The other interesting finding here is that only 57% of these "job stayers" beat or matched inflation, while 43% suffered a real wage cut. A huge chunk of the people who's wages beat inflation only did so due to job hopping
Saw a theory somewhere that, instead of raising the minimum wage, a policy that enables and incentivizes job hopping is what actually works for increasing the median wage level. The inverse implication of the theory is also interesting: any policy that makes job hopping harder than staying would suppress the wage level.
A policy that requires job hopping to get good wages discriminates against people who are less mobile: workers with families, elderly parents, older workers with more ties to their neighborhood, people who don’t have enough savings to move, people who can't afford transportation...
I’m not sure that raising the median wage is even more desirable than raising the minimum wage. If the median wage enables a good life but, say, the lowest quartile is precarious exploitative jobs close to the poverty line then raising the minimum should increase overall happiness more than just raising the median.
Dane here. We don't have a minimum wage. We rely on structural remedies for improving working conditions and wages, and they work far better than a minimum wage. The UK, on the other hand, favours direct intervention. They've been increasing their minimum wage considerably over the years. The result appears to be aggressive wage compression. Meaning very little benefit to people who get degrees and accrue experience relative to someone doing an unskilled, minimum wage job. It also appears to have created a very unfavourable job market for the young. Why hire a young and inexperienced worker for £12.71 per hour when you can hire an experienced worker for £14? Young people with degrees appear to be particularly impacted, since they "wasted" so many years on degrees which yield very little benefit, and they cannot find a job. The UK also has very tough laws about firing employees, meaning companies are incentivised to not take a chance on a young worker.
To your point: yes, people who have a weaker bargaining position in Denmark earn less. However we also have generous social safety nets, so no one ends up destitute or hungry. Ultimately, I think wages should be between an employer and employee (with or without the assistance of unions - we like our unions). If an employee has fewer skills, less experience, is unwilling or unable to move for a job, etc, they should expect to be paid less. This represents materially different value to the employer.
Britain has a few structural issues too, so someone who happens to live in a big city, especially London, will have more opportunities without having to move.
As a tangent, poverty line definitions vary by country, in Australia, for example, earning less than half the median wage is considered below the Australian poverty line.
Worth keeping in mind when doing any apples V oranges country by country comparisons of population percentages in poverty.
As I understand it, that's a fairly common definition for relative poverty (either that or 60%) though of course you're still right that it's best to confirm both the threshold the methodology is the same (or use an explicitly international comparison that covers both/all compared countries in the same work, such as those produced by the OECD or similar bodies).
Why does it have to be a choice? Raise the median, raise the minimum, use wealth created through higher productivity and a healthier labour market to redistribute to some degree, everyone wins?
The frictions we're talking about, like health insurance being tied to an employer, make things worse for families anyway - getting rid of the distortionary regulations that cause that can only be a good thing.
Higher productivity and other such benefits are a leap. I don't think it's unreasonable to assume that people who work at a company longer end up more capable of contributing to that company.
In some ways this could even be an argument for the cause of enshittification of everything. When everything is liminal, it somewhat directly leads to a 'get mine and go' type mindset, which in turn leads directly to enshittification, no longer term than next quarter thinking, and so on. I've always assumed the cause of this all was MBAs, and I still think it's the primary cause, but perhaps we're creating this certain from multiple directions all at once.
That not what the paper says. They're saying that good quality jobs can lead to higher productivity. That's something discovered by Ford way back in the early 20th century when he stepped from the typical 60+ hours of the week down to our now normal 40 hour work week and saw productivity/worker increase at each step down.
For my little hypothesis to be incorrect you'd need to demonstrate that a company with less experienced workers (in terms of years worked at that specific company) is more productive than with more experienced workers. I think that's very improbable.
You should live in France, having to pay 15% of the value of your home to be allowed to move, being cash poor (which means having low flexibility) because 50% of what your company pays for you goes to mandatory social things, taxes and insurances and most of the rest goes to fixed expenses.
In France the minimum wage is roughly indexed on inflation (especially if inflation isn't too high) but getting a raise when your salary is higher than this is very difficult, especially without job hopping. Your employer knows that he can risk not giving you a raise and you can't as easily risk being upset about it.
The US isn't so different. Federal capital gains taxes will eat a minimum of 10% of the appreciated portion of your home value, and more if you're in a higher tax bracket. Many states also tax proceeds on a home sale. I've got a property that I'll be selling soon in California and I expect to pay about $400k in total taxes.
You can sell your primary residence and be exempt from capital gains taxes on the first $250,000 if you're single and $500,000 if married filing jointly.
In addition to the $250,000 (or $500,000 for a couple) exemption, you can also subtract your full cost basis in the property from the sales price. Your cost basis is calculated by starting with the price you paid for the home, and then adding purchase expenses, such as closing costs, title insurance, and any settlement fees.
Also, most (if not all) states do not tax your primary residence unless you go past the federal exemptions.
That's good info, but unfortunately none of it applies to me because I moved out of California eight years ago and the property is not my primary residence.
I reckon California is increasingly democratic but at least you're talking about a tax on some good news. It's still quite taxing because you wouldn't gain any compensation if the home lost value and because a lot of the appreciated portion is probably just following inflation.
The 15% I talked about is on the total value of the home, although to be fair 33+% of people avoid agency fees (about 7%) by selling directly to an individual.
> It wasn’t inflation per se, but the fact that wages didn’t keep up — that’s been weighing down consumer sentiment, he said. His proof: Belgium.
> “It is the only European country that had consumer confidence that bounced back after the inflation period,” Hurst said.
> That’s because it also happens to be the only European country where wage increases are directly tied to inflation. If prices go up by 7%, then by law, so does your salary.
Item 2 seems like a circular argument. If your wages did keep pace with inflation then of course subjectively there is no inflation. On the other hand this does not hold in all situations. In galloping inflation you might as well spend because savings get eroded.
Jurisdictions that require wages increase with inflation maintain purchasing power, jurisdictions that don't are inflating away your purchasing power while empowering capital (unless you're willing to take on more risk to find higher wages, if at all possible to find in the labor marketplace). It's that simple.
This is the standard in the Scandinavian social democracies. They have no minimum wage laws (though unions supplement that greatly) and a competitive labor market pushes wages up.
Much like housing, the best solution usually isn't government price controls. Better (if feasible) is abundance in the market.
They also have a much better safety net. Healthcare not being tied to employment is already massive.
I think a flat tax + UBI is the only way to go. The dream of AI should be a society where maybe 10% of people have to work. The nightmare is if the other 90% still need work but can’t find it.
Healthcare being tired to employment and related lacks of safety net are the only reason the most abusive companies (call centers, common retail experiences) have employees.
We would do well to improve safety nets so that everyone benefits.
Flat tax is only ever flat when you hold down deductions. That’s way harder than it seems.
The corporate veil is extraordinarily valuable to the point where a minimum 10% tax on any money passing through options makes a lot of sense. However, the idea you can pass liability off for free is so pervasive you’d never get something like that to pass. Not because of how good or bad the idea is, but because of how effective voting blocks + donors are.
Yes to a stronger welfare state, including untying healthcare and employment, and a UBI (more specifically a negative income tax).
But I think the nightmare you imagine is not realistic. There isn't a lump of labor. We shouldn't make policy decisions based on the assumption that the labor pool will be limited.
To clarify, that's the demand for labour in farming has shrunk while crop yields per acre have increased.
Three people doing the work required to seed, spray, harvest 4,000 Hectares for assorted barley, canola, etc is commonplace today in areas that once struggled to farm a few hundred hectares with four brothers and a father.
And yet, within the last couple years, the unemployment rate has remained stable within its usual 3-5% healthy band, and the total amount of people employed has increased overall.
Where labor has contracted in some places, it has grown elsewhere.
That metric is so gamed it doesn’t even make sense. If you’ve been out of work for 6 months (or is it 12) you just fall off the metric. So the entire homeless population of the US is not counted as unemployed. That’s been baked into the metric for decades and they have only gotten more discriminatory as to who counts as unemployed since.
There’s no duration for when you’re counted out of the labor force; only when you stop looking for work. Your incentivized to report your looking for work (and provide proof) to get unemployment benefits, and those who opt out of such benefits for more than 4 weeks are not counted as part of the labor force.
I think that’s fair, since even if you are homeless, as long you’re receiving unemployment benefits, you count as part of the statistic.
And there’s good reason to count certain people out of the labor force. Retired folks, stay-at-home parents, anybody else that’s willfully unemployed—if your working in or around government trying to make labor policy decisions, including these people gives you an inaccurate picture of the labor market. If you want to help people get jobs, you need to focus on the people that actually need help.
Of course no statistic is perfect, but broadly, I think that the unemployment rate is a useful and accurate measure. If you think otherwise, I’d invite you to propose a good alternative.
Are you seriously implying that removing people from “unemployed” status after 4 weeks of not submitting a job application is not a deliberate gaming of the statistic in favor of having better job reports?
It’s not on me to invent a new statistic. It is on me to push back on ridiculous claims that minimize the fact that this statistic has been defanged over and over again in the decades since it was first introduced.
The unemployment problem is about people looking for a job and not being able to find one. If someone doesn’t even want a job though, that’s not something you can “fix” anymore.
To include people who don’t want to be employed in the labor force is counter-productive, since why would you try to find jobs for people who don’t want them?
It’s not even that these people are “lazy” like many who (wrongly) disparage the unemployed say. They just aren’t looking for jobs at the moment—stay at home parents, retired people, anybody that doesn’t need/want to work. (And by the way, plenty of homeless people receive unemployment benefits and are therefore included in the statistic.)
The unemployment rate is useful because it helps us see how many people need jobs. If you start including people who don’t need jobs, the metric just becomes less useful.
To your other point, I’m not asking you to invent a new statistic. It’s just that when people say one metric isn’t working, someone smart usually has come up with alternatives. A lot of people for example don’t like using GDP, and thus economists have come up with HDI, GNI weighted GDP, or whatever else suits their taste.
I bring this up because there are few alternatives to unemployment metrics, simply because they are not nearly as problematic as you paint them to be. Practically every competent government on Earth uses the same measures for unemployment, and specifying the labor force to only people actively looking for work is very standard; if you want to say that this nearly ubiquitous method is wrong, I think it’s reasonable to ask what needs to be fixed.
They headline U3 because it's best at answering the question "who is looking for work but can't find it", but of course they use U6. It's literally one of the main metrics in the monthly unemployment report by the Buerau of Labor Statistics. The BLS created the U-# system, and was in fact the first to report a separate U6 metric.
Eurostat, the Internation Labor Organization, OECD--what incentive do all these organizations have to globally misrepresent unemployment? Of course they measure and consider U6, but they choose to headline U3 instead not because it's prettier and they want to serve national propaganda interests, but because it's just more useful.
Didn't we have negative unemployment rate sometime during or right after COVID? I remember people talking about how gamed and disconnected from reality these numbers were because (I think) a bunch of people stopped looking for work or filing for unemployment and were dropped from the labor force for official statistics. It really messed up the models being used.
As far as I understand, that’s (negative unemployment) not possible with the way the statistic is measured. I might be confused though as I’ve never heard of the term.
In any case, COVID was a hellish time for pretty much every economic metric, but for unemployment specifically, the catastrophe didn’t actually end up lasting that long, and the labor market in the U.S. has recovered remarkably well.
Jobs are created by desire, and the labor required to fulfill the market's desires. People won't ever stop wanting things.
Our wants today are vastly different from our wants a hundred years ago, and thus the labor pool looks vastly different. We shouldn't make policy decisions based on the assumption that there is a limited lump of labor.
Desire is not an external entity or being that manipulates us. Our biology generates desire, since it has been selected for by evolution through natural selection.
People create jobs.
But unlike the conventional picture people have in their head, it is a unidirectional creation process (i.e. by the "job giver"). The job is created through the dynamic of the "giver" and the "seeker".
Citation required. I assure you, wanting vs. being able to realistically acquire is a very powerful force of want extinguishment. You cannot, in fact, get a thing, if the world around you is not conducive to enabling you to pull the requisite capital together to meet the prices set. Something that is getting markedly harder for various strata in the economy currently.
I don't think I'll ever understand this perspective. To my ears, all the AI hype and profoundly ignorant economic fantasies sound exactly like the bidet hype of the 2010s.
You can't have a revolution based entirely on not having to wipe your ass (except when you still do because bidets are garbage).
Unless you are fresh out of college and working at some lame startup or coding sweatshop, mature white collar work has always been pretty damn close to "not having to work".
To be clear, I meant that there are no threats to what has always kept white collar workers employed. The past few years have been nothing but the most asinine arguments by truly pitiable people.
You're easily replaceable early on when your only value is doing, but with more experience come more meetings and responsibilities. You become valuable for knowing, and knowing is not mere knowledge.
Assuming that the years of experience have shaken out the chaff, the only source of stress for those who remain employed is what is already inseparable from life itself. Personal growth without work doesn't even make sense.
That's why it doesn't feel like work. That's why the concept of "not having to work" is pathological and ridiculous. Anyone feeling this way about "work" needs to get help. I'm totally serious when I say that.
I always wonder if minimum wage does more harm than good.
This conversation usually derails, so to be clear no, I don’t think people should work for poverty wages, a viable business should include happy non-subsidized employees.
My question is whether a global price floor psychologically depresses wages by establishing a global price anchor. Price anchoring is well known to influence the price people will accept.
For jobs like cashier that are fungible just blanket get minimum wage, would they pay more without one when the employer can’t just point to the anchor price and say take it or leave it? Would they be faster to localize wages to local costs?
This was fun to entertain but I don't think we live in that world.
You think it's possible that the true wage the grocery store wants to pay its employees is actually higher than the price floor? But for some reason they can't think of any other numbers to write down on the paycheck? And without the price floor they'd be forced to think for themselves and reconsider their morals and the market conditions and their balance sheet and pay $20 an hour instead of $15?
I think it's much more likely the minimum wage can be interpreted as "we would pay you even less than this if it weren't illegal." See the tipped wage. They would pay you $0 if they could.
You mention unions, but what you're leaving out is they have a huge advantage in those countries compared to the US. One big one is that, Union A can boycott a Company B over a dispute with Union C. That is illegal in the US, and it's a very powerful thumbscrew against the powerful.
It's one thing to fight your baristas, it's another to fight your baristas, bean supplier, mail delivery, and freight movers all at once.
This is true, and the collective agreements set lower bounds for almost all jobs. On the flip side, employers often treat collective agreements as the only salary option they're willing to offer for blue-collar positions, and the only wage increases may be the percentage bumps negotiated by the unions. In this case the only way to meaningfully increase your salary is to advance in your career. Doing the same work with double the efficiency will not be reflected in the pay.
Mind you, this does not apply to white-collar positions like IT in the same manner. The salary bands are still quite strict -- 6 figures is still a rarity -- but you do negotiate them and can get meaningful raises.
Dane here. Europeans have a different appetite for risk. Venture funding is 100x harder to get in Europe, meaning far less dynamism in start-ups and far less innovation. Sweden and Denmark buck the trend a little, but it's still a different league.
Why is funding harder? Culture and laws we created as a result. We're far less accepting of things like leverage M&As, options, flexible employee remuneration and conditions (especially for start-ups), etc. VCs therefore need to clear a far higher bar to mitigate risk, meaning only the very best proven ideas receive funding.
