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Comment by bloppe | Hacker News Reader

Until I see median real income start to actually go down, I just don't buy it.

AI is currently a commodity. Maybe one of the labs will be able to differentiate sufficiently to be able to charge the kinds of premiums they need just to pay back their investors. Maybe, instead, we'll see something akin to the FOSS revolution, where large, high-quality, open training sets are developed to make sure there's always a fair alternative to the big players. Then who actually benefits from AI? Mainly users, not companies.

In many ways, the bar to having a competitive advantage is actually lowering. I reckon in the future, simply avoiding a crippling social media addiction that sucks up 4-8 hours of every day will be enough to get rich.

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If you denominate your income in silly money such as USD, then it won't go down, probably will go up!

However if you start asking questions on how much housing medical and materials it buys, then I think it will squeeze people even more than now.

That's what the "real" in "median real income" means. It measures how much stuff you can buy, not how much currency you have. And it's been going up relatively reliably: https://fred.stlouisfed.org/series/mepainusa672n

Median is obviously flawed here. What should be looked at is wealth distribution.

The rich are getting richer and the poor are getting poorer and anyone with any power is doing their best to accelerate this trend.

https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...

No, the poor are also getting richer: https://fred.stlouisfed.org/series/WFRBLB50107

You're looking at what percent of the total wealth pie do the poor get. But the pie itself is growing, and so is _everyones_ slice of the pie.

Maybe you think its an inherent problem that some people get a bigger percent of the pie than others. But its objectively untrue to say that the poor are getting poorer.

That stat is not real income. The dollars don't matter if they buy less.

Actually, median is exactly what you want. It strips out outliers. It's the "middle of the pack" person. Mean is the one that would be skewed by outliers.

And "the poor are getting poorer" is simply untrue for the last 10 years. They had a pretty bad time from 1980 - 2015, but in the last 10 years, their real income has risen faster than any other quintile: https://www.visualcapitalist.com/growth-in-real-wages-over-t...

Median says very little about distribution and says almost nothing about how the tails are doing (which are real people that are easily ignored).

That page breaks about a second after loading. It's enough time to see the graphic, but not enough to see the methodology for data collection. Can you share how that data is collected? Afaik government sources do not track real income distribution.

https://fred.stlouisfed.org/series/CXU900000LB0102M (47% increase since 2021)

https://fred.stlouisfed.org/series/CXU900000LB0103M (26%)

https://fred.stlouisfed.org/series/CXU900000LB0104M (23%)

https://fred.stlouisfed.org/series/CXU900000LB0105M (22%)

https://fred.stlouisfed.org/series/CXU900000LB0106M (17%)

Yes, the bottom quintile has a lot more variance, but the argument that the poor are being left behind has been really hard to make for the last 5 years. Coupled with high inflation, which erodes the savings of the rich, they're actually getting a bigger slice of the overall pie.

There's a case to be made for "real wages" not capturing what they're meant to capture though, at least if you look at housing [1].

And this isn't even considering the productivity growth over time having a widely asymmetrical distribution, ie not captured by the median person.

[1] https://www.visualcapitalist.com/charted-american-income-vs-...

And the reason for the death of the middle class is regulation that was purportedly to help reduce inequality, like all manner of taxes. I think the solution is obviously to keep trying. That's not the definition of insanity, that's good old fashioned human stupidity, and unlike AI stupidity, human stupidity gets reset back to 100% with every generation. No wonder history repeats itself.

Median is simply a 50/50 centrality measure. When you're dealing with a bimodal distribution you won't learn too much about it with median. So you need something else, e.g. Gini coefficient to characterize it.

As for the real, does it measure housing, insurance and medical as well? Does it measure the safety on the streets? Overall quality of life?

AI will strip what's left of the middle class to bare bones. And the tech lords will call it 'disruption', the fixated adolescents they are.

I agree.

After a decade of "quantitative easing" there is still a shitload of money looking for a spot in the economy that needs it. NFTs, bitcoin mining farms, AI data centers, FAANG stocks, real estate, gold ... These are hedges (or attempts to hedge), but they add little to no intrinsic value to the world's prosperity.

They merely shift and concentrate wealth and power, for the most part.

> Until I see median real income start to actually go down

I'm not sure I understand this, it doesn't feel like what I have "lived" for the least 30 years.

Median real income might not be down statistically, but the purchasing power of professional incomes relative to housing, education, and major life costs clearly feels lower than it did in the mid 90s. An inflation-adjusted six-figure salary today does not deliver the same lifestyle position it once did.

Man... healthcare costs, too. Hell, even computers! Raw computing power per dollar is cheaper than ever, but the minimum spec required to function professionally has risen so much that the real cost of staying technologically current feels higher.

According to a random inflation calculator I found with a lazy Google search, $50,000 in 1996 is about $106,000 today.

