Or semiconductor salaries need to rise...
Jacking up salaries without bringing the standard of living for the rest of your society will only lead to a continued breakdown of the social fabric that we have been seeing steadily happening over the past 30-40 years.
Salaries have largely stayed the same while prices have risen and that excess has gone to profits. If workers demand more pay and they force the issue, the economy eventually will reach equilibrium.
The issue currently is that those workers can't really do that because the US government has shown time and again that they don't really care that much if a company violates organised labor laws or labor laws in general (you get a fine and a slap on the wrist) but they will bring down god's wrath if workers/a union has an "illegal strike" after the employer ignores their demands.
There is a reason why ever since Reagan took a hardline anti-union stance and disbanded the PATCO union for having the audacity to strike in the 1980s that the number of major strikes per year has steadily declined.
I'm not saying everyone can't get a pay raise, but we can't think linearly here. Semiconductor workers aren't exactly applying for food stamps.
As long as more of the gross profit goes to workers, that's a step in the right direction.
Though I would say the linear solution is paying everyone $6k more, which is much better!
That's now how the lesser paid workers will see it, unfortunately.
>Though I would say the linear solution is paying everyone $6k more, which is much better!
That would be flat (Y = 6000 vs Y = 1.X%). Perhaps better, but I'm not sure if that's been done outside of stimulus checks.
I think what the person up chain was alluding to was to increase minimum wage or similar initiatives. Doesn't help the higher end of the working class but helps out the lower end immensely, and indirectly helps out the middle as well.
- automation, ie order at a kiosk at McDonald's - not hiring for the job because it is not profitable to do.
This is what happens to low skill workers when we make low skill jobs too expensive.
I don't think corporate has ever said "we have too many people who want to work". There will be more jobs out there that can't be automated, at least until we hit Terminator levels of sentience. But by then our robot overlords will solve capitalism for us.
Sounds better than the current situation where the trends are reversed.
Or, notice how ukraine went from "nazi shithole" to "beacon of freedom and democracy" once the war started?
To know how things really are behind the propaganda is basically impossible.
> Of course you will not do that, everyone is a hero on the internet
Well most people don't speak korean…
Start and learn Korean, and then emigrate. Tell us in 30 years time how it went.
I mean it'd be great but is it really feasible?
Salaries for the top 10% or so have increased significantly over the years. Of course it still pales in comparison to how much the incomes of the top 1% increased over the same period (meaning there is enough money/productivity to pay everyone more)
In order to figure out what activities we ought to allocate resources to, we compare their present values as a sum of future cash flows, each period 'discounted' by a rate. The rate is calculated based on the activities risks + a 'benchmark' or 'risk free' rate. Basically "this activity is risky, how much more should it pay than something totally without risk?"
The closest thing we have to that is US debt. US bonds have a set face value and interest rate, but if you buy above/below the face value, the interest will be a higher or lower return on what you paid, 'yield'. US debt is the most active market in the world, so taking the 'yield' shows what rate the global market[0] is accepting 'risk free' investment.
If the market is nervous, more bonds get bought because everyone wants 'safety'. But this drives up the bond price and lowers yield. Lower yields create an incentive to consider 'hey maybe we do something a little risky after all, it pays better.' Vice versa: if the market is buying risky stuff instead of safe bonds, yields go up and people think 'why do something risky if I can get that return with no risk'?
BUT the Fed interferes in this market. They have unlimited power to buy/sell bonds and therefore establish price ceilings and floors[1]. For most of the past 20 years they created a high price floor, which means low yields. This forces society to allocate resources to risky activity with higher returns.
In particular, when rates go down, cash flows in the future relatively contribute more to present value. With higher rates you look harder at the next 20 years. With lower rates, you look more at years 20+[2].
In practice it made any business that can 'promise the future' an attractive investment. Think Big Tech, VC startups, Tesla, Wework, Theranos. Meanwhile, businesses that are less risky and make goods and services now have to compete with those guys for ROI. If you have little hope of growth, and your business is established you have to raise prices or reduce costs somewhere. You can't control what you pay for raw materials/inputs, but you can control what you pay workers.
