive, but if the alternative is freezing everyone's relative buying power where it's at right now, I'd prefer not to do so. Because I think that people growing my food and making things in factories deserve to get ahead, but in order for that to happen, (all things being equal, even if you drove profits and executive pay down to some "acceptable" level) costs of things might have to increase.

All that is a super abstract and hand-wavy argument ignoring really important factors over the past several decades. Now of course, the reality of the situation is that a lot of productivity increase went straight to the top instead of improving compensation. But wage-inflation for all doesn't solve that.

But in my abstract hypothetical scenario: - where the only relevant factors to CPI are labor cost - and we've effectively max'd out productivity per worker - so wage increases aren't offset by output

then I'll take increase costs relative to my personal lifestyle if it means less people with essential jobs living paycheck to paycheck. I don't want everyone on the same salary, but in a scenario where vampire squids aren't sucking all excess wealth out of the system, I'm ok with my tech salary being relatively closer to farmers and factory workers. (or really arriving at whatever unmolested market price makes sense)

"My software engineering salary buying less of car/house/food than it did last year is a reflection (in an abstract sense) that my total share of "value" is relatively smaller by comparison to the factory worker, farmer, etc"

That's true if that factory worker or farmer is also getting a raise. It can still be true if those workers are getting raises higher than inflation even if you as a dev gets an inflation adjustment. The thing I was saying is that I should get inflation adjusted and those other people should be getting more than inflation adjusted by moving up the floor.

"it's a lot less convincing than "I'm 11% more productive"."

It can still be convincing if the company is able to charge 11% more for the same output you are producing.

"Now of course, the reality of the situation is that a lot of productivity increase went straight to the top instead of improving compensation. But wage-inflation for all doesn't solve that."

Not entirely, but maybe a little. The fact that the top are absorbing the increases while the workers absorb inflation is the problem. If wages are inflating as they are now, the at least puts pressure on the top to stop sucking up the extra to stay competitive. Maybe. I can't imagine how good life could have been if real wages hadn't decreased for the past 50 years.

"I'll take increase costs relative to my personal lifestyle if it means less people with essential jobs living paycheck to paycheck."

I'd rather make the top pay. I don't make all that much.

Some stores are evening paying store managers $200k per year now (read it in an article about a month ago).

Inflation is a measure of the price of the basket of goods. Let's say all prices stay the same except that gasoline is up 100%. This will be measured as "overall inflation" but it isn't like the business you are working for is raising prices or taking in more revenue than before. If everybody says "well inflation is X% so we need to raise prices and salaries by X%" then inflation will necessarily rise beyond X% because that X% was driven by different price increases.

People like to think of X% inflation meaning that every dollar is worth less and every product as costing X% more, but this isn't actually how it works in practice.

That basket of goods is supposed to be representative of a person's needs (although there is debate about that). If the person's aggregate purchasing power across the basket went down, then the value of their salary went down. They're receiving less value for doing the same work.

Most things are interconnected. Yes, gas might not directly affect a specific company, but it will eventually due to things like inputs, shipping, etc going up. And yes, even the people on the supplier side getting raises will affect it.

"People like to think of X% inflation meaning that every dollar is worth less"

At an aggregate level that is how it works. The basket of goods costs more. The person's purchasing power has been reduced. The the number of dollars needed to purchase the same basket of goods is higher. So yes, the dollar is worth less. As you point out, not every product costs more, but most do eventually as the effects ripple (some go down, but usually though changes in technology/production/etc).

I understand that the company needs to stay competitive and they would need to increase revenue to increase salary. Usually that isn't a large enough increase to affect competitive prices for the actual workers (executives and management are different). Of course that assumes being competitive with other onshore companies. If competing with offshore companies in LCOL areas, then it's going to be nearly impossible to compete (see things like steel production in the US).

But a company will not usually downward adjust your salary during years of deflation. I think there is some risk management involved.

That would be a valid explaination if it checked out. However, real wages have declines for the past 50 years. We also see way more inflation than deflation.

The main issue is that all of your dollars, even the ones you save, are worth less.

Let's invent our own unit: the "grocery-year" -- one grocery-year represents the amount of money needed to buy one year of groceries.

Now let's say I am making $100k this year, and spending $10k on groceries. My annual salary is ten grocery-years (though I'm saving nine of those).

Let's assume that inflation is 10%, but I get a 5% raise. You're absolutely right that my net income will increase in dollar-terms (i.e. I'll spend $11k on groceries now, but make $105k; a $4k net increase). The issue here is that in actual purchasing power, my salary has gone down: my annual salary is now only 9.54 grocery-years.

Obviously not everything experiences the same rates of inflation, but the idea here is that inflation affects all of your income, not just the income you're spending. Likewise, my actual purchasing power will decrease if my raise doesn't match inflation, regardless of how much actual purchasing I do in a given year.

Yes that's fair. My point wasn't that high inflation does not matter or that it does not affect people on higher incomes. The rate of inflation and the rate of wage increase, however doesn't necessarily need to be pegged for everyone, as the real effect of high inflation is inversely proportional to income.

I like this analogy. Going to start using it as a metric in conversation.

On a six figure income here. Most is spent on groceries and housing because we have kids.

I was living in a HCOL location with kids and my experience matched yours. I then moved to a LCOL location and I spend a fraction of that.

I've been working remote since long before the pandemic, but I did enjoy some benefits of living in a HCOL (fun events, social life, networking) - benefits that I wasn't using as much after having kids.

If you're in the States you may also consider the benefits of lowering your tax rates + health insurance bill by moving to LCOL country overseas.

There are a few (mostly) english speaking countries with low taxes, cheap properties, low crime with decent public healthcare or cheap good private healthcare.

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