Was $50,000 a lot of money in 1996? Did it afford a nice house in a good neighborhood? Or is it that 6 figures just isn't what it used to be?

I had my first house built in the burbs of Atlanta - 2700 square feet 3-2 and a bonus room for $170k.

Going by the house shouldn’t be more than 3.5x your income. That puts the necessary income less than $50K.

Heck I had my second house built in the northern burbs of Atlanta in “the good school system” for $335k in 2016. We sold it in 2024 for exactly twice the price.

I bought my first house in the 90s on a 65k base salary in an ok neighborhood in a great city. Anecdotally anyway.

Sure but you have to run AI on something and today that's basically limited to multi-thosand dollar hardware - the price and effort to entry has to come down to make it make sense for normal consumers to move it out of the cloud to local.

I'm with you. If we all have access to AI then how is that a bridge being taken away?

Doesn't that mean that a single person can more easily disrupt the status quo?

All this stuff about genetics... I just don't think it's relevant at this point. Average intelligence and access to the internet is what most of the world has.

It's the systems of money and law that are taking the bridge away not AI. But someone could invent new systems to replace the ones that don't serve the 99%

Will most people go that far? Probably not. But the bridge is still there - unless they take the AI models away entirely.

I think the only way the rich can stay rich with ai is if they just use AI to convince people that they can't do anything themselves. After all that's what the last century was about with respect to capitalism.

I think my concern would be if the relationship between model intelligence and inference cost was altered very significantly. I sort of feel like we got lucky that AI isn't arbitrarily scalable in a single instance

(i.e. if you could run a single LLM on an entire datacenter and it just immediately becomes a super genius versus running it on the minimum viable hardware i.e. some form of quantization on a local machine.)

Obviously there's a sort of goldilocks zone / most appropriate substrate for an LLM to run on somewhere in between those two extremes (small cluster of tightly coupled flagship GPUs)

So luckily enough the economics appear to work out to make that at least conceptually viable for even private members of the public to afford access to the same order of magnitude of LLM intelligence. But we're already seeing some departure from that.

My concern would be if this curve was altered significantly by a new algorithmic approach beyond or instead of Transformerd such that someone with $200,000 to spare could achieve just like a completely categorically different quality of work, massively magnify their existing wealth advantage, because this would be a threat of the sort being discussed above, namely a pathway to a severe form of modern Feudalism.

You can't just look at real median income. You also need to look at other factors like wealth inequality, housing prices and health care.

housing prices and health care are captured by the "real" part of "median real income". Inequality is not, but as long as everybody is getting richer, I'm less concerned about inequality.

Inequality is still important even if everybody is getting richer (I disagree that everybody is getting richer, but that's a different discussion). Because wealth and power concentrated in the hand of a few means that a few have outsized influence on politics and society, which is very much eroding the fundaments of how a democracy is supposed to work.

Furthermore, there are many studies showing that more wealth inequality results in more consumption in a society. Which is not good for many reasons.

Well, I think in the context of the parent comment, separating out housing would risk overstating changes in its effect on purchasing power because increases to housing would already be captured by inflation (since we're talking about real median income, which is already inflation adjusted)

I agree that housing affordability is a major problem and that looking at it independently could help you quantify if housing specifically has become more unaffordable, but that's a different question then whether the median person's overall purchasing power has declined (considering all of housing, healthcare food etc)

Yes housing prices are captured by inflation, but since housing prices are so different from region to region and city to city, just looking at a country-wide average median income does not say much.

> Until I see median real income start to actually go down, I just don't buy it.

Assuming you're intending "real" to mean the technical definition of "real" which is "adjusted for inflation", its basically been flat since 2019*, and that's using the government's inflation measures which abuse things like basket substitution and other hacks to hide the actual increases in the true cost of living. If you made better assumptions about inflation, you actually would see that median real income is down dramatically already over the past several decades.

Here is a recent video on some of these measurement biases: https://www.youtube.com/watch?v=0B4tgG-CGXU&t=1s

Source: https://fred.stlouisfed.org/series/MEHOINUSA672N

Your assertion that it's "flat" is rather unconvincing after looking at that graph. It's clearly been rising relatively consistently. The dip for covid I think is especially understandable, and it's currently higher than it's ever been.

Maybe your personal expenses are not reflected by the CPI, but you can see for yourself: https://www.bls.gov/cpi/tables/relative-importance/2025.htm

44% housing, 8% medicine, 14% food. I don't see how these number are manipulated to the point of malicious data picking. They also publish their methodology.

Are you blind?

2019: 83260

2024: 83730

2018: 77700

If you actually look at the rest of the graph, you'd quickly notice that 2 year dips are entirely normal. The overall trend is consistent. And it's risen over 5% in the last 4 years. Those are the 4 years since ChatGPT.

It dipped during the covid recession and then recovered to an all time high. Is this your first time looking at an economic chart? It doesn't need to increase every quarter for it to have a very strongly increasing trend.

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