To further illustrate: Google burns hundreds of billions on projects that never see daylight or get axed after a couple years. How did market forces decide that was a better use of resources than building (relatively) more hospitals and bridges? Fed yield interference.
I'm not saying high rates are good, or low rates are bad. I'm saying rates that don't match market conditions are bad.
[0] Explainer on the bond market for the uninitiated: Big companies can't safely keep a lot of cash as currency because FDIC insurance is meant for individuals and only covers 250k. Instead you buy something 'safe' and very easily tradeable or 'liquid'. In the past, this might have been gold. Now it's US debt, which works better than gold for this purpose (diff maturities, easier settlement, etc.)
[1] These are decided by a committee of 12 individuals, the FOMC.
[2]To see this for yourself, model out a dcf and then add a row where you divide each discounted cash flow by the present value, "contribution to PV". Then, set up a bar chart for this row and play with your discount rate to see how the "time-shape" of PV contributions changes.
I'm even inclined to agree with you: inflation is better and healthier than the financial gimmickry we did in 2008-2010. But the pushback to that seems to be much broader than "Republicans." Biden's approval rating on the economy is at 36%, and it's just 52% among Democrats 18-44. Americans seem to really hate inflation.
Current wages are at the 1993 levels? That's just not true.
https://www.pewresearch.org/short-reads/2018/08/07/for-most-...
Inflation-adjusted wages being flat mean that the quality of life linked to a specific job/profession stayed the same, which is absolutely perfectly fine.
Averages also hide very real disparities: software engineers are much better off today than they would have been 30 years ago; truckers, on the other hand, are much worse off today.
When it comes to housing, it's pretty clear how the Fed's monetary policy drove those costs in areas where it is scarce. Luckily counteracting that is simple given political will, at least in principle.
How can that be done without either stoking massive inflation or somehow paying someone else less?
They might indirectly own it, but it is other folks getting rich off of their money.
Realistically, no one should have risk when paying into pensions/retirement for later and it should be somewhat promised. The entire system is reprehensible as it stands.
Prior to that retirement funds were primarily handled by pensions where the company or organisation you worked for put away money for you in a fund and for the employee there was little to no risk that this money would disappear or diminish in value. Behind the scenes the company may invest it in various ways but it was generally a "low risk" retirement fund.
The reason why every company and organisation (other than a handful of government orgs) got rid of pensions and switched to investment based retirement funds was because the risk got moved away from the company to the employee and as a result it was cheaper to operate.
And as an added bonus, now any time we want to consider raising wages or improving things for workers at the cost of shareholders profits, companies can turn around and argue "this is hurting retired people".
So no of course not I don't think retired people should be getting fucked out of the funds they've been paying into for their entire careers but they shouldn't be paying into those funds in the first place. Unless they explicitly opt into that risk, they should be getting access to a pension with guaranteed payout by default.
This is firmly opt-out at this point. Who offers pensions anymore outside of State/Fed (how reliable do we expect those states to be in the coming decades). You can't demand a company provide a pension so it's on you to invest for your retirement ... into what?
Companies don't provide pensions anymore because it is always cheaper for them to provide a 401k or IRA and offload that risk. People only let them do it because we had fairly substantial periods of prosperity where relying on the stock market seemed "guaranteed" even though it is anything but.
What I'm suggesting is that not providing a pension shouldn't be seen as acceptable. I don't know if I'd suggest going as far as mandating it by law but I think workers should be demanding a right to a pension for themselves and all their fellow workers at a given org or in a given industry.
The labor movement is having a bit of a revival at the moment so hopefully unions can start pushing for Qualified Direct Benefit Plans (aka pensions) to be a standard again.
> how reliable do we expect those states to be in the coming decades
The federal government provides guarantees for qualified pensions through the Pension Benefits Guarantee Corporation (https://www.pbgc.gov). Even if the states fuck up, those state employees still get their pensions.
