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Comment by nradov | Hacker News Reader

Real wages have risen a lot since 1980 when you include employer contributions to employee health insurance.

It's difficult for me to call those wages "real" when medical costs have been so absurdly gouged to eat up those contributions. Those increases have had no real impact on the average consumer, and is profoundly awful for those without access to employment that provides that insurance

All costs. New roof on the house? $30k. Hail damage on the car? It’s actually totaled. Whatever is in the store? Inflation certainly hit there too.

That's not entirely accurate. Wages are real enough whether paid out as cash, or paid to a third party for the employee's benefit. Some medical costs are unreasonably inflated, but on the other hand much of the cost increase reflects greater capabilities. We can effectively treat many conditions today that would have been a death sentence in 1980, but some of those cutting edge treatments cost >$1M per patient. That doesn't directly benefit the average healthy consumer, but it can help a lot if you get sick.

I do agree that it makes no logical sense to couple medical insurance to employment. This system was created sort of accidentally as a side effect of wartime tax law and has persisted mainly due to inertia.

It’s somewhat misleading to claim that better care today is the reason for higher costs. Most other developed countries have some form of universal coverage and pay significantly less per person. That includes countries like England, Germany and Switzerland which also have advanced healthcare capabilities. Other countries negotiate drug prices, provide budgets for hospitals rather than charging per procedure, regulate medical prices, and have reduced administrative costs (compared to the US which must deal with the complexities of multi-payer).

That’s to say nothing of the fact that millions are uninsured in the US and have limited access to necessary medical treatment, never mind “cutting edge” treatments.

I won't attempt to make the counter-argument on account of being a stranger to America and it's healthcare system, but would point to the existence of this, just in case you haven't seen it.

https://www.youtube.com/watch?v=CeDOQpfaUc8

Even without including employer health insurance costs, real wages are up 67% since 1980.

Source: https://fred.stlouisfed.org/graph/?g=1JxBn

Details: uses the "Wage and salary accruals per full-time-equivalent employee" time series, which is the broadest wage measure for FTE employees, and adjusts for inflation using the PCE price index, which is the most economically meaningful measure of "how much did prices change for consumers" (and is the inflation index that the Fed targets)

How has inflation behaved since 1980?

It rose 2.75% per year (239% over 45 years).

Source with details: https://fred.stlouisfed.org/graph/?g=1JxIa

Can you walk me through how to reach this '239%' number? Thank you.

You can hover over places on the chart to get exact values. In January 1980, the index was at 37.124. In April 2025, it was at 125.880.

Then calculate cumulative inflation as the proportional change in the price level, like this:

(P_final - P_initial) / P_initial = (125.880 - 37.124) / 37.124 = 2.39

This shows that the overall price level (the cumulative inflation embodied in the PCEPI) has increased by about 2.39 times over the period, which is 239%.

The thing that bugs me to no end when talking about inflation in an historical context, is that everyone forgets to consider how the indexes of consumption it's calculated from (PCEPI, CPI, etc.) are NOT static, and very arbitrarily are changed over time, often to make inflation seem lower than it actually is for the consumer.

Overall, historical comparisons of inflation numbers are so imprecise to be practically worthless the longer the timescale. You can expect the real figure to be much greater in reality for consumers, given the political incentive to lie over inflation data.

1.0275 ^ 45 = 3.389

3.389 - 1 (to account for increase) = 2.38 ~ 239%

It's probably worth noting that the "real" in "real wages" indicates that the number is already inflation adjusted.

No, that's not a real wage increase, thats nominal wage. If i make 20k more, but health insurance costs also went up 20k, my real wage did not change. I am no richer.

No, that's a real wage increase. The healthcare system can effectively treat a lot more conditions than it could in 1980. That makes you richer as measured in terms of QALYs.

That's a nice thought but I've only had one physical in the last 15 years. I'm sure others are sitting in the same boat.

These are obviously aggregate statistics and individual experiences may vary. It shouldn't be necessary to point that out.

Not when you account for the insane rise in cost of health care.

Does it correct for housing costs?

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