Further, investors tend to prefer lower, but more stable returns. There is much less appetite for moon-shots. I could speculate that this is partly driven by the tax structures. Why risk $50M if you know that 60% of the rewards would be taxed? You would use a much more conversative risk ratio, preferring 5% returns but very low risk. This extends to individuals, too. Why start a business when most of the rewards from the considerable risk will be taxed? Especially given the onerous business laws.
Denmark and Sweden are notable standouts. Our laws make it easy to start businesses, operate, and fire workers as needs change. However we still have very high taxes.
There is one final thought: most people I know do not aspire to become Ferrari owners with five mansions. We aspire to happy and healthy families with good friends, good wine, and cozy holidays. If this is one's aspiration, risking their financial stability for something they don't care about would not be very common. Danes who do aspire for the Ferrari lifestyle leave for the US.
This is a great summary, and I agree with everything you mentioned here.
One additional thing to mention though is that Americans are also just richer. Even if you include government benefits (social transfers), Americans rank extremely high on measures of disposable income per household. As far I’m aware that is the most complete measure of income, and despite being a massive country of almost 400 million, the median American is comparable to someone living in Luxembourg.
As you’d expect, this effect only grows when you go up the ladder, and American millionaires are on average richer than say, Danish millionaires.
(Note, I’m not saying that this is good or bad, just that it is. For what it’s worth I think we could learn a lot from the Danish model, but that’s my own distinct, normative option.)
Thus, since there is just generally more capital to go around, capital is easier to raise.
(And as an American, there’s plenty of us here too who enjoy the good life, free of Ferraris and mansions!)
It's a good point, and I think it's self-reinforcing. Americans are richer because they invest more because they're richer. This is why productivity declines are so pernicious. They lead to a negatively reinforcing cycle of poorer -> less investment -> poorer.
Great point. So many people I know who have worked in Silicon Valley have spoken about a different mindset there. Culture matters a great deal, but because it's intangible and hard to measure, we don't often see it in productivity and prosperity metrics and research. I think it's true that culture is contagious, but we also see that people who share values like to hang out together. The largest expression of this is a nation.
The US has had many very successful tech companies. Those attract talented engineers that want to work there. Partly this is about supply and demand but the other part is that engineers who work for the successful companies see their compensation go way up due to stock options or RSUs (which are/were offered to attract said top talent and motivate them to work hard). If you have a new AI startup (for example) and you want to hire top talent away from Google or Microsoft or Apple of nVidia you're going to need to offer a competitive pay.
So competition over a limited talent pool in combination with a vibrant economy and many successful companies that make a lot of money. At least historically.
High salaries isn't limited to tech. Bankers, lawyers, doctors e.g. tend to earn more in the US.
Another aspect is that you get paid more but you potentially have higher expenses. So some of the delta is related to cost of living. But not all.
Americans are individualists and value their own career higher than any "loyalty" to an employer. So employers in fast moving sectors have to compete for talent with the money they offer.
Because America is the innovation capital of the world.
I know that sounds like corny and biased American exceptionalism, but I think it’s just objectively true.
Other countries can have vastly superior government policy, and that shows up in significant ways (like Denmark having an even higher productivity than the U.S.), but nobody has played the productivity game at as big a scale as the U.S. has, and that’s sort of just an insurmountable advantage for the time being.
NVIDIA, Apple, Amazon, Meta, Google—-I could go on for a very, very long time. Those companies alone are going to create heavy competition within the tech sphere, and add on top of that Baumol’s cost disease from every other big U.S. industry, and you get the current situation.
No other country has the behemoth of capital and opportunity like the U.S. has. This will naturally have a big influence on things.
When everyone is the same (genetics, background, culture, etc) there is very little structural inequality in a competitive market. In an empire like the US, so many groups exist in a hierarchy that government support is required. In such an environment bare competition simply reveals and highlights fundamental difference, which is not conducive to social cohesion or harmony.
This is essentially how the job market is structured in Denmark, and it works very well. We provide strong safety nets, free healthcare, etc, but in return, employers are given wide latitude to fire employees. This allows them to remain unusually flexible in a European context - responding to market changes much faster than almost any other European nation. We don't even have a minimum wage. Despite this, people can and do leave when an employer treats them badly or pays them poorly. This forces employers to offer reasonable wages and working conditions, or they lose their employees. For example, in 2021, Dansk Arbejdsgiverforening measured that 38.4% of employees in their member companies changed jobs. This was during a period when inflation jumped but employers were too slow to increase wages. While this should not be extrapolated to the entire economy, it provides an anchor to understand just how dynamic our job market is.
Employees are (or should be) given more rights/protections than the employers because they have less individual bargaining power. The rights are there to counterbalance. For example it shouldn't be as easy to get fired as it is to quit.
The country's culture matters a lot. The same system that works perfectly in a healthy society will end up an abusive nightmare in an unhealthy one. Mobility for salary raises can also become mobility just to keep a job.
I don't disagree re bargaining power, but there are many ways to remedy this other than direct intervention. I think Denmark's model is one of the best in a nation with high social service costs.
I've often felt that I'm not very good at a particular company until I've been there 4 years... then I can really do good work. I wonder if there is any downside for society to incentivize switching often.
4 years seems like a long time, but I'd easily say that's true for a year. I suppose it's relative to your definition of good.
In my industry, 2 years is about what it takes to feel the ramifications for your bad decisions. Leaving before then makes you a bomb thrower in my not so humble opinion, leaving everyone else holding the bag. And unless you are a contractor, it's a resume red flag for me.
I get that not all jobs work out, but a long string of < 2 years makes me skeptical.
The labor market is just kind of complicated. Having a four year span where your real income goes down because you didn’t job hop isn’t ideal, but it’s totally possible that it pays off in the long run quite handsomely.
Ideally, you want to have a dynamic economy where people have very many paths to prosperity. In the US, you have people like Ted Sarandos who managed video rental stores for 17 years before taking a job at Netflix, which eventually led him to become CEO. Or you have Doug McMillion, who started at Walmart in 1984 unloading trailers at a distribution center and rose up to the CEO position. And you have Dara Khosrowshahi, the Uber CEO, who started his career in investment banking, became a media executive, and then served as Expedia CEO. An of course, there any plenty of extremely successful entrepreneurs who never worked for anyone else before founding their own company.
For sure there is a downside. To develop real expertise in a domain takes time. We have people hopping between jobs before they've even learnt how to do one job right.
In software it can take a long time between writing the code and seeing what happens to it in the long term. How it evolves. How it's maintained. Quality. If you never close this loop you're limited in your growth as a software engineer.
I don't know what the magic number is but I can relate to 2-4 years before you feel like you're comfortable in a new and complex domain. So ideally people stay some reasonable time beyond that. The company is getting a lot more out of this person then they did when they started so it should be a win-win. Instead what's happening is this guy is going to jump ship, get a higher pay, and be totally ineffective or even contribute negatively, and the company will hire someone new and possibly pay that new person more than the original guy, only to have him spend a ton of time getting up to speed...
I think it's bimodal for me, lots in the first six months bringing fresh eyes and outside ideas followed by a lull of a couple years before the benefits of realy knowing the company sets in.
It's not about being uneasy. I've had six jobs in my career that are all over the lot with respect to software engineering. How to work with specific influential personalities like the C-suite, picking up and gaining some expertise with the company's stack, establishing the proper processes and engineering discipline for mentoring and growth. Over time I see the decisions that the company has made and what has worked and what hasn't, and also the reasoning behind those decisions, and I can bring that knowledge forward when the company tries to iterate on their current processes. That is immensely valuable in maintaining continuity in the business and making good decisions that don't repeat past mistakes.
I don't know for a shortcut for this. It's simply experience, though I do find the more industries I work in and the more jobs I work, the more I can pattern match across that experience to make better decisions faster in a new job.
well yeah - unfamilliarity, to a certain degree. But its more than that. It's the slow process of gaining expertise. There are of course many transferable skills from one company to another. and there are some that are not. Knowing the relationships between all the bosses, who got passed over for promotion, who needs a certain type of project on their plate etc. Also knowing all the history of various prior initiatives, failed and successful, really helps you get stuff done. Most work in non-small enterprises needs building yes but also buy-in from others, which needs them to respect you, and for you to know what hoops to jump through and what to say to keep tham all happy.
But greater turnover only occurs when people don’t want to stay.
It’s my observation a high-turnover business is often good for nobody. There’s more spent in retraining etc than if you just paid halfway-competent people properly instead of literally rolling the dice every year or more.
Yeah. Itd be ideal if companies could adjust their existing employees wages fairly. This alternative of people moving frequently creates a high turnover org which isnt efficient. But if employers dont compensate their existing employees fairly then high turnover is unfortunately the only way to go
I have zero respect for people >50 especially any in official policy roles. Zero fucks for anyone but themselves this whole time; ignored reality just like religious nutters and presumed political dogma would be on their side
Jokes on them; Millennials are even more convinced it all just goes black with death, fewer young people going into elder care jobs, population decline crushing those jobs... GenX can enjoy hobbling to their toilet unassisted with bed sores and gout. Fuck them too then
I dunno, the Ute and Navajo folks I live near don't agree. A lot of the indigenous folks I know think we are living in a literal apocalypse.
Historically the way white folks have squared that circle has been to say that those folks aren't really people and simply don't know the joys of Christian city dwelling.
And statistically worse in many ways. Statistics are just euphemism for history, prior observation; stats exist for both categories. We can write and carry on about wars we won and ignore Vietnam with stats just as we do English. It's just a language that lets us ignore physical reality like religious catechism; same biological ability to delude ourselves.
There's the whole ignoring externalities of capitalism and reality itself for toxic positivity thing.
Sure is great though watching where I grew up slowly become engulfed in wildfire smoke; something that never happened until 10 years ago.
I was thinking the time it takes to find a job is good indicator of how hard it is to switch jobs, if that was tracked and reduced that would be good for workers.
And yet that has terrible implications. Job hopping is both extremely unsatisfying on an individual level (no place to belong; you're just an interchangeable cog in the machine being swapped around, giving you no sense of purpose in your work) and on the greater national economic level (it's insanely inefficient and completely irrational to churn employees because you're willing to pay new hires more than your veteran staff).
A competitive labor market doesn't automatically mean you switch jobs constantly though. You get choose which job you go to, and if you have better options available, and choose your optimal fit, that can give you more purpose, not less.
And while it is inefficient if a company has to constantly retrain employees, overall you can have a more efficient market when people are given options, since employees can find the best fit. If you're working a job that isn't the best possible fit (something that's harder to find when your limited by time and resources) that's worse overall for the economy.
Of course there's more nuance here, but this is the core debate of unemployment payments. More unemployment benefits incentivizes people to stay unemployed longer (bad), but when they do find eventually find employment, it's usually better employment (very good).
> A competitive labor market doesn't automatically mean you switch jobs constantly though.
Maybe "a competitive labor market" doesn't, but "job hopping" does. That is, in fact, the definitional meaning of job hopping. They specifically made the claim about "job hopping" as pertains to a mechanism for achieving wages. This is incompatible with finding an optimal fit -- even if you found your optimal fit, you would essentially be taking a massive wage cut to stay at your optimal fit job for more than a couple of years, if job hopping is the chosen mechanism for society-wide wage growth. I was responding to the claim that was made about job hopping, not some other claim about competitive labor markets.
The reason for all of [job hopping, fluid labor markets, bankruptcy, startup formation, inflation] is because the world doesn't stay the same. Desires change. New technologies are invented. Resources get depleted, and substitutes need to be found. Bottlenecks emerge. Old people die, and young people are born.
Changing wages and periodic layoffs are ways of adapting the jobs that people do to the new realities of which jobs need to be done.
Yeah, that's a romantic idea, but none of those grand societal trends really has anything to do with the reality of job hopping. The reality of job hopping is that the market is irrational and will pay 20% more to a new college grad they have to train to replace somebody with 15 years of experience they just laid off because they refused to give them a raise even though the person with 15 years of experience brings the company 10x more profit than they are paid in salary.
You're right, and I should've addressed you more directly.
Job hopping is the result of competition in the labor market, and while some may find it unfulfilling, that is usually the exception, and macroeconomically speaking, more job hopping can be really good for the overall market. That's all I was saying, though I forgot to mention how competition in the labor market relates.
My definition of job hopping is to switch jobs continually until you find the right fit, the right fit including wages as a factor among many others. I suspect that your definition means jumping jobs arbitrarily for the highest wage. In that case you are right that job hopping is bad, and it's my fault for confusing job hopping as wage increasing mechanism vs job hopping in general.
If your mindset is "The economy is an incredibly dynamic, living thing whose purpose is to satisfy the consumer desires of the moment", then job-hopping can be all of very satisfying, very lucrative, and very purposeful. Your purpose is to do whatever is most needed. You don't get attached to any one task, but treat yourself as malleable and adaptable, and think of your past roles as a portfolio of skills and experiences that you can draw on to meet new challenges. You could describe your approach to work as "Work is something I do, not what I am."
If your mindset is "The economy is the society that I grew up in, and I'm seeking my place in it, and then I want a role where I can grow and build expertise", this is extremely unsettling. You view your job as an identity, a part of yourself. To leave that job is to leave a part of your identity behind, and to be fired or laid off is to have a part of your identity ripped away. And so you'll fight hard (and take many poor bargains) to avoid being put in that situation. It's not simply a matter of economics; it's a matter of being and belonging. Work is not just what you do, it is who you are.
Commerce vs. Guardian syndrome [1], or growth vs. fixed mindset [2]. There isn't really a right answer, but American culture, society, and business favors commerce syndrome over guardian syndrome, while many other cultures (really, most of the rest of the world) is the opposite.
Competitive labor markets are FAR more efficient in terms of labor productivity, allocation, skill development, and spreading ideas around. One of the reasons the Industrial Revolution happened in England was because labor was more mobile than on the continent.
> [...] on the greater national economic level (it's insanely inefficient and completely irrational to churn employees because you're willing to pay new hires more than your veteran staff).
A certain amount of churn is good on the national or even global level, because it moves knowledge between companies. Probably not great for the company you depart, but great for the company you arrive at.
Job-hopping doesn't seem to have those downsides in Silicon Valley though? I think the "feeling like a cog" aspect has more to do with company size. Can you get a meeting with the CEO?
I don't know why you think SV doesn't have those downsides. In fact the entire world suffers the price of SV driving away their own employees with institutional knowledge and massively diminishing the quality of their software as a result.
I worked at a series of startups and I think having lunch every day with the other employees was an excellent way to get to know them. These jobs didn't last long because the startups weren't all that successful, but I remember them well.
Or maybe it was because I was younger then?
Stayed at Google over a decade and it wasn't quite the same, particular when working with people in distant offices.
Since a public option will never happen, maybe the most feasible fix we could do is to do a REAL version of the P in HIIPA - portability. Let employees stay in the group plan of any company, paying the full premium a la COBRA, but forever, and require companies to give a tax-deductible cash benefit equivalent to the premium subsidy they'd be entitled to in their new job, if they show proof they're in a COBRA plan (which for efficiency, should just be a flag in some government database since they're all up in our business now with the 1095 forms anyway, they ought to know).
Ok, good luck with that. When dems had both houses and Obama in the WH, the best they could do was the ACA which was a HUGE compromise (no public option, and in many ways a huge handout to the entrenched insurer lobby). But by all means, go for it.
Anyway, the reason for employer-based care isn't to be evil, it was to create risk pools. Insurance being purchased only individually has big problems: the insurers can't price the risk for a new individual subscriber in any sensible way without going back to the "pre-existing conditions exclusion" BS that all of us hate, or penalizing people with high premiums based on the conditions they've had. Employer groups fix that because they can look at a company as a whole and understand that say a gym chain disproportionally employs young and fit people, whereas, say, Walmart, employs a more health-diverse and age-diverse set of people, so maybe they need to pay more per person. So they can price risk efficiently without punishing individuals.
Of course I personally think the insurance idea itself is the wrong way to model paying for healthcare, but it's what we have, and distorting the market even further will only make things worse.
Bottom line, if you want major changes, work on convincing more than 49% of the public to vote for your party.
shrug I’m rooting for a public option. It’s a democratic republic though. Only way to get a change like that done is to convince more voters that your party actually represents their interests in order to get the power to push something like that through. Yet the Democrats have been losing support for years, because they now expend most of their political capital on unpopular policies, and appeal only to college-educated elites, showing disdain toward everyone that doesn’t already support them.
The way to benefit from irrational hiring practices is by starting your own company that's less irrational, and thus can scoop up good workers for relatively cheap (while still paying them more than they get in the rest of the market.)
Worked for Alan Greenspan and his consulting firm Townsend-Greenspan.
If you run your own company like that, then the longer the market stays irrational the bigger your gain.
Low job switching is a sign of a stagnant economy and society. An environment where a worker feels confident to change jobs has all kinds of hidden benefits like business-process cross-pollination.
Your job hopping comment is interesting and is generalisable: reduce monopsony in the labour market, and you get more competition for labour that actually bites.
The minimum wage is a strawman by comparison: it doesn't actually help workers.
Gig-work like Uber is a great safety valve to enable instant job hopping for unskilled labour. And not just the job hopping itself, but also the threat of job hopping.
I'd like to see a world where the government provided a job for anybody who wanted one. If you're not enjoying your corporate job you can go back to planting trees to offset carbon emissions. Getting to old to plant trees? Go work in the library. Want to develop it skills? get a job helping the government transition to Libre Office
This doesn't work though. The government needs to pay you. Where does the money come from? People working for the government tend to not really work that hard because what's their incentive to work hard? Are you getting paid per tree?
If the government wants trees planed it's better for everyone that they hire a company that plants trees. Even that isn't always that great but it's less worse. The government doesn't want that and doesn't have the money for that. They could get that money by raising taxes which increases cost of living for everyone that works and that tends to be not popular.
Anyways- that's what the USSR looked like or maybe China before they switched to their version of a free market. Due to human nature and other factors it doesn't work.
Ah yes. A great example is how much cheaper and more efficiently our military support is since we fired all the military cooks and gave all the contracts to KBR and Haliburton.
People don’t work hard for crap wages unless you beat them with a stick. Government jobs are seen as cushy because there are actual rules and regulations being followed as to how much work should be done. Corporations just skirt that, do a worse job, and then spread your type of propaganda everywhere.
People wouldn’t be jealous of the government job holders if they could achieve a similar work life balance at Joes Tree planting service.
This is a beautiful fantasy and it sounds like what most college freshmen think the world should be like. When that was practiced IRL in the Soviet Union, the issue is that if you are owed a job, people figure out really quickly that they can just phone it in, so those trees don’t really get planted, etc. The managers of the tree planters also don’t do their job of making sure the work gets done - they just report to their managers that the tree planting project is going great. Everyone gets paid. But the jobs that actually need doing also don’t get done either, so you have shortages of everything constantly. What you’ve created is an economy that barely subsists at best, since everyone does the absolute minimum and just lines up for their paycheck.
Why would you assume you can't be fired for phoning it in. If you want to daydream about utopia you have to assume we can solve trivial problems. I mean, you could just pay per tree for example?
There is no rule that says you can't have performance bonuses as a government employee, nor are there any rules to say you can't have competition within government departments.
I'm no expert, but I think the problem with the Soviets were that you were not rewarded for effort, and I think we all understand why that's important.
I've read in the US there are teachers that can't be fired because of public school tenure laws and union contracts. So yeah, first thing you have to do is have a sane and functioning government. Then you can start dreaming about a better society.
> Why would you assume you can't be fired for phoning it in. If you want to daydream about utopia you have to assume we can solve trivial problems. I mean, you could just pay per tree for example?
If you fire them, they're still entitled to a job, right? So some other agency has to hire them. The flunkies will progress from the most demanding jobs, on down to the ones where the assignment is like, "Just please collect at least one piece of trash per day, okay?" The net effect, I'd argue, is that jobs that are necessary but high-effort, like assembling important machines, constructing buildings, food production, IT support, are starved of workers because you can get paid decently for 1000% less stress to be on litter patrol, or the mailbox graffiti removal squad, or whatever.
If you pay piecework, the least motivated will just do terrible work (in many jobs a poorly-done thing can be a big problem), and if you don't pay the ones who don't manage to plant a single tree, then that's technically not a job (though it is daycare, and since you've still got to actually pay the overseers you're generating negative value on the whole operation).
> problem with the Soviets were that you were not rewarded for effort
We actually agree on the important points then, it seems. In my view of people, the ones who are motivated to be truly excellent even with the visible goal of the bonus are rare, and the ones who are motivated to cheat "the system" (which is really just cheating the rest of us who do our share) at every turn are, while not the majority, more than numerous enough to tank any system I've seen that tries to achieve aims like universal employment or true zero poverty. (And worse, they also seem to climb to positions of power of those systems in shocking frequency!) And finally, once people see the freeloaders defrauding society from both the top and the bottom, the truly excellent contributors to society are the first to flee to somewhere their efforts will be rewarded, and the reasonable middle of hard workers also do. This concentrates the low productivity further.
I guess one good thing the Trump administration demonstrates is that you _can_ just ignore past norms and laws and do what you want. You can bring a wrecking ball, swing it around, and force change if you need to.
I agree with the work sucks bullet point. So nobody should work. We can all just sit at home, get our UBI money, and pay our rent, get our groceries, buy a car, get fuel, go on vacation. That sounds perfect to me. But.. who makes the car? who grows the fruit and veggies? Who works in the store? Who builds houses? Who repairs and cleans those houses. Hm. maybe somebody has to work after all.
Seriously I support having a decent social net so that nobody is starving on the street without healthcare etc. but the preference is always that if work is available someone should work (assuming it's reasonably suitable, they're not taken advantage of, they are able to work etc.).
UBI has to be significantly lower than the average taxes paid. If it isn't the books don't balance and eventually inflation kicks in hard and eventually it reaches that equilibrium. If nobody works then taxes are $0 and UBI is $0.
So if you do the math using fairly roughly you'll find that the US can support a UBI of about $1500/month without significant inflationary pressure. That'll pay your rent (if you're sharing an apartment) and cover groceries (if you mostly live on rice and beans). If you want a car, vacations or the latest iPhone you have to work. So most would work and build those cars et al.
You are indulging in a Black And White Fallacy here.
UBI doesn't mean no one works. It means no one has to work just to live.
And even if you want to ignore the actual scholarly research on the subject (which is ample), we have plenty of examples of people who would never have to work a day in their lives, and yet they still do so, sometimes even despite millions of people actively hating them for it: the very wealthy, particularly those who inherited generational wealth.
Scott Alexander uses a lot of words to argue his points, but I don't think he makes them very successfully. Almost every point in the linked essay can be easily refuted without thinking too much. Perhaps he is arguing for a spercific implementation, but if we are dreaming about utopia, why not be generous in our interpretation for how the jobs for all might work. We are comparing it to the dream of UBI after all.
1. We could provide jobs for disabled people that makes feel better about themselves. Also remember this is jobs for all who _want_ to work. There is still disability for those that need it.
2 & 3 Government provided jobs could help caretakers and parents because they could be more flexible with hours and shifts. Work while your kids are at school.
4. Jobs causing poverty because you have to drive somewhere and eat out because there is no break room is ridiculous. I laughed out loud when he argued that if you work you are too tired to drive to the shop where the cheap groceries are sold.
5. Yep, some people need to be fired. I'm not sure what he is trying to say here. I think these government jobs need to be run well, and employees need to be paid bonus if they do good work. (Compared to other teams that do the same work)
A (big) decrease in employment would be sufficient to tank the minimum wage, but it ain't necessary. I'd say, concentrating on employment is a bit of a red herring.
A worker's compensation is a whole basket of pay, working conditions, career advancement opportunities, prestige etc. Similarly, what a worker does for the company is a whole basket of things.
Minimum wage outlaws baskets where pay per official hour is under some threshold.
For an illustration of different baskets, have a look at the hectic life and relatively higher pay you get working for Aldi with the more measured pace and lower wages at Walmart.
Yeah no thanks, I rather have the government regulate some actual floors rather than hoping that the better angels of American corporations eventually do the right thing.
Also who wrote this theory? Sounds like the wet dream of some neoliberal econ grad.
You're not simply hoping that corporations do the right thing though. Rather, you're making it economically unfeasible for them to pay workers less.
That's good because you don't have to rely on corporations acting morally, and corporations who do act good out of moral obligation aren't punished fiscally for it. It also just works better than adding a price floor, if done right.
And although the idea is sexy, it's far from a wet dream. It's actually the standard in the Scandinvan social democracies.
Gotcha, pure fantasy that seems to rely on many assumptions that don't hold up in other countries. Do appreciate the criticism section on wiki: "a purely linguistic combination of opposites that can be applied to virtually any policy mix."
Everything we try will rely on some assumption, but I think it’s unfair to call that fantastical. What assumptions do you think are uncalled for?
Norway, Sweden, Denmark—these are countries where this model has been proven to work in practice, not theory.
If you still call bullshit though, I’d cordially invite you to show me similar evidence for price controls working as well as flexicurity does in the Scandinavian states.
NC teacher salaries are terrible on their own but they are also outpaced by inflation.
The new budget just got approved. Last year a teacher with 15 years of experience made $58,270 and this year they will make $62,500 so right around an 8% bump but the prior two years was only a ~$1000 bump each.
So 2023 -> 2026 $56,250 -> $62,500 was roughly 12% increase in pay but adjusted for inflation $62500 in 2026 is ~$57,220 in 2023 so not even an actual raise of $1000 in buying power.
Sure, $62.5k for a 10 month contract is $75k over 12 (62.5/10 == 75/12) but my point about purchasing power remains.
As the other commenter called out it's low considering to get to this salary at 15 years of experience you also have to have a master's degree. Master degree holders have a median salary $95k in the US so this is off the mark by a considerable amount.
They're signals with low leverage since everyone has to have them in their field, so you end up with lower nominal pay from the institutions that buy most of that labor.
Consider acceptance rate as a metric - education has one of the highest by this report, up there with public service:
maybe they are easy but "everyone has to have them" doesn't change the amount of time and money invested in getting them. The real compensation under that is stagnating with inflation. NC is particularly bad because state law forbids collective bargaining and they are at the whim of the legislature (which stalled a budget for 1000 days).
The signal of supply and demand the cost (and debt) of an advanced degree is not reflected in the marginal salary bump over bachelors degree given the rising costs of tuition. From same site you used 46.7% of public university masters degree completions used debt so basically half.
Not necessarily. It could also be simply saying that industries where job hopping is common (e.g. tech) are more highly paid than industries where job hopping is really uncommon (e.g. teachers, utilities, etc)
Theoretically jobs reward loyalty and wish to maintain institutional knowledge.
For some reason right now everyone thinks they can get away without those. And I can't say they're precisely wrong. But as someone working on dumpster fire fighting, holy hell is a lot lost when you lose someone who's done nothing but X for 15 years. Now you've got someone with no experience with our processes, overworked, also underpaid, with nobody left with any experience of their own to train them. That can cost an awful lot of money.
Employers are optimizing for labor cost control. As long as the enterprise continues to function and is profitable, the behavior continues. We cannot say it doesn’t work as long as it continues to work.
Some have said job hop, I’d say unionizing can also work.
> My investigation points to a far more conventional explanation: Acrisure is shifting work once performed by American employees to lower-cost operations in India, the Philippines, and Colombia.
Labor cost controls, in this context via offshoring.
Would love to see this calculated in high cost of living areas (NY, CA), pretty sure some people have seen 20% wage declines since covid (in terms of how far your income goes)
Check the prices of the flagship 1975 Ferrari, the flagship 1975 Hasselblad camera, or, I don't know, a 1975 Cessna 182 in reference to median 1975 household income.
Then check it again for 2026.
Oh, but we have GPS, Amazon Prime, and doomscrolling now.
Why would universal economic growth imply everyone owning more of a resource with a limited supply?
There's only so much gold in the world (which is kind of the point) - if people in $INSERT_COUNTRY owned more of it per capita, that would mean global inequality has increased, and thankfully we've seen the opposite of that.
Workers have become ~90% more productive over the last forty years, and received very little of that value, while the US throws off ~$5T in profits per year to shareholders. There is a reason socialism has become palatable politically recently to the electorate, and will continue to be until the labor situation changes.
> The top 10% of households by wealth had $8.1 million on average. As a group, they held 67.2% of total household wealth. The bottom 50% of households by wealth had $60,000 on average. As a group, they held 2.5% of total household wealth.
> The top 20% of households by income had $4.3 million in wealth on average. As a group, they held 71.1% of total household wealth.
The bottom 20% of households by income had $180,000 in wealth on average. As a group, they held 3% of total household wealth.
Top 10% owns 93% of equities. Middle class wealth is primary residence real estate, representing roughly 60% to 80% of total household wealth.
> In any event, stock market booms have traditionally produced the largest rewards for those who are already wealthy. That's because the wealthiest US households have most of their assets tied up in equities, while most middle-class families have their assets tied up in housing, researchers said in a 2020 study. Meanwhile, the bottom 50% of Americans held just 1% of all stocks in the third quarter of 2023.
> The latest data show that 42.0 percent of full-time working Americans do not have access to retirement plans, 44.1 percent do not participate, and 50.5 percent do not receive an employer match. (Note that these figures are for employed workers between the ages of 18 and 65, excluding government and self-employed workers.)
> Even for those who do have access, traditional defined benefit pensions have become much less common as defined contribution plans, such as 401(k)s, have become the primary type of retirement plan. This shift has increased the risks and responsibilities for individuals in planning and managing their retirement. Yet research shows that many households are ill-equipped for this task and have little or no retirement savings. As of 2022, about half of households with a worker age 55 and older had no retirement savings, and 32% had no retirement savings or a defined benefit plan.
I guess the corollary to this is that the more money you have, the less efficient you can convert money to tangible wealth (there's an actual studied conversion 'factor' for different kinds of wealth).
Wealth, in financial theory, is the present value of all expected future cash flows an individual or asset can generate over time, discounted back to today's value using a specific rate of return. It measures accumulated economic potential rather than just cash in hand.
Are there limits to future economic potential? I argue yes, it is a function of demographics, which are in structural decline. Therefore, I would agree it only becomes harder over time to chase after the current amount of total potential wealth, which will decline into the future.
> "As of 2026, humanity is likely below replacement fertility. That has never happened before, not in wars or pandemics. But the real surprise is that the fall has been concentrated in low- and middle-income countries and among poorer and less educated women. We fit a single-factor model to 236 countries since 1950: the common component peaked in 1978, and what drives fertility down today are country-specific trends, 219 of them negative and not one leveling off. None of the commonly cited mechanisms can account for this pattern, so we offer a conjecture: modernity itself, which makes a third child expensive and childlessness cheap. Children come in integers, so it takes very little to move a cohort’s fertility rate from 1.8 to 1.3. And nothing in an economy pushes fertility back to 2.1. We close with the main economic consequences, in particular slow growth."
I'm sorry—vapid trappings of conspicuous consumption? You've just named three vacuous toys, whereas GPS and e-commerce deliver real value to working people.
Doomscrolling, I agree, is a devastatingly poor substitute for a real civic life.
The whole point is that it is not to the "working people" that the "real value" is "delivered". The real people got the crumbs and were told to appreciate it.
Almost all of the value went to those who one might call "unreal" people.
it absolutely did. Those were the crumbs I was referring to.
It enrages me, because "they" took all the value, and told us "my god, how immoral and vulgar it would be of you to covet the vapid trappings of conspicuous consumption! Instead, how wonderful it is that you can drive your car from your house to our offices in the morning, and our businesses in the evenings, avoiding traffic in service of shareholder value, while teaching our systems everything about yourself, so that we can market even more goods and services to you, even more insidiously, all thanks to GPS!"
They told us this while driving the Ferraris and flying the private airplanes.
And so many of us now come and say "oh, how immoral -- desiring an object of desire! Isn't it so nice that we can now build shareholder value more productively using GPS?"
I don't know, friend. I am not a moral absolutist.
There's nothing that makes my heart tremble like starting the propeller of a small GA airplane. On that moment I reconnect with my nine year old self. You may call me evil, vulgar, stupid, shallow, vicious even. I know what I feel inside. The rest of the world can disappear on that moment.
Not many people buy GA aeroplanes, so it's a sensible decision for those to receive a lower weighting than other consumer goods in a general purpose index like the CPI.
There is a divergence between the prices of goods the US produces and those that consumers purchase, as measured by the GDP IPD and CPI respectively, but that is not something that is appropriate to measure using one highly idiosyncratic good, nor even a basket of goods like "things I personally want to purchase", if one is wishing to produce numbers that others agree are reflective of the average experience of many.
But also, the very point of this entire thread was that even these highly idiosyncratic goods were orders of magnitude more accessible to the median American household back in 1975.
Despite that very same household being orders of magnitude more productive in 2026, thanks to GPS (and the rest of technology).
"Idiosyncratic" doesn't mean "we expect it to me less accessible", it means "we expect it to behave in its own special way so just taking a random one of them doesn't tell us anything about the average experience".
Given the number of goods and services there are in any given economy, you can probably find at least one good of each of the following categories:
A) that was very inaccessible in the 70s, and accessible now,
B) that was very accessible in the 70s and still very accessible now,
C) that was very inaccessible in the 70s and still very inaccessible, and
D) that was very accessible in the 70s and very inaccessible now (in addition to the one that you already picked)
None of those four tell us anything about whether "things people usually purchase" or "things the economy generally produces" have gotten more or less accessible, because different goods have gotten more or less expensive at different rates. You can easily point towards increasing inequality, which shows that the median American is getting a smaller share of income, and the divergence between CPI and GDPIPD, which serves to show that what people purchase on average (CPI) are getting more expensive faster than what the economy produces on average (IPD). (by about 30% on average according to FRED)
Insisting on intentionally using less useful evidence to support your claims is like making a strawman of your own argument, when clearly a stronger argument exists.
My friend, the 2026 Cessna 182 is basically the same airplane as it was in 1975, with digital screens instead of analog gauges, except now it costs about $750,000.
That's a whopping $735,000 increase over its base price of ~$15,000 USD back in 1975 for a brand-new airplane.
I promise, those avionics aren't worth $735,000. We've just gotten much, much poorer.
EDIT: Heck, if this doesn't convince you, here's another set of numbers:
1. $15,000 of 1975 dollars is about ~$95,000 of 2026 dollars
2. A heavily used 1975 Cessna 182 today costs about $150,000
What improvements in GA since 1975? They are very slow to change from what I understand. There are a ton of airframes from that era still flying today.
I mean, yeah at the top end things have gotten nicer.
>What improvements in GA since 1975? They are very slow to change from what I understand.
Which is exactly why they make a great comparison point. Harder to get bad faith sidetracked by "but your modern car has airbags" and "but your modern house is marginally bigger" type commentary when the actual product has barely changed.
I guess RSUs aren't really "real wages" but mine vested over four years to the extent that by the time I left they were worth barely 25% of what they had been when I signed the offer. Happened over time, too, so quarterly vests took a decent hit in that timeframe.
RSUs are great for workers because if the value dips 75% you can just leave and get a new job and get new RSUs at a reasonable price. Of course it's not trivial to switch jobs but at a 75% cut it's surely worth at least looking around. I don't think you can really consider it a fault of the economy if you didn't.
I did that once. The company doubled rsus the next quarter (still didn't make up for it), then the stock price 5xed over the next 3 years. By the end of it, if I had stayed, I would have cleared 1.2M per year.
Although I heard they also fired some of those people with high rsus! So it goes both ways.
Well, with all due respect you could've worded that better. It sounded as if you were making a blanket statement over all individual jobs that involve RSUs, as opposed to a statement over all jobs as an aggregated statistic.
This thought occurred to me too, but then I realized even 37% is very high. In a reasonable society, most individuals' earnings should go up all the time. The downward pressure that should exist is high earners retiring and low earners just starting their career. A mildly idealized society should probably have 3% go from unemployed to employed, 3% go from employed to (voluntarily) unemployed, and the remaining 94% increase their earnings.
The only thing that surprised me about this article is that more people didn't see real wages decline. 2021-2024 was a period of peak inflation that the US hadn't seen in decades. And of course the primary cause of this inflation was governments flooding dollars into the market by literally paying people not to work, which while perhaps faulty was at least a reasonable response to Covid. The ironic thing is that, in the US at least, the inflation rate was coming down before we decided to install the guy who instituted massive tariffs, an unprecedented deportation program, and an unprovoked war in Iran, all of which are highly inflationary.
So it's completely unsurprising to me that wages, especially of people who stayed in the same job, didn't accelerate faster than inflation. This feels a bit like picking your dates to tell a narrative. I'd be much more interested in the percentage of folks whose wages fell in real terms by looking at multiple overlapping 5 year timespans.
>In a reasonable society, most individuals' earnings should go up all the time.
I don't think this is a reasonable expectation at all. In the absence of economic growth I would expect the average individual's earnings to be flat.
The only way for wages to go up across the board is if productivity increases. If you're not creating more wealth than last year, the only way for one person's wages to go up is if someone else's goes down.
I read it as 3% retire, 3% enter the workforce, and everyone else is slightly better / more senior than the year before. So the average wage could be flat.
> The downward pressure that should exist is high earners retiring and low earners just starting their career.
> and the remaining 94% increase their earnings.
This is an extremely unrealistic expectation. There are a multitude of reasons for people's incomes to fluctuate other than retirement. People make career changes that result in lower income for many reasons, like taking a better job, changing careers, transitioning to a lower demand job when they have children, or moving to a new city with lower wages for personal preference.
For many jobs the earnings are also dependent on the company's earnings. Incentive structures, bonuses, RSUs. Even low paying companies scale their staff up and down based on demand. They can't hold a monotonically growing set of staff and also monotonically increase their wages when the incoming demand for their product is not monotonically growing.
The only way to come close to an "idealized society" like you're proposing is a totally self-sustaining, command and control economy where a central authority determines not only everyone's income, but their expenditures too. It's not possible to keep the entire economy and everyone in it moving in the same direction unless you're dictating where all of the money goes in society to a fine degree. Variations of this have been tried. The members of that society do not find themselves more well off.
Its interesting, I thought it was pretty well established that COVID era stimulus helped lower earners make real gains, even adjusted for inflation, while higher earners who did not get stimulus checks lost ground?
From page 36 of the paper: All deciles during this earlier period experienced annual real wage growth, with the growth being the largest for the bottom two deciles of the wage distribution.
I’m pretty confused where you’re coming from. Stimulus checks were a one or two time payment of a couple thousand dollars, but stocks and corporate profits went absolutely parabolic.
Unemployment almost by definition means they’re not getting as much money as they were before.
We can focus strictly on wages, but for higher earners, it doesn’t tell the entire story, especially if we’re focusing on my new detail details like a couple thousand dollars per person.
Many people were making more money on unemployment than their standard wage due to the covid increased pay. The fed paid $600 on top of state benefits for a few months and then $300 for more than a year after that meaning people were seeing 16 -> 24 dollars an hour in wages for not working in my state of Georgia for instance. It was often smarter to stay unemployed until that ran out compared to local wages.
While losing a job is a pretty unpleasant disruption to one’s life, it can also be the case that the next job will be better and one ought to (in hindsight) have changed jobs sooner. Potentially the shake-up of employment in low-productivity sectors was also good for the economy (and in hindsight I think this strategy worked better than subsidising people in their current jobs, ie furlough, which is what many other countries did).
My cousin and many others I knew were getting more money from unemployment than when they had their jobs during covid. Though I don’t believe that caused inflation. Inflation was an international phenomenon and countries experiencing inflation had very diverse stimulus responses to COVID. It seems the Russian invasion of Ukraine, a pivot to a goods based rather than services based economy, coupled with climate changed caused shortages and retiring boomers caused it.
Yeah agree, share of wealth definitely went up for folks who had the money to be invested in the stock market.
My recollection is that some combination of stimulus checks / COVID dynamics made it much harder to hire low wage workers, so employers were "forced" to raise wages in response. At the same time, higher wage workers who got "normal" raises were not keeping up with inflation.
Maybe it's very bad. Or maybe it's negligible. And which third of americans is it, the poor the middle or the rich or a mix of everyone? These factors are important before we can draw more than the most shallow of conclusions.
There's a chart of the average that looks pretty bad. But also I don't have time to read 78 pages right now.
I don't think the "average" is a good metric for the social impact of this. Everyone (or almost everyone) being at a standstill would be the minimum that governments should worry about. When even a sizable minority loses ground, that could create unrest.
> This compression accelerated in 2021: real wage growth in the bottom two deciles remained positive and close to its pre-period pace, while all other deciles experienced declines of about 2 percent, roughly four percentage points below their pre-period growth
That’s true, and you could even use any measure you’d like. Perhaps the Gini coefficient. I should specify that I’m not trying to make direct claim about inequality.
Only that, for anyone against the ails of inequality, the bottom wage earners getting more (and even outpacing other deciles) is a win.
You can't put electricity, meat, coffee... in the same bag as Teslas and iPhones, otherwise you'll hide the type of inflation that makes the lower classes unable to pay rent and buy food while still being able to access the latest smartphone and SUVs.
I'm not sure averages are that interesting, because the people at the high end have an extra-ordinary amount of influence on the average. You might want to look at the shape of the distribution?
One could make the point that in a society that is primarily driven by capital, it is wise to keep an eye on the health of it from those that are within said system.
Inflation is not just an increase in prices, it's basically a money pump. Under weakened labor it is redistribution from workers to the parasite class.
I hope to retire some day - to do that, I'm going to have to save up enough money in a brokerage account that it generates enough money for me to live off of. Will that make me a member of the parasite class? I'm willing to be a worker for as long as I can, but at some point I will be too physically old to keep doing it (plus which, nobody really wants to hire old people).
In your plan is an implicit assumption that those that cannot work do not deserve to have housing and food. This is a political choice made by a society.
The paper only mentions total compensation as: "total compensation (base wages plus bonuses)"
Total compensation includes stock options, stock grants, health insurance premiums, 401k contributions, so-called "employer social security contributions", retirement contributions, time off with pay, etc. Total compensation averages 146% of wages.
This is not a triviality.
The paper doesn't cover this, and so the conclusions don't have merit.
There are also some fairly interesting trends in labor productivity.
Labor Productivity for Manufacturing: Household and Institutional Furniture and Kitchen Cabinet Manufacturing: (has flattened out in the last decade-ish)
Why would that make any difference? What an employer spends on an employee is what the employee gets. If the employer spends less, the employee gets less, and hence is a pay decrease, even if not in nominal terms but in real terms.
Premiums for a silver plan can easily be $30k per year for a family of 4. If an employer decides to cover 70% of it instead of 80%, that is literally a pay decrease of $3k, not to mention possible changes in coverage, deductible, and oop max.
For example, the employer could keep the 80% subsidy, but increase deductible from $1k to $10k. Unless premiums go down a lot that is basically a huge pay decrease too.
Employment ain't guaranteed either, so I'm not sure that guarantee is worth much.
And you can be pretty sure that many workers would walk if the extra goodies they are accustomed to but which ain't guaranteed were to be withdrawn. Assuming the competition still provides them.
There are good reasons for companies to provide those benefits. And they most definitely are part of their total compensation. When a study does not take this into account, their results are not valid.
Not so. I'm part of a religious community for whom FICA is something we can opt out of via IRS Form 4029, and I can avoid contributions to FICA more broadly (not just SS taxes!) by handing HR the approved 4029 that I receive in response to filing.
I don't know how available this is to folks who aren't Mennonite or Mennonite-adjacent, but it's there.
About 0.14% of the population is Mennonite. By filing 4029, you assert that your community is going to provide the equivalent of SS and Medicare, so it amounts to about the same thing.
My remark was a rebuttal to the assertion that these contributions were guaranteed. That notwithstanding, I'm unsure that I agree that it amounts to about the same thing; we tend to take care of each other as a matter of due course and not as a transaction.
The mainstream Anglo-American attitude around this kind of support leaves me scratching my head a lot of the time.
It is a kind of transaction. While I don't know the details, isn't it some form of you support the community, and the community supports you when you're in need?
Not at all. Tithing[0] is contributed as one is able, but assistance in the face of hardship is no questions asked. For my congregation in particular while I was growing up, this extended even to non-members, and there was a strong thread of volunteerism.
--
0: Tithing can take many forms beyond giving cash. I tithed my RSUs.
Count me in the unlucky 37%. I job hopped for more stability in 2022. I got more comp but then proceeded to get 2% raises. I'm making less now adjusted for inflation than I did in 2022.
> Data measure usual weekly earnings of wage and salary workers. Wage and salary workers are workers who receive wages, salaries, commissions, tips, payment in kind, or piece rates.
For the Tech sector, inflation speeds up companies crashes as staff leave for startups due to wages being extraordinarily "sticky-up" in large companies.
No big surprise- were making mess money and terrified of losing our jobs, afraid of losing healthcare and can’t afford our homes, less social because of doom scrolling
Welcome to the progress and “better world” that Tech Bros promised while they reaped billions of the VC/PE economy
The working class doesn't hold that much in cash, do they? Competition in the labour market means nominal wages go up when inflation goes up. Many working class people have mortgages (though I'm not sure whether they have fixed rate mortgages?)
Working class typically rely solely on wages and have little to no wealth. So any purchasing power decrease is often referred to as a hidden tax on wages.
> Working class typically rely solely on wages and have little to no wealth. So any purchasing power decrease is often referred to as a hidden tax on wages.
That's only true if wages are fixed. They typically aren't, especially when people move jobs.
Kevin Erdmann has some good writing about mortgages before and after the GFC.
Submitters: If you want to say what you think is important about an article, that's fine, but do it by adding a comment to the thread. Then your view will be on a level playing field with everyone else's: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
"in the long run, its really really hard to cut nominal wages. [without] inflation, a significant number of workers take wage cuts"
basically, inflation is a way to cheat all laborers out of their earned wealth so that the management class doesn't have to make hard decisions about who to keep.
That's not really right either. think about it this way: what would happen if the budget was balanced and the us suddenly had a surplus? you HAVE to print money, where is the interest on debt going to come from.
Why was that bound to happen? Inflation also raises nominal wages. It's not clear what impact inflation has on the relative price of labour vs goods and services.
How much of inflation during Biden years was from Trump? For instance, Trump agreements to restrict oil production after covid lasted deep into Biden's term. The US still did better on inflation than most comparable peers in the aftermath of covid.
A big part of it was like $5T in covid stimulus, most of which happened under Trump. Biden piled some more on, probably unnecessarily. It felt like we were balancing on a razor's edge and maybe starting to come out of it by the end of 2024. A lot of inflationary policies since then.
The biggest problems were various supply shocks associated with the pandemic and its aftermath and the Russian invasion of Ukraine.
The Biden admin brought down inflation much faster than even optimistic economists predicted, while maintaining full employment and avoiding a recession. The US economy during that period significantly outperformed most other wealthy countries. (As one indicative example, the cover story of The Economist from October 2024 was titled The American economy: The envy of the world.)
Since then we've had a wide range of completely self-inflicted policy faceplants, including notably several rounds of illegal tariffs and a war with Iran.
Biden's ARP independently caused inflation according to multiple central bank analyses.
However, you are also correct that Trump pressuring OPEC to cut oil production at the end of his first term did cause additional inflation in Biden's term.
We let Trump print $4T in an election year and Biden print $2T in four years. Trump was going 40mph in the parking lot, Biden slowed down to 5mph, and while there is a legitimate discussion to be had about whether or not the latter was too fast when someone is spazzing out about the 5mph and ignoring the 40mph, it's because they have an agenda.
Based on lived experience in Canada. 5 million new immigrants added to the 36 million population from 10 years ago. So 14% of the total population. Record immigration, crazy increase in housing prices, stagnant wages and youth unemployment.
If the paper came from Academia, it already went through lots of political allegiance filters, and taboo topics like being critical of immigration. Article debunks itself, when source can't be trusted.
I thought Trump fixed that? Shouldn't caging/deporting 2000+ people a day have a dent at some point? What do you blame when the immigrants are all gone?
Personally I'm pretty sure it's more about the value of property and the limitations on construction that wealthy property owners put in place to block development (which would lower property values.) Property values go up -> costs rise (taxes, insurance) -> rent increases. That and the fact that the government and corporate america (same thing really) want all development to happen within existing major metro areas. There's plenty of cities and towns with cheap housing, but they lack employment opportunities.
The other interesting finding here is that only 57% of these "job stayers" beat or matched inflation, while 43% suffered a real wage cut. A huge chunk of the people who's wages beat inflation only did so due to job hopping
Saw a theory somewhere that, instead of raising the minimum wage, a policy that enables and incentivizes job hopping is what actually works for increasing the median wage level. The inverse implication of the theory is also interesting: any policy that makes job hopping harder than staying would suppress the wage level.
A policy that requires job hopping to get good wages discriminates against people who are less mobile: workers with families, elderly parents, older workers with more ties to their neighborhood, people who don’t have enough savings to move, people who can't afford transportation...
I’m not sure that raising the median wage is even more desirable than raising the minimum wage. If the median wage enables a good life but, say, the lowest quartile is precarious exploitative jobs close to the poverty line then raising the minimum should increase overall happiness more than just raising the median.
Dane here. We don't have a minimum wage. We rely on structural remedies for improving working conditions and wages, and they work far better than a minimum wage. The UK, on the other hand, favours direct intervention. They've been increasing their minimum wage considerably over the years. The result appears to be aggressive wage compression. Meaning very little benefit to people who get degrees and accrue experience relative to someone doing an unskilled, minimum wage job. It also appears to have created a very unfavourable job market for the young. Why hire a young and inexperienced worker for £12.71 per hour when you can hire an experienced worker for £14? Young people with degrees appear to be particularly impacted, since they "wasted" so many years on degrees which yield very little benefit, and they cannot find a job. The UK also has very tough laws about firing employees, meaning companies are incentivised to not take a chance on a young worker.
To your point: yes, people who have a weaker bargaining position in Denmark earn less. However we also have generous social safety nets, so no one ends up destitute or hungry. Ultimately, I think wages should be between an employer and employee (with or without the assistance of unions - we like our unions). If an employee has fewer skills, less experience, is unwilling or unable to move for a job, etc, they should expect to be paid less. This represents materially different value to the employer.
Britain has a few structural issues too, so someone who happens to live in a big city, especially London, will have more opportunities without having to move.
As a tangent, poverty line definitions vary by country, in Australia, for example, earning less than half the median wage is considered below the Australian poverty line.
Worth keeping in mind when doing any apples V oranges country by country comparisons of population percentages in poverty.
* AU: https://povertyandinequality.acoss.org.au/poverty/
* UK: https://en.wikipedia.org/wiki/Poverty_in_the_United_Kingdom
* US: https://en.wikipedia.org/wiki/Poverty_thresholds_(United_Sta...
As I understand it, that's a fairly common definition for relative poverty (either that or 60%) though of course you're still right that it's best to confirm both the threshold the methodology is the same (or use an explicitly international comparison that covers both/all compared countries in the same work, such as those produced by the OECD or similar bodies).
Why does it have to be a choice? Raise the median, raise the minimum, use wealth created through higher productivity and a healthier labour market to redistribute to some degree, everyone wins?
The frictions we're talking about, like health insurance being tied to an employer, make things worse for families anyway - getting rid of the distortionary regulations that cause that can only be a good thing.
Higher productivity and other such benefits are a leap. I don't think it's unreasonable to assume that people who work at a company longer end up more capable of contributing to that company.
In some ways this could even be an argument for the cause of enshittification of everything. When everything is liminal, it somewhat directly leads to a 'get mine and go' type mindset, which in turn leads directly to enshittification, no longer term than next quarter thinking, and so on. I've always assumed the cause of this all was MBAs, and I still think it's the primary cause, but perhaps we're creating this certain from multiple directions all at once.
Being able to efficiently allocate labor with a more mobile workforce does increase productivity, this is well studied.
Here's a source, although it isn't that detailed and is more of a descriptive literature review: https://www.urban.org/sites/default/files/publication/103581...
This too: https://www.oecd.org/en/publications/2025/07/oecd-employment... - but I didn't have time to read it in detail.
I don't think anyone believes labor mobility reduces productivity.
That not what the paper says. They're saying that good quality jobs can lead to higher productivity. That's something discovered by Ford way back in the early 20th century when he stepped from the typical 60+ hours of the week down to our now normal 40 hour work week and saw productivity/worker increase at each step down.
For my little hypothesis to be incorrect you'd need to demonstrate that a company with less experienced workers (in terms of years worked at that specific company) is more productive than with more experienced workers. I think that's very improbable.
You should live in France, having to pay 15% of the value of your home to be allowed to move, being cash poor (which means having low flexibility) because 50% of what your company pays for you goes to mandatory social things, taxes and insurances and most of the rest goes to fixed expenses.
In France the minimum wage is roughly indexed on inflation (especially if inflation isn't too high) but getting a raise when your salary is higher than this is very difficult, especially without job hopping. Your employer knows that he can risk not giving you a raise and you can't as easily risk being upset about it.
The US isn't so different. Federal capital gains taxes will eat a minimum of 10% of the appreciated portion of your home value, and more if you're in a higher tax bracket. Many states also tax proceeds on a home sale. I've got a property that I'll be selling soon in California and I expect to pay about $400k in total taxes.
You can sell your primary residence and be exempt from capital gains taxes on the first $250,000 if you're single and $500,000 if married filing jointly.
In addition to the $250,000 (or $500,000 for a couple) exemption, you can also subtract your full cost basis in the property from the sales price. Your cost basis is calculated by starting with the price you paid for the home, and then adding purchase expenses, such as closing costs, title insurance, and any settlement fees.
Also, most (if not all) states do not tax your primary residence unless you go past the federal exemptions.
https://www.investopedia.com/ask/answers/06/capitalgainhomes...
That's good info, but unfortunately none of it applies to me because I moved out of California eight years ago and the property is not my primary residence.
I reckon California is increasingly democratic but at least you're talking about a tax on some good news. It's still quite taxing because you wouldn't gain any compensation if the home lost value and because a lot of the appreciated portion is probably just following inflation.
The 15% I talked about is on the total value of the home, although to be fair 33+% of people avoid agency fees (about 7%) by selling directly to an individual.
Real wage losses are at the root of low consumer sentiment, new paper finds - https://www.marketplace.org/story/2026/08/18/real-wage-losse... - August 18th, 2026
> It wasn’t inflation per se, but the fact that wages didn’t keep up — that’s been weighing down consumer sentiment, he said. His proof: Belgium.
> “It is the only European country that had consumer confidence that bounced back after the inflation period,” Hurst said.
> That’s because it also happens to be the only European country where wage increases are directly tied to inflation. If prices go up by 7%, then by law, so does your salary.
Item 2 seems like a circular argument. If your wages did keep pace with inflation then of course subjectively there is no inflation. On the other hand this does not hold in all situations. In galloping inflation you might as well spend because savings get eroded.
Jurisdictions that require wages increase with inflation maintain purchasing power, jurisdictions that don't are inflating away your purchasing power while empowering capital (unless you're willing to take on more risk to find higher wages, if at all possible to find in the labor marketplace). It's that simple.
This is the standard in the Scandinavian social democracies. They have no minimum wage laws (though unions supplement that greatly) and a competitive labor market pushes wages up.
Much like housing, the best solution usually isn't government price controls. Better (if feasible) is abundance in the market.
They also have a much better safety net. Healthcare not being tied to employment is already massive.
I think a flat tax + UBI is the only way to go. The dream of AI should be a society where maybe 10% of people have to work. The nightmare is if the other 90% still need work but can’t find it.
Healthcare being tired to employment and related lacks of safety net are the only reason the most abusive companies (call centers, common retail experiences) have employees.
We would do well to improve safety nets so that everyone benefits.
Flat tax is only ever flat when you hold down deductions. That’s way harder than it seems.
The corporate veil is extraordinarily valuable to the point where a minimum 10% tax on any money passing through options makes a lot of sense. However, the idea you can pass liability off for free is so pervasive you’d never get something like that to pass. Not because of how good or bad the idea is, but because of how effective voting blocks + donors are.
Yes to a stronger welfare state, including untying healthcare and employment, and a UBI (more specifically a negative income tax).
But I think the nightmare you imagine is not realistic. There isn't a lump of labor. We shouldn't make policy decisions based on the assumption that the labor pool will be limited.
We have seen the labor pool shrink for construction, restaurant, cleaning, farming, etc greatly in the last couple years.
To clarify, that's the demand for labour in farming has shrunk while crop yields per acre have increased.
Three people doing the work required to seed, spray, harvest 4,000 Hectares for assorted barley, canola, etc is commonplace today in areas that once struggled to farm a few hundred hectares with four brothers and a father.
And yet, within the last couple years, the unemployment rate has remained stable within its usual 3-5% healthy band, and the total amount of people employed has increased overall.
Where labor has contracted in some places, it has grown elsewhere.
That metric is so gamed it doesn’t even make sense. If you’ve been out of work for 6 months (or is it 12) you just fall off the metric. So the entire homeless population of the US is not counted as unemployed. That’s been baked into the metric for decades and they have only gotten more discriminatory as to who counts as unemployed since.
There’s no duration for when you’re counted out of the labor force; only when you stop looking for work. Your incentivized to report your looking for work (and provide proof) to get unemployment benefits, and those who opt out of such benefits for more than 4 weeks are not counted as part of the labor force.
I think that’s fair, since even if you are homeless, as long you’re receiving unemployment benefits, you count as part of the statistic.
And there’s good reason to count certain people out of the labor force. Retired folks, stay-at-home parents, anybody else that’s willfully unemployed—if your working in or around government trying to make labor policy decisions, including these people gives you an inaccurate picture of the labor market. If you want to help people get jobs, you need to focus on the people that actually need help.
Of course no statistic is perfect, but broadly, I think that the unemployment rate is a useful and accurate measure. If you think otherwise, I’d invite you to propose a good alternative.
Are you seriously implying that removing people from “unemployed” status after 4 weeks of not submitting a job application is not a deliberate gaming of the statistic in favor of having better job reports?
It’s not on me to invent a new statistic. It is on me to push back on ridiculous claims that minimize the fact that this statistic has been defanged over and over again in the decades since it was first introduced.
The unemployment problem is about people looking for a job and not being able to find one. If someone doesn’t even want a job though, that’s not something you can “fix” anymore.
To include people who don’t want to be employed in the labor force is counter-productive, since why would you try to find jobs for people who don’t want them?
It’s not even that these people are “lazy” like many who (wrongly) disparage the unemployed say. They just aren’t looking for jobs at the moment—stay at home parents, retired people, anybody that doesn’t need/want to work. (And by the way, plenty of homeless people receive unemployment benefits and are therefore included in the statistic.)
The unemployment rate is useful because it helps us see how many people need jobs. If you start including people who don’t need jobs, the metric just becomes less useful.
To your other point, I’m not asking you to invent a new statistic. It’s just that when people say one metric isn’t working, someone smart usually has come up with alternatives. A lot of people for example don’t like using GDP, and thus economists have come up with HDI, GNI weighted GDP, or whatever else suits their taste.
I bring this up because there are few alternatives to unemployment metrics, simply because they are not nearly as problematic as you paint them to be. Practically every competent government on Earth uses the same measures for unemployment, and specifying the labor force to only people actively looking for work is very standard; if you want to say that this nearly ubiquitous method is wrong, I think it’s reasonable to ask what needs to be fixed.
They use U3 because it makes them look better and since no one is using the more accurate U6, there is no pressure to stop cooking their books.
Edit: only people who are homeless for less than six months would be on unemployment benefits. That doesn’t sound like “plenty” to me.
They headline U3 because it's best at answering the question "who is looking for work but can't find it", but of course they use U6. It's literally one of the main metrics in the monthly unemployment report by the Buerau of Labor Statistics. The BLS created the U-# system, and was in fact the first to report a separate U6 metric.
Eurostat, the Internation Labor Organization, OECD--what incentive do all these organizations have to globally misrepresent unemployment? Of course they measure and consider U6, but they choose to headline U3 instead not because it's prettier and they want to serve national propaganda interests, but because it's just more useful.
C'mon man. I have to give up on this thread.
Are you seriously wondering why a government would want to underreport unemployment?
Edit: it must just be a happy coincidence that U6 has never been lower than U3.
Didn't we have negative unemployment rate sometime during or right after COVID? I remember people talking about how gamed and disconnected from reality these numbers were because (I think) a bunch of people stopped looking for work or filing for unemployment and were dropped from the labor force for official statistics. It really messed up the models being used.
As far as I understand, that’s (negative unemployment) not possible with the way the statistic is measured. I might be confused though as I’ve never heard of the term.
In any case, COVID was a hellish time for pretty much every economic metric, but for unemployment specifically, the catastrophe didn’t actually end up lasting that long, and the labor market in the U.S. has recovered remarkably well.
> the other 90% still need work but can’t find it.
Where do all jobs come from? Ultimately they’re created by people, so I wouldn’t worry about there being a demand but no supply.
Jobs are created by desire, and the labor required to fulfill the market's desires. People won't ever stop wanting things.
Our wants today are vastly different from our wants a hundred years ago, and thus the labor pool looks vastly different. We shouldn't make policy decisions based on the assumption that there is a limited lump of labor.
> Jobs are created by desire
This made me pause and think for a moment.
Desire is not an external entity or being that manipulates us. Our biology generates desire, since it has been selected for by evolution through natural selection.
People create jobs.
But unlike the conventional picture people have in their head, it is a unidirectional creation process (i.e. by the "job giver"). The job is created through the dynamic of the "giver" and the "seeker".
Seeker and giver, and the ebb and flow between—-enlightening. Great perspective.
>People won't ever stop wanting things.
Citation required. I assure you, wanting vs. being able to realistically acquire is a very powerful force of want extinguishment. You cannot, in fact, get a thing, if the world around you is not conducive to enabling you to pull the requisite capital together to meet the prices set. Something that is getting markedly harder for various strata in the economy currently.
I don’t mean “wanting” in the traditional sense. In economics, “wanting” is more closely defined as a sort of always-on, unconscious self-interest.
https://en.wikipedia.org/wiki/Scarcity
Sorry to be so overly-intellectual. I probably should’ve been simpler.
> flat tax
FYI in some places flat taxes are technically unconstitutional
I don't think I'll ever understand this perspective. To my ears, all the AI hype and profoundly ignorant economic fantasies sound exactly like the bidet hype of the 2010s.
You can't have a revolution based entirely on not having to wipe your ass (except when you still do because bidets are garbage).
Unless you are fresh out of college and working at some lame startup or coding sweatshop, mature white collar work has always been pretty damn close to "not having to work".
Are we using the same kind of bidet? Or maybe we have to very different diets?
For me they're a huge upgrade.
Haha I agree. Although my bidet is phenomenal, air conditioned white collar work has always felt like a lucky getaway from real work to me.
To be clear, I meant that there are no threats to what has always kept white collar workers employed. The past few years have been nothing but the most asinine arguments by truly pitiable people.
You're easily replaceable early on when your only value is doing, but with more experience come more meetings and responsibilities. You become valuable for knowing, and knowing is not mere knowledge.
Assuming that the years of experience have shaken out the chaff, the only source of stress for those who remain employed is what is already inseparable from life itself. Personal growth without work doesn't even make sense.
That's why it doesn't feel like work. That's why the concept of "not having to work" is pathological and ridiculous. Anyone feeling this way about "work" needs to get help. I'm totally serious when I say that.
Is this another way of saying "choose a job you love, and you will never have to work a day in your life"?
With enough experience, it doesn't matter what you pick. Any job can become effortless. Choose a career that fucking pays at least.
I always wonder if minimum wage does more harm than good.
This conversation usually derails, so to be clear no, I don’t think people should work for poverty wages, a viable business should include happy non-subsidized employees.
My question is whether a global price floor psychologically depresses wages by establishing a global price anchor. Price anchoring is well known to influence the price people will accept.
For jobs like cashier that are fungible just blanket get minimum wage, would they pay more without one when the employer can’t just point to the anchor price and say take it or leave it? Would they be faster to localize wages to local costs?
This was fun to entertain but I don't think we live in that world.
You think it's possible that the true wage the grocery store wants to pay its employees is actually higher than the price floor? But for some reason they can't think of any other numbers to write down on the paycheck? And without the price floor they'd be forced to think for themselves and reconsider their morals and the market conditions and their balance sheet and pay $20 an hour instead of $15?
I think it's much more likely the minimum wage can be interpreted as "we would pay you even less than this if it weren't illegal." See the tipped wage. They would pay you $0 if they could.
You mention unions, but what you're leaving out is they have a huge advantage in those countries compared to the US. One big one is that, Union A can boycott a Company B over a dispute with Union C. That is illegal in the US, and it's a very powerful thumbscrew against the powerful.
It's one thing to fight your baristas, it's another to fight your baristas, bean supplier, mail delivery, and freight movers all at once.
This is true, and the collective agreements set lower bounds for almost all jobs. On the flip side, employers often treat collective agreements as the only salary option they're willing to offer for blue-collar positions, and the only wage increases may be the percentage bumps negotiated by the unions. In this case the only way to meaningfully increase your salary is to advance in your career. Doing the same work with double the efficiency will not be reflected in the pay.
Mind you, this does not apply to white-collar positions like IT in the same manner. The salary bands are still quite strict -- 6 figures is still a rarity -- but you do negotiate them and can get meaningful raises.
Why are tech wages lower in Scandinavian countries than in the United States?
Dane here. Europeans have a different appetite for risk. Venture funding is 100x harder to get in Europe, meaning far less dynamism in start-ups and far less innovation. Sweden and Denmark buck the trend a little, but it's still a different league.
Why is funding harder? Culture and laws we created as a result. We're far less accepting of things like leverage M&As, options, flexible employee remuneration and conditions (especially for start-ups), etc. VCs therefore need to clear a far higher bar to mitigate risk, meaning only the very best proven ideas receive funding.
Further, investors tend to prefer lower, but more stable returns. There is much less appetite for moon-shots. I could speculate that this is partly driven by the tax structures. Why risk $50M if you know that 60% of the rewards would be taxed? You would use a much more conversative risk ratio, preferring 5% returns but very low risk. This extends to individuals, too. Why start a business when most of the rewards from the considerable risk will be taxed? Especially given the onerous business laws.
Denmark and Sweden are notable standouts. Our laws make it easy to start businesses, operate, and fire workers as needs change. However we still have very high taxes.
There is one final thought: most people I know do not aspire to become Ferrari owners with five mansions. We aspire to happy and healthy families with good friends, good wine, and cozy holidays. If this is one's aspiration, risking their financial stability for something they don't care about would not be very common. Danes who do aspire for the Ferrari lifestyle leave for the US.
This is a great summary, and I agree with everything you mentioned here.
One additional thing to mention though is that Americans are also just richer. Even if you include government benefits (social transfers), Americans rank extremely high on measures of disposable income per household. As far I’m aware that is the most complete measure of income, and despite being a massive country of almost 400 million, the median American is comparable to someone living in Luxembourg.
https://en.wikipedia.org/wiki/Household_income
As you’d expect, this effect only grows when you go up the ladder, and American millionaires are on average richer than say, Danish millionaires.
(Note, I’m not saying that this is good or bad, just that it is. For what it’s worth I think we could learn a lot from the Danish model, but that’s my own distinct, normative option.)
Thus, since there is just generally more capital to go around, capital is easier to raise.
(And as an American, there’s plenty of us here too who enjoy the good life, free of Ferraris and mansions!)
It's a good point, and I think it's self-reinforcing. Americans are richer because they invest more because they're richer. This is why productivity declines are so pernicious. They lead to a negatively reinforcing cycle of poorer -> less investment -> poorer.
This is interesting and makes sense, the first thing I thought of is how California and the west started as gold rush, land, mining opportunities.
The people who risked their (and families) lives going west were taking very large risks for large rewards. And it's never stopped.
Great point. So many people I know who have worked in Silicon Valley have spoken about a different mindset there. Culture matters a great deal, but because it's intangible and hard to measure, we don't often see it in productivity and prosperity metrics and research. I think it's true that culture is contagious, but we also see that people who share values like to hang out together. The largest expression of this is a nation.
Not to look a gift horse in the mouth, but it's always been puzzling to me why American tech wages were so high.
The US has had many very successful tech companies. Those attract talented engineers that want to work there. Partly this is about supply and demand but the other part is that engineers who work for the successful companies see their compensation go way up due to stock options or RSUs (which are/were offered to attract said top talent and motivate them to work hard). If you have a new AI startup (for example) and you want to hire top talent away from Google or Microsoft or Apple of nVidia you're going to need to offer a competitive pay.
So competition over a limited talent pool in combination with a vibrant economy and many successful companies that make a lot of money. At least historically.
High salaries isn't limited to tech. Bankers, lawyers, doctors e.g. tend to earn more in the US.
Another aspect is that you get paid more but you potentially have higher expenses. So some of the delta is related to cost of living. But not all.
Well, for a while, the USA was probably THE premier country for electronics and IT. As a natural result, companies offer top dollar for top talent.
Now days, companies offer top dollar for Junior-level AI talent. And you see where that's going.
Americans are individualists and value their own career higher than any "loyalty" to an employer. So employers in fast moving sectors have to compete for talent with the money they offer.
The standard answer is agglomeration effects, I think.
Because America is the innovation capital of the world.
I know that sounds like corny and biased American exceptionalism, but I think it’s just objectively true.
Other countries can have vastly superior government policy, and that shows up in significant ways (like Denmark having an even higher productivity than the U.S.), but nobody has played the productivity game at as big a scale as the U.S. has, and that’s sort of just an insurmountable advantage for the time being.
NVIDIA, Apple, Amazon, Meta, Google—-I could go on for a very, very long time. Those companies alone are going to create heavy competition within the tech sphere, and add on top of that Baumol’s cost disease from every other big U.S. industry, and you get the current situation.
No other country has the behemoth of capital and opportunity like the U.S. has. This will naturally have a big influence on things.
We don't need a minimum wage if your minimum needs are met.
When everyone is the same (genetics, background, culture, etc) there is very little structural inequality in a competitive market. In an empire like the US, so many groups exist in a hierarchy that government support is required. In such an environment bare competition simply reveals and highlights fundamental difference, which is not conducive to social cohesion or harmony.
What are some immutable differences in humans that are not conducive to social cohesion and harmony?
Humans are not a resource to be inventoried.
[dead]
This is essentially how the job market is structured in Denmark, and it works very well. We provide strong safety nets, free healthcare, etc, but in return, employers are given wide latitude to fire employees. This allows them to remain unusually flexible in a European context - responding to market changes much faster than almost any other European nation. We don't even have a minimum wage. Despite this, people can and do leave when an employer treats them badly or pays them poorly. This forces employers to offer reasonable wages and working conditions, or they lose their employees. For example, in 2021, Dansk Arbejdsgiverforening measured that 38.4% of employees in their member companies changed jobs. This was during a period when inflation jumped but employers were too slow to increase wages. While this should not be extrapolated to the entire economy, it provides an anchor to understand just how dynamic our job market is.
Employees are (or should be) given more rights/protections than the employers because they have less individual bargaining power. The rights are there to counterbalance. For example it shouldn't be as easy to get fired as it is to quit.
The country's culture matters a lot. The same system that works perfectly in a healthy society will end up an abusive nightmare in an unhealthy one. Mobility for salary raises can also become mobility just to keep a job.
I don't disagree re bargaining power, but there are many ways to remedy this other than direct intervention. I think Denmark's model is one of the best in a nation with high social service costs.
> enables and incentivizes job hopping
I've often felt that I'm not very good at a particular company until I've been there 4 years... then I can really do good work. I wonder if there is any downside for society to incentivize switching often.
4 years seems like a long time, but I'd easily say that's true for a year. I suppose it's relative to your definition of good.
In my industry, 2 years is about what it takes to feel the ramifications for your bad decisions. Leaving before then makes you a bomb thrower in my not so humble opinion, leaving everyone else holding the bag. And unless you are a contractor, it's a resume red flag for me.
I get that not all jobs work out, but a long string of < 2 years makes me skeptical.
The labor market is just kind of complicated. Having a four year span where your real income goes down because you didn’t job hop isn’t ideal, but it’s totally possible that it pays off in the long run quite handsomely.
Ideally, you want to have a dynamic economy where people have very many paths to prosperity. In the US, you have people like Ted Sarandos who managed video rental stores for 17 years before taking a job at Netflix, which eventually led him to become CEO. Or you have Doug McMillion, who started at Walmart in 1984 unloading trailers at a distribution center and rose up to the CEO position. And you have Dara Khosrowshahi, the Uber CEO, who started his career in investment banking, became a media executive, and then served as Expedia CEO. An of course, there any plenty of extremely successful entrepreneurs who never worked for anyone else before founding their own company.
For sure there is a downside. To develop real expertise in a domain takes time. We have people hopping between jobs before they've even learnt how to do one job right.
In software it can take a long time between writing the code and seeing what happens to it in the long term. How it evolves. How it's maintained. Quality. If you never close this loop you're limited in your growth as a software engineer.
I don't know what the magic number is but I can relate to 2-4 years before you feel like you're comfortable in a new and complex domain. So ideally people stay some reasonable time beyond that. The company is getting a lot more out of this person then they did when they started so it should be a win-win. Instead what's happening is this guy is going to jump ship, get a higher pay, and be totally ineffective or even contribute negatively, and the company will hire someone new and possibly pay that new person more than the original guy, only to have him spend a ton of time getting up to speed...
I think it's bimodal for me, lots in the first six months bringing fresh eyes and outside ideas followed by a lull of a couple years before the benefits of realy knowing the company sets in.
What kind of things made you feel not good in the first four years? Just unfamiliarity, something else?
Maybe we can fix the things that make workers uneasy in the first few years.
It's not about being uneasy. I've had six jobs in my career that are all over the lot with respect to software engineering. How to work with specific influential personalities like the C-suite, picking up and gaining some expertise with the company's stack, establishing the proper processes and engineering discipline for mentoring and growth. Over time I see the decisions that the company has made and what has worked and what hasn't, and also the reasoning behind those decisions, and I can bring that knowledge forward when the company tries to iterate on their current processes. That is immensely valuable in maintaining continuity in the business and making good decisions that don't repeat past mistakes.
I don't know for a shortcut for this. It's simply experience, though I do find the more industries I work in and the more jobs I work, the more I can pattern match across that experience to make better decisions faster in a new job.
not op but -
well yeah - unfamilliarity, to a certain degree. But its more than that. It's the slow process of gaining expertise. There are of course many transferable skills from one company to another. and there are some that are not. Knowing the relationships between all the bosses, who got passed over for promotion, who needs a certain type of project on their plate etc. Also knowing all the history of various prior initiatives, failed and successful, really helps you get stuff done. Most work in non-small enterprises needs building yes but also buy-in from others, which needs them to respect you, and for you to know what hoops to jump through and what to say to keep tham all happy.
The more turnover the more leadership wants to keep talent. The more turnover the more hiring leadership needs to keep headcount.
Greater turnover is good for all employees and worse for employers
But greater turnover only occurs when people don’t want to stay.
It’s my observation a high-turnover business is often good for nobody. There’s more spent in retraining etc than if you just paid halfway-competent people properly instead of literally rolling the dice every year or more.
Yeah. Itd be ideal if companies could adjust their existing employees wages fairly. This alternative of people moving frequently creates a high turnover org which isnt efficient. But if employers dont compensate their existing employees fairly then high turnover is unfortunately the only way to go
> Itd be ideal if companies could adjust their existing employees wages fairly
They can.
Employee-owned companies do it all of the time.
Properly-ran privately-owned companies do it all of the time.
Who’s the odd one out?
Not just in employment; voting out incumbents improves economic growth for the majority: https://www.nber.org/papers/w29766
Since the early 1980s, start of the Millennial generation, inflation is 300%; takes $800k/yr to have the buying power of $200k/yr in the 80s
Millennials and GenZ have only ever known austerity and oligarchy.
And that Exxon computed the min-max of the climate trend back in the 1970s just says they know, given all the data, they know.
GenX edge lords don't give shiiiit
https://www.nytimes.com/2023/08/25/style/gen-x-generation-di...
I have zero respect for people >50 especially any in official policy roles. Zero fucks for anyone but themselves this whole time; ignored reality just like religious nutters and presumed political dogma would be on their side
Jokes on them; Millennials are even more convinced it all just goes black with death, fewer young people going into elder care jobs, population decline crushing those jobs... GenX can enjoy hobbling to their toilet unassisted with bed sores and gout. Fuck them too then
That's some pretty extreme bitterness. Good luck to you.
Don't know you, text on a screen, don't care.
American freedom; off the hook assuring a social safety net exists for you is pretty great.
Will go my entire life never having to worry if you end up buried in medical debt living in your car.
I mean, can you blame them? Look at the world the boomers damned us to.
Which is statistically better than any time in history for all ages.
*For long time periods, not cherry-picking small time periods.
I dunno, the Ute and Navajo folks I live near don't agree. A lot of the indigenous folks I know think we are living in a literal apocalypse.
Historically the way white folks have squared that circle has been to say that those folks aren't really people and simply don't know the joys of Christian city dwelling.
I can't make the math work, though.
And statistically worse in many ways. Statistics are just euphemism for history, prior observation; stats exist for both categories. We can write and carry on about wars we won and ignore Vietnam with stats just as we do English. It's just a language that lets us ignore physical reality like religious catechism; same biological ability to delude ourselves.
There's the whole ignoring externalities of capitalism and reality itself for toxic positivity thing.
Sure is great though watching where I grew up slowly become engulfed in wildfire smoke; something that never happened until 10 years ago.
I was thinking the time it takes to find a job is good indicator of how hard it is to switch jobs, if that was tracked and reduced that would be good for workers.
Reforming tax incentives to prevent health insurance from being coupled with employment would be a major improvement on this front.
And yet that has terrible implications. Job hopping is both extremely unsatisfying on an individual level (no place to belong; you're just an interchangeable cog in the machine being swapped around, giving you no sense of purpose in your work) and on the greater national economic level (it's insanely inefficient and completely irrational to churn employees because you're willing to pay new hires more than your veteran staff).
A competitive labor market doesn't automatically mean you switch jobs constantly though. You get choose which job you go to, and if you have better options available, and choose your optimal fit, that can give you more purpose, not less.
And while it is inefficient if a company has to constantly retrain employees, overall you can have a more efficient market when people are given options, since employees can find the best fit. If you're working a job that isn't the best possible fit (something that's harder to find when your limited by time and resources) that's worse overall for the economy.
Of course there's more nuance here, but this is the core debate of unemployment payments. More unemployment benefits incentivizes people to stay unemployed longer (bad), but when they do find eventually find employment, it's usually better employment (very good).
> A competitive labor market doesn't automatically mean you switch jobs constantly though.
Maybe "a competitive labor market" doesn't, but "job hopping" does. That is, in fact, the definitional meaning of job hopping. They specifically made the claim about "job hopping" as pertains to a mechanism for achieving wages. This is incompatible with finding an optimal fit -- even if you found your optimal fit, you would essentially be taking a massive wage cut to stay at your optimal fit job for more than a couple of years, if job hopping is the chosen mechanism for society-wide wage growth. I was responding to the claim that was made about job hopping, not some other claim about competitive labor markets.
The optimal fit doesn't remain static.
The reason for all of [job hopping, fluid labor markets, bankruptcy, startup formation, inflation] is because the world doesn't stay the same. Desires change. New technologies are invented. Resources get depleted, and substitutes need to be found. Bottlenecks emerge. Old people die, and young people are born.
Changing wages and periodic layoffs are ways of adapting the jobs that people do to the new realities of which jobs need to be done.
Yeah, that's a romantic idea, but none of those grand societal trends really has anything to do with the reality of job hopping. The reality of job hopping is that the market is irrational and will pay 20% more to a new college grad they have to train to replace somebody with 15 years of experience they just laid off because they refused to give them a raise even though the person with 15 years of experience brings the company 10x more profit than they are paid in salary.
You're right, and I should've addressed you more directly.
Job hopping is the result of competition in the labor market, and while some may find it unfulfilling, that is usually the exception, and macroeconomically speaking, more job hopping can be really good for the overall market. That's all I was saying, though I forgot to mention how competition in the labor market relates.
My definition of job hopping is to switch jobs continually until you find the right fit, the right fit including wages as a factor among many others. I suspect that your definition means jumping jobs arbitrarily for the highest wage. In that case you are right that job hopping is bad, and it's my fault for confusing job hopping as wage increasing mechanism vs job hopping in general.
This really depends on mindset.
If your mindset is "The economy is an incredibly dynamic, living thing whose purpose is to satisfy the consumer desires of the moment", then job-hopping can be all of very satisfying, very lucrative, and very purposeful. Your purpose is to do whatever is most needed. You don't get attached to any one task, but treat yourself as malleable and adaptable, and think of your past roles as a portfolio of skills and experiences that you can draw on to meet new challenges. You could describe your approach to work as "Work is something I do, not what I am."
If your mindset is "The economy is the society that I grew up in, and I'm seeking my place in it, and then I want a role where I can grow and build expertise", this is extremely unsettling. You view your job as an identity, a part of yourself. To leave that job is to leave a part of your identity behind, and to be fired or laid off is to have a part of your identity ripped away. And so you'll fight hard (and take many poor bargains) to avoid being put in that situation. It's not simply a matter of economics; it's a matter of being and belonging. Work is not just what you do, it is who you are.
Commerce vs. Guardian syndrome [1], or growth vs. fixed mindset [2]. There isn't really a right answer, but American culture, society, and business favors commerce syndrome over guardian syndrome, while many other cultures (really, most of the rest of the world) is the opposite.
[1] https://jebkinnison.com/2016/04/29/jane-jacobs-monstrous-hyb...
[2] https://online.hbs.edu/blog/post/growth-mindset-vs-fixed-min...
There is another thing that has kept me from moving on - when I moved I often found the grass wasn't greener, it was just a different texture.
Competitive labor markets are FAR more efficient in terms of labor productivity, allocation, skill development, and spreading ideas around. One of the reasons the Industrial Revolution happened in England was because labor was more mobile than on the continent.
> [...] on the greater national economic level (it's insanely inefficient and completely irrational to churn employees because you're willing to pay new hires more than your veteran staff).
A certain amount of churn is good on the national or even global level, because it moves knowledge between companies. Probably not great for the company you depart, but great for the company you arrive at.
Job-hopping doesn't seem to have those downsides in Silicon Valley though? I think the "feeling like a cog" aspect has more to do with company size. Can you get a meeting with the CEO?
I don't know why you think SV doesn't have those downsides. In fact the entire world suffers the price of SV driving away their own employees with institutional knowledge and massively diminishing the quality of their software as a result.
I worked at a series of startups and I think having lunch every day with the other employees was an excellent way to get to know them. These jobs didn't last long because the startups weren't all that successful, but I remember them well.
Or maybe it was because I was younger then?
Stayed at Google over a decade and it wasn't quite the same, particular when working with people in distant offices.
> any policy that makes job hopping harder than staying would suppress the wage level
Like healthcare being tied to employment?
Exactly like this.
Since a public option will never happen, maybe the most feasible fix we could do is to do a REAL version of the P in HIIPA - portability. Let employees stay in the group plan of any company, paying the full premium a la COBRA, but forever, and require companies to give a tax-deductible cash benefit equivalent to the premium subsidy they'd be entitled to in their new job, if they show proof they're in a COBRA plan (which for efficiency, should just be a flag in some government database since they're all up in our business now with the 1095 forms anyway, they ought to know).
We need to ban healthcare provided by employers.
Ok, good luck with that. When dems had both houses and Obama in the WH, the best they could do was the ACA which was a HUGE compromise (no public option, and in many ways a huge handout to the entrenched insurer lobby). But by all means, go for it.
Anyway, the reason for employer-based care isn't to be evil, it was to create risk pools. Insurance being purchased only individually has big problems: the insurers can't price the risk for a new individual subscriber in any sensible way without going back to the "pre-existing conditions exclusion" BS that all of us hate, or penalizing people with high premiums based on the conditions they've had. Employer groups fix that because they can look at a company as a whole and understand that say a gym chain disproportionally employs young and fit people, whereas, say, Walmart, employs a more health-diverse and age-diverse set of people, so maybe they need to pay more per person. So they can price risk efficiently without punishing individuals.
Of course I personally think the insurance idea itself is the wrong way to model paying for healthcare, but it's what we have, and distorting the market even further will only make things worse.
Bottom line, if you want major changes, work on convincing more than 49% of the public to vote for your party.
> it was to create risk pools
Imagine if the risk pool was the entire country’s population. Just like it is for the cost of police and elementary school.
Now imagine you don’t even think of it as “risk”, but a human right that everyone gets. It saves everyone money AND you get better outcomes.
This idea is so well understood hundreds of millions of people in every developed country on earth - except one - use it everyday.
shrug I’m rooting for a public option. It’s a democratic republic though. Only way to get a change like that done is to convince more voters that your party actually represents their interests in order to get the power to push something like that through. Yet the Democrats have been losing support for years, because they now expend most of their political capital on unpopular policies, and appeal only to college-educated elites, showing disdain toward everyone that doesn’t already support them.
Self-correction: I introduced a slightly less common misspelling of "HIPAA." I regret the error. But at least the P does stand for portability. LOL
Or hiring practices that can remain irrational longer than you can stay solvent?
The way to benefit from irrational hiring practices is by starting your own company that's less irrational, and thus can scoop up good workers for relatively cheap (while still paying them more than they get in the rest of the market.)
Worked for Alan Greenspan and his consulting firm Townsend-Greenspan.
If you run your own company like that, then the longer the market stays irrational the bigger your gain.
Ah yes, just make sure your dad is a stockbroker like Greenspan's before you plan on spending all that capital in one piece.
You might like https://sockpuppet.org/blog/2015/03/06/the-hiring-post/ more if you don't like Greenspan.
Low job switching is a sign of a stagnant economy and society. An environment where a worker feels confident to change jobs has all kinds of hidden benefits like business-process cross-pollination.
Your job hopping comment is interesting and is generalisable: reduce monopsony in the labour market, and you get more competition for labour that actually bites.
The minimum wage is a strawman by comparison: it doesn't actually help workers.
Gig-work like Uber is a great safety valve to enable instant job hopping for unskilled labour. And not just the job hopping itself, but also the threat of job hopping.
I'd like to see a world where the government provided a job for anybody who wanted one. If you're not enjoying your corporate job you can go back to planting trees to offset carbon emissions. Getting to old to plant trees? Go work in the library. Want to develop it skills? get a job helping the government transition to Libre Office
This doesn't work though. The government needs to pay you. Where does the money come from? People working for the government tend to not really work that hard because what's their incentive to work hard? Are you getting paid per tree?
If the government wants trees planed it's better for everyone that they hire a company that plants trees. Even that isn't always that great but it's less worse. The government doesn't want that and doesn't have the money for that. They could get that money by raising taxes which increases cost of living for everyone that works and that tends to be not popular.
Anyways- that's what the USSR looked like or maybe China before they switched to their version of a free market. Due to human nature and other factors it doesn't work.
Ah yes. A great example is how much cheaper and more efficiently our military support is since we fired all the military cooks and gave all the contracts to KBR and Haliburton.
People don’t work hard for crap wages unless you beat them with a stick. Government jobs are seen as cushy because there are actual rules and regulations being followed as to how much work should be done. Corporations just skirt that, do a worse job, and then spread your type of propaganda everywhere.
People wouldn’t be jealous of the government job holders if they could achieve a similar work life balance at Joes Tree planting service.
This is a beautiful fantasy and it sounds like what most college freshmen think the world should be like. When that was practiced IRL in the Soviet Union, the issue is that if you are owed a job, people figure out really quickly that they can just phone it in, so those trees don’t really get planted, etc. The managers of the tree planters also don’t do their job of making sure the work gets done - they just report to their managers that the tree planting project is going great. Everyone gets paid. But the jobs that actually need doing also don’t get done either, so you have shortages of everything constantly. What you’ve created is an economy that barely subsists at best, since everyone does the absolute minimum and just lines up for their paycheck.
Why would you assume you can't be fired for phoning it in. If you want to daydream about utopia you have to assume we can solve trivial problems. I mean, you could just pay per tree for example?
There is no rule that says you can't have performance bonuses as a government employee, nor are there any rules to say you can't have competition within government departments.
I'm no expert, but I think the problem with the Soviets were that you were not rewarded for effort, and I think we all understand why that's important.
I've read in the US there are teachers that can't be fired because of public school tenure laws and union contracts. So yeah, first thing you have to do is have a sane and functioning government. Then you can start dreaming about a better society.
> Why would you assume you can't be fired for phoning it in. If you want to daydream about utopia you have to assume we can solve trivial problems. I mean, you could just pay per tree for example?
If you fire them, they're still entitled to a job, right? So some other agency has to hire them. The flunkies will progress from the most demanding jobs, on down to the ones where the assignment is like, "Just please collect at least one piece of trash per day, okay?" The net effect, I'd argue, is that jobs that are necessary but high-effort, like assembling important machines, constructing buildings, food production, IT support, are starved of workers because you can get paid decently for 1000% less stress to be on litter patrol, or the mailbox graffiti removal squad, or whatever.
If you pay piecework, the least motivated will just do terrible work (in many jobs a poorly-done thing can be a big problem), and if you don't pay the ones who don't manage to plant a single tree, then that's technically not a job (though it is daycare, and since you've still got to actually pay the overseers you're generating negative value on the whole operation).
> problem with the Soviets were that you were not rewarded for effort
We actually agree on the important points then, it seems. In my view of people, the ones who are motivated to be truly excellent even with the visible goal of the bonus are rare, and the ones who are motivated to cheat "the system" (which is really just cheating the rest of us who do our share) at every turn are, while not the majority, more than numerous enough to tank any system I've seen that tries to achieve aims like universal employment or true zero poverty. (And worse, they also seem to climb to positions of power of those systems in shocking frequency!) And finally, once people see the freeloaders defrauding society from both the top and the bottom, the truly excellent contributors to society are the first to flee to somewhere their efforts will be rewarded, and the reasonable middle of hard workers also do. This concentrates the low productivity further.
Would you staff the sane and functioning government from people outside or inside the society you're trying to fix?
Bad societies are a reflection of their people.
I guess one good thing the Trump administration demonstrates is that you _can_ just ignore past norms and laws and do what you want. You can bring a wrecking ball, swing it around, and force change if you need to.
Compare and contrast https://slatestarcodex.com/2018/05/16/basic-income-not-basic...
I agree with the work sucks bullet point. So nobody should work. We can all just sit at home, get our UBI money, and pay our rent, get our groceries, buy a car, get fuel, go on vacation. That sounds perfect to me. But.. who makes the car? who grows the fruit and veggies? Who works in the store? Who builds houses? Who repairs and cleans those houses. Hm. maybe somebody has to work after all.
Seriously I support having a decent social net so that nobody is starving on the street without healthcare etc. but the preference is always that if work is available someone should work (assuming it's reasonably suitable, they're not taken advantage of, they are able to work etc.).
UBI has to be significantly lower than the average taxes paid. If it isn't the books don't balance and eventually inflation kicks in hard and eventually it reaches that equilibrium. If nobody works then taxes are $0 and UBI is $0.
So if you do the math using fairly roughly you'll find that the US can support a UBI of about $1500/month without significant inflationary pressure. That'll pay your rent (if you're sharing an apartment) and cover groceries (if you mostly live on rice and beans). If you want a car, vacations or the latest iPhone you have to work. So most would work and build those cars et al.
You are indulging in a Black And White Fallacy here.
UBI doesn't mean no one works. It means no one has to work just to live.
And even if you want to ignore the actual scholarly research on the subject (which is ample), we have plenty of examples of people who would never have to work a day in their lives, and yet they still do so, sometimes even despite millions of people actively hating them for it: the very wealthy, particularly those who inherited generational wealth.
Scott Alexander uses a lot of words to argue his points, but I don't think he makes them very successfully. Almost every point in the linked essay can be easily refuted without thinking too much. Perhaps he is arguing for a spercific implementation, but if we are dreaming about utopia, why not be generous in our interpretation for how the jobs for all might work. We are comparing it to the dream of UBI after all.
1. We could provide jobs for disabled people that makes feel better about themselves. Also remember this is jobs for all who _want_ to work. There is still disability for those that need it.
2 & 3 Government provided jobs could help caretakers and parents because they could be more flexible with hours and shifts. Work while your kids are at school.
4. Jobs causing poverty because you have to drive somewhere and eat out because there is no break room is ridiculous. I laughed out loud when he argued that if you work you are too tired to drive to the shop where the cheap groceries are sold.
5. Yep, some people need to be fired. I'm not sure what he is trying to say here. I think these government jobs need to be run well, and employees need to be paid bonus if they do good work. (Compared to other teams that do the same work)
I could go on.. but seems a little pointless.
> The minimum wage is a strawman by comparison: it doesn't actually help workers.
[citation needed]
By measures such as own-wage elasticity [DUBE & ZIPPERER] increases to the minimum wage evidently increase wages more than they decrease employment.
[DUBE & ZIPPERER]: https://www.nber.org/papers/w32925
A (big) decrease in employment would be sufficient to tank the minimum wage, but it ain't necessary. I'd say, concentrating on employment is a bit of a red herring.
A worker's compensation is a whole basket of pay, working conditions, career advancement opportunities, prestige etc. Similarly, what a worker does for the company is a whole basket of things.
Minimum wage outlaws baskets where pay per official hour is under some threshold.
For an illustration of different baskets, have a look at the hectic life and relatively higher pay you get working for Aldi with the more measured pace and lower wages at Walmart.
I am taking your reply as stating a lack of intention to provide any evidence for claims given you have failed to do so.
Yeah no thanks, I rather have the government regulate some actual floors rather than hoping that the better angels of American corporations eventually do the right thing.
Also who wrote this theory? Sounds like the wet dream of some neoliberal econ grad.
You're not simply hoping that corporations do the right thing though. Rather, you're making it economically unfeasible for them to pay workers less.
That's good because you don't have to rely on corporations acting morally, and corporations who do act good out of moral obligation aren't punished fiscally for it. It also just works better than adding a price floor, if done right.
And although the idea is sexy, it's far from a wet dream. It's actually the standard in the Scandinvan social democracies.
https://en.wikipedia.org/wiki/Flexicurity
Gotcha, pure fantasy that seems to rely on many assumptions that don't hold up in other countries. Do appreciate the criticism section on wiki: "a purely linguistic combination of opposites that can be applied to virtually any policy mix."
Everything we try will rely on some assumption, but I think it’s unfair to call that fantastical. What assumptions do you think are uncalled for?
Norway, Sweden, Denmark—these are countries where this model has been proven to work in practice, not theory.
If you still call bullshit though, I’d cordially invite you to show me similar evidence for price controls working as well as flexicurity does in the Scandinavian states.
NC teacher salaries are terrible on their own but they are also outpaced by inflation.
The new budget just got approved. Last year a teacher with 15 years of experience made $58,270 and this year they will make $62,500 so right around an 8% bump but the prior two years was only a ~$1000 bump each.
So 2023 -> 2026 $56,250 -> $62,500 was roughly 12% increase in pay but adjusted for inflation $62500 in 2026 is ~$57,220 in 2023 so not even an actual raise of $1000 in buying power.
That's close to what local IT makes in my state.
Local IT with 15 years of experience and a masters degree?
Have to adjust for days worked for teachers.
Sure, $62.5k for a 10 month contract is $75k over 12 (62.5/10 == 75/12) but my point about purchasing power remains.
As the other commenter called out it's low considering to get to this salary at 15 years of experience you also have to have a master's degree. Master degree holders have a median salary $95k in the US so this is off the mark by a considerable amount.
Education degrees are broadly considered some of the easiest degrees and have large numbers of them matriculating:
https://nces.ed.gov/programs/coe/indicator/ctb/graduate-degr...
They're signals with low leverage since everyone has to have them in their field, so you end up with lower nominal pay from the institutions that buy most of that labor.
Consider acceptance rate as a metric - education has one of the highest by this report, up there with public service:
https://cgsnet.org/wp-content/uploads/2025/12/CGS_GED-2025_R...
maybe they are easy but "everyone has to have them" doesn't change the amount of time and money invested in getting them. The real compensation under that is stagnating with inflation. NC is particularly bad because state law forbids collective bargaining and they are at the whim of the legislature (which stalled a budget for 1000 days).
The signal of supply and demand the cost (and debt) of an advanced degree is not reflected in the marginal salary bump over bachelors degree given the rising costs of tuition. From same site you used 46.7% of public university masters degree completions used debt so basically half.
https://nces.ed.gov/programs/digest/d23/tables/dt23_332.45.a...
> A huge chunk of the people who's wages beat inflation only did so due to job hopping
so job hop
the market is trying to tell you something
Not necessarily. It could also be simply saying that industries where job hopping is common (e.g. tech) are more highly paid than industries where job hopping is really uncommon (e.g. teachers, utilities, etc)
That is completely expected. If you don’t shop around, why would you get the best price?
Theoretically jobs reward loyalty and wish to maintain institutional knowledge.
For some reason right now everyone thinks they can get away without those. And I can't say they're precisely wrong. But as someone working on dumpster fire fighting, holy hell is a lot lost when you lose someone who's done nothing but X for 15 years. Now you've got someone with no experience with our processes, overworked, also underpaid, with nobody left with any experience of their own to train them. That can cost an awful lot of money.
Employers are optimizing for labor cost control. As long as the enterprise continues to function and is profitable, the behavior continues. We cannot say it doesn’t work as long as it continues to work.
Some have said job hop, I’d say unionizing can also work.
Example:
Michigan Insurance Giant Blames "AI" for Layoffs–But Evidence Points Overseas - https://news.ycombinator.com/item?id=49365161 - August 2026
> My investigation points to a far more conventional explanation: Acrisure is shifting work once performed by American employees to lower-cost operations in India, the Philippines, and Colombia.
Labor cost controls, in this context via offshoring.
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Would love to see this calculated in high cost of living areas (NY, CA), pretty sure some people have seen 20% wage declines since covid (in terms of how far your income goes)
What 2021-2024?
Check the prices of the flagship 1975 Ferrari, the flagship 1975 Hasselblad camera, or, I don't know, a 1975 Cessna 182 in reference to median 1975 household income.
Then check it again for 2026.
Oh, but we have GPS, Amazon Prime, and doomscrolling now.
Thanks, I'd rather take the Cessna.
The most jarring effect is to look at incomes in ounces of gold before and after 1971. Explains a lot of things.
Why would universal economic growth imply everyone owning more of a resource with a limited supply?
There's only so much gold in the world (which is kind of the point) - if people in $INSERT_COUNTRY owned more of it per capita, that would mean global inequality has increased, and thankfully we've seen the opposite of that.
Workers have become ~90% more productive over the last forty years, and received very little of that value, while the US throws off ~$5T in profits per year to shareholders. There is a reason socialism has become palatable politically recently to the electorate, and will continue to be until the labor situation changes.
Most Americans are shareholders, I’m all for spreading the wealth but don’t ignore why there’s so much to spread. Americans reinvest for profit
Factually inaccurate as it relates to equity exposure (“shareholders”). There is no evidence of “wealth spreading” beyond a token gesture.
https://www.visualcapitalist.com/a-visual-breakdown-of-who-o...
https://www.stlouisfed.org/open-vault/2025/june/the-state-of...
> The top 10% of households by wealth had $8.1 million on average. As a group, they held 67.2% of total household wealth. The bottom 50% of households by wealth had $60,000 on average. As a group, they held 2.5% of total household wealth.
> The top 20% of households by income had $4.3 million in wealth on average. As a group, they held 71.1% of total household wealth. The bottom 20% of households by income had $180,000 in wealth on average. As a group, they held 3% of total household wealth.
https://finance.yahoo.com/news/wealthiest-10-americans-own-9...
Top 10% owns 93% of equities. Middle class wealth is primary residence real estate, representing roughly 60% to 80% of total household wealth.
> In any event, stock market booms have traditionally produced the largest rewards for those who are already wealthy. That's because the wealthiest US households have most of their assets tied up in equities, while most middle-class families have their assets tied up in housing, researchers said in a 2020 study. Meanwhile, the bottom 50% of Americans held just 1% of all stocks in the third quarter of 2023.
https://eig.org/whos-left-out-of-americas-retirement-savings...
> The latest data show that 42.0 percent of full-time working Americans do not have access to retirement plans, 44.1 percent do not participate, and 50.5 percent do not receive an employer match. (Note that these figures are for employed workers between the ages of 18 and 65, excluding government and self-employed workers.)
https://www.gao.gov/financial-security-older-americans
> Even for those who do have access, traditional defined benefit pensions have become much less common as defined contribution plans, such as 401(k)s, have become the primary type of retirement plan. This shift has increased the risks and responsibilities for individuals in planning and managing their retirement. Yet research shows that many households are ill-equipped for this task and have little or no retirement savings. As of 2022, about half of households with a worker age 55 and older had no retirement savings, and 32% had no retirement savings or a defined benefit plan.
I guess the corollary to this is that the more money you have, the less efficient you can convert money to tangible wealth (there's an actual studied conversion 'factor' for different kinds of wealth).
Wealth, in financial theory, is the present value of all expected future cash flows an individual or asset can generate over time, discounted back to today's value using a specific rate of return. It measures accumulated economic potential rather than just cash in hand.
Are there limits to future economic potential? I argue yes, it is a function of demographics, which are in structural decline. Therefore, I would agree it only becomes harder over time to chase after the current amount of total potential wealth, which will decline into the future.
Terra Incognita: The Economics of a Shrinking World [pdf] - https://news.ycombinator.com/item?id=49352811 - August 2026
> "As of 2026, humanity is likely below replacement fertility. That has never happened before, not in wars or pandemics. But the real surprise is that the fall has been concentrated in low- and middle-income countries and among poorer and less educated women. We fit a single-factor model to 236 countries since 1950: the common component peaked in 1978, and what drives fertility down today are country-specific trends, 219 of them negative and not one leveling off. None of the commonly cited mechanisms can account for this pattern, so we offer a conjecture: modernity itself, which makes a third child expensive and childlessness cheap. Children come in integers, so it takes very little to move a cohort’s fertility rate from 1.8 to 1.3. And nothing in an economy pushes fertility back to 2.1. We close with the main economic consequences, in particular slow growth."
The demographic future of humanity: facts and consequences [pdf] - https://news.ycombinator.com/item?id=44866621 - August 2025 (400 comments) (start at slide 31 of the pdf)
I'm sorry—vapid trappings of conspicuous consumption? You've just named three vacuous toys, whereas GPS and e-commerce deliver real value to working people.
Doomscrolling, I agree, is a devastatingly poor substitute for a real civic life.
The whole point is that it is not to the "working people" that the "real value" is "delivered". The real people got the crumbs and were told to appreciate it.
Almost all of the value went to those who one might call "unreal" people.
Gps didn't provide value to regular people?
it absolutely did. Those were the crumbs I was referring to.
It enrages me, because "they" took all the value, and told us "my god, how immoral and vulgar it would be of you to covet the vapid trappings of conspicuous consumption! Instead, how wonderful it is that you can drive your car from your house to our offices in the morning, and our businesses in the evenings, avoiding traffic in service of shareholder value, while teaching our systems everything about yourself, so that we can market even more goods and services to you, even more insidiously, all thanks to GPS!"
They told us this while driving the Ferraris and flying the private airplanes.
And so many of us now come and say "oh, how immoral -- desiring an object of desire! Isn't it so nice that we can now build shareholder value more productively using GPS?"
Sorry, but no. It isn't nice.
But Ferraris and private planes are stupid vices.
But Ferraris and private planes are stupid vices.
...and I only ever commuted by bicycle or train.
I don't know, friend. I am not a moral absolutist.
There's nothing that makes my heart tremble like starting the propeller of a small GA airplane. On that moment I reconnect with my nine year old self. You may call me evil, vulgar, stupid, shallow, vicious even. I know what I feel inside. The rest of the world can disappear on that moment.
Sorry.
Not many people buy GA aeroplanes, so it's a sensible decision for those to receive a lower weighting than other consumer goods in a general purpose index like the CPI.
There is a divergence between the prices of goods the US produces and those that consumers purchase, as measured by the GDP IPD and CPI respectively, but that is not something that is appropriate to measure using one highly idiosyncratic good, nor even a basket of goods like "things I personally want to purchase", if one is wishing to produce numbers that others agree are reflective of the average experience of many.
Yes.
But also, the very point of this entire thread was that even these highly idiosyncratic goods were orders of magnitude more accessible to the median American household back in 1975.
Despite that very same household being orders of magnitude more productive in 2026, thanks to GPS (and the rest of technology).
"Idiosyncratic" doesn't mean "we expect it to me less accessible", it means "we expect it to behave in its own special way so just taking a random one of them doesn't tell us anything about the average experience".
Given the number of goods and services there are in any given economy, you can probably find at least one good of each of the following categories:
A) that was very inaccessible in the 70s, and accessible now,
B) that was very accessible in the 70s and still very accessible now,
C) that was very inaccessible in the 70s and still very inaccessible, and
D) that was very accessible in the 70s and very inaccessible now (in addition to the one that you already picked)
None of those four tell us anything about whether "things people usually purchase" or "things the economy generally produces" have gotten more or less accessible, because different goods have gotten more or less expensive at different rates. You can easily point towards increasing inequality, which shows that the median American is getting a smaller share of income, and the divergence between CPI and GDPIPD