That's the important point. The costs and risks are on the org. They can guarantee the pension with low risk investments or dollar equivalents and have effectively no risk or they can try higher risk investments in an effort to save money but at the end of the day the employee/pensioner gets the amounts promised from the beginning.
1. They can allocate measurably portions of it to low risk investments, bonds, etc.
2. A qualified direct benefit plan (which is referred to as a pension) has guarantees attached to it. Even if the company goes completely under and all that money bursts into flames, the PBGC (https://www.pbgc.gov/) will guarantee the payout of the pension to the pensioner and foot the bill.
I'm not trying to suggest that there aren't costs that need to be borne by someone but forcing the worker to bear those costs seems like it's quite obviously the wrong choice (they should be allowed to bear it if they want to though).
The other reason you're forgetting about is that you can't count on that company actually being in business to provide your pension when you retire. Or not declaring bankruptcy to avoid their pension obligations, as I believe GM did back in 2008. With a 401k/IRA, you don't have that worry: you can contribute to it, and if your company goes belly-up, no problem (well, not for your retirement funds): your money is still there; you can get another job somewhere else and keep contributing to your retirement.
Also, what happens to your retirement funds is strongly controlled by the SEC, unlike company pensions, so there's much less risk for the employee. Of course, the stock market goes up and down a lot, but that can be avoided mostly by directing your funds into safe investments, though your returns won't be that much.
>Unless they explicitly opt into that risk, they should be getting access to a pension with guaranteed payout by default.
That's what government-run pension schemes are for. Government shouldn't be guaranteeing a pension run by a private company.
I'd imagine the typical stock owner by worth of stock owned not remotely being a retired teacher
But the retired teachers indirect stock was also an attempt to get rid of pensions. Why don't we just support retired teachers as they are, instead of tying their well-being to some rich guys?
Edit: Of course some people are going to have less if we redistribute income in any way. There is no real reason that we have such income disparity. It really seems unfair for a few professions, but mostly because the job can be really stressful. Doctors and nurses and teachers, for example: Then again, not all of these jobs are paid well now and some folks would benefit from some of the distribution.
Not that people shouldn't fight to be paid more, just that it has limited effect unless you happen to get paid significantly more than everyone else compared to what things cost now, and hope that continues forever.
That would do nothing to solve the knowledge worker shorter with this chip factories.
Eh, I don't know, if you follow the example of the bay area, jacking up salaries in tech means everyone else paid more money (earning 3k a month means you're upper middle class in France and poor in the bay area). Now if we could fix our housing problem...
Maybe in a poor rural area.
You need to encourage more (efficient) production to make labor better off.
Wages are practically flat.
Software and the internet haven't helped, quite the opposite.
The profits are captured at the top.
1970s, of course, is when the dollar started being backed by nothing more than "full faith and credit".
This is a moving target that can never be met. We can already provide all of that for very cheap if people are willing to accept standards from some decades ago. But they aren't. They want the expensive stuff.
When I was growing up the main part of the meal was potatoes/rice/pasta. Meat was a few times a week (too rarely) and there were no fancy sauces/condiments on it. Why? Because it was cheap.
The three main things which have skyrocketed in price since the 70s are higher education, healthcare, and housing. On top of that, over-credentialized jobs now require bachelor’s degrees for things which used to require high school diplomas. This fact alone has meant that young people today start their careers significantly poorer than their parents did.
Point is, it’s not just about the prices of sneakers and pasta. For all of the most important costs in life, things have gotten much more expensive.
High schools do not maintain any sort of reasonable standards for granting a degree anymore, so it's no wonder businesses require a college degree. We decided everyone needed a HS degree, so we started lowering the standards for it, "teaching to the test", and only focusing on improving the worst quartile students to minimum tested standards. Now the same thing is happening with colleges.
The solution is to fix secondary education, but there's no political will to do that.
My barber, who neither went to college nor inherited anything, lives on a 10-acre property with his wife (who works as a teacher) and two children. His secret? The home is a mobile home (they're saving up to build a real house), and he's in a low COL area with reasonable home prices, with the only real disadvantage being that the rest of the country thinks it's in a "shithole state".
Your statement, properly amended, is as follows: it's impossible to own a home in a highly desirable, relatively low-density area, with many high income earners and lots of inbound migration both internal and external, unless you inherit one. Which of course makes perfect sense, and there's nothing wrong with that picture.
It's actually pretty funny. My old neighborhood was one of those with places with Black Lives Matter signs on every other lawn but approximately zero actual black people living there. Here, there are approximately zero Black Lives Matter signs, but a lot more actual diversity on the ground, with people of different races rubbing shoulders as neighbors, friends, and lovers. There's openly gay people. Everyone minds their own business, for the most part.
Of course, every place has its ups and downs, and there are legitimate downsides to living in a place like this. The restaurant scene is definitely not as good, although I'm sure some of that is due to just the size difference of the cities. But that brings me back to my original point, which is that you can't have your cake (big-city amenities, nice climate, majority politics you agree with) and eat it (houses you can afford right out of the gate as a new participant in the economy), too.
It would be worth their while for "kids these days" to examine whether they'd rather be tutted at and get a cold shoulder every now and then[0] for being a lesbian with purple hair or whatever while having the opportunity to buy a home and make an independent life for themselves, versus having their identity "affirmed" in a place where an actual ownership stake in that society is forever out of reach. I'm not saying there's a right answer here; all I'm saying that it's worth everyone asking that question of themselves.
[0]: And in my experience, it's at most every now and then. The difference in the sociopolitical attitudes between, say, Oregon and Mississippi, is basically just 48% one way and 52% the other, just flipped around. The number of people with similarities are much, much greater than the differences.
That's not going to work in several areas of the world. Which is why we normally make houses.
> the rest of the country thinks it's in a "shithole state".
You mean if he's gay or an atheist he will get shot? Perfectly reasonable to ask people to go live there, of course.
> Which of course makes perfect sense, and there's nothing wrong with that picture.
"I got mine, I don't care if you don't get yours".
You should give speeches, we could bring school children to learn what's wrong with humanity.
> That's not going to work in several areas of the world.
Trust me, this part of the world gets plenty hot in the summer, yet people make do in mobile homes. At least people here are given the choice to suffer through a hot summer in a home they own.
You can set building codes to be arbitrarily high such that nobody will ever suffer the indignity of straying from a 72 degree, 45% relative humidity indoor environment. The only downside to that, of course, is that nobody will able to afford a house.
> You mean if he's gay or an atheist he will get shot?
This is about as accurate as Fox News saying that if you go to San Francisco, roving bands of homeless people will break into your car and take a dump in it, and you'll step on a pile of fentanyl and instantly get addicted.
Unless they don't, of course. Especially considering every year will be hotter than the previous.
>it's impossible to own a home in a highly desirable, relatively low-density area, with many high income earners and lots of inbound migration both internal and external, unless you inherit one
Of course it would be nice if everyone got what they wanted, but when it comes to housing it seems to me that everybody wants to live in the same places. This drives up the prices in those areas because only a limited amount of people can live in a given area.
I don't see how you can fix that with any policy. As long as everyone wants to live in the same place the cost of living is going to be expensive there.
Do you mean hot as flying lead hot?
Sorting out the supply chain here is a pretty critical issue that makes sense to tackle in isolation.
While we do want general welfare to improve that wasn't the topic in the thread.
If you want to buy bread in a supermarket, but the bread is more expensive than you would like it to be -- hey, that's the market price, deal with it.
If a company wants to hire a specialist, but the specialist is more expensive than the company would like them to be be -- attention people, our society has a serious problem that we need to solve immediately by reforming education and immigration and whatever else might be necessary.
Maybe because it is impossible in practice?
I'm an EE trying to move from embedded SW to higher level (backend/dev-ops since I had some experience with that and with python), and all I get are rejections ("sorry, thanks for your application but we can't move forward with it since we have so many quality applicants with more experience to choose from").
To me it seems, the current market doesn't seem to favor career switchers at all. Companies seem to be looking for seniors or at least mid level experienced in their area of work, so switching careers does indeed seem to be impossible right now. Or maybe I live in a bad market.
Unfortunately for me, now's the best and only time, as I was laid off. I have to do what I can. Looks like it's time to overinflate the resume to stand out. Wish me luck.
>Two years ago
Two years ago was a temporary anomaly in many markets, not just employment, that we may never see in the near future.
Their actions the last 30 decades and even 40 are easily Googled
They’ve collided with government to expropriate worker wealth, or more accurately, propagated the myth a mathematical minority are the keystone to physical reality itself
They’re only a few mere mortals and their riches are only possible so long as the majority graciously do not kill them
That could be achieved by pursuing production for use, not profit. Municipal collective ownership works quite well for utilities (like ISPs) and housing. Regional collective/co-op food production can work well too. Nationalised transportation and medicine works in many places. And so on.
It only takes the workers to be sufficiently well organised to obtain the means to produce in this way.
Instead, let’s cut the red tape and remove the barriers in the parts of the economy that are not following the rules of the market. Do that and prices will decrease.
Experiments with collectivisation have failed to serve the needs of the capitalist class, for sure. It's why they use union busting, sanctions, coups and invasions to cause such experiments to fail.
Profit is a much-misunderstood concept. Private profit is the best way discovered so far to align incentives for those who produce. As Adam Smith said, "it is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest."
A system that disregards profit and instead relies on some other incentive structure can work in small groups of people for short periods of time; but eventually those other incentives (usually some kind of familial love, a sense of group belonging and solidarity, or similar) run out of steam, and it fails to scale both in size and time.
To paraphrase Churchill, free-market capitalism is the worst system of economics, except for all the others that have been tried.
> Nationalised transportation and medicine works in many places
Only for a certain definition of "works". The Seoul Metro, owned by the city of Seoul, for example, is a huge network of clean, efficient subway lines that millions ride daily to get places. It's really quite nice to use. Under the hood, however, is the fact that they lose a quarter of a billion dollars every year, and is subsidized by taxpayers from around the whole country, most of whom don't even live in Seoul.
I think you mean: "lowering prices raises the rents of every worker"
Maybe WW3 can bring it and keep it for a couple of decades, if we don't all die in the mushrooms.
But yes, inequality has also gone up as you point out. Raising other people's salaries is probably the best way to deal with this while staying in the current paradigm. Although raising chip worker wages isn't going to change inequality - you'd have to apply this to other jobs like retail, food service, custodial, etc.
>despite some ups and downs over the past several decades, today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. And what wage gains there have been have mostly flowed to the highest-paid tier of workers.
https://www.pewresearch.org/short-reads/2018/08/07/for-most-...
Real wage means purchasing power parity, or it should. These two statements cannot be true, if they are using the same definition of inflation:
- Real wages have risen over the past 50 years
- Today's real average wage has about the same purchasing power it did 40 years ago
The methodology must be different.
But until that movement is ready to happen, I think it's fine to acknowledge that the "real" cost of living has risen over the past few decades, while most people's "real" wages have remained stagnant. If it's not salaries, then I think the next thing to look at is the exorbitant housing and rent prices.
A doctor working at a public hospital should be paid much more than us, that are sitting at their computer all day. Yes, doctor wages need to rise, but also SW wages need to fall.
And this is comping from an aerospace engineer with an inflated wage, which, being in Europe, is not nearly as unfairly inflated as in the US.
Doctors do have a credential system that sets them up for a longer more stable career path with few ageism concerns. But all things considered more money now for less time investment is more valuable.
But all in all I think worker's share of wealth shoud raise but that's a bloody question.
The way you're phrasing it now it's like you're imagining that there's some central committee to appeal to in order to change this fact, but I imagine you already know that's not how things work -- so why would you phrase it like that?
lol no. I'm not taking a paycut in a world where CEOs making 400x their bottom paid workers are the ones greedily raising prices across the board.
Until then they don’t have to try so hard to find people, students can see the bad salaries ahead of time yet they study for a decade for these roles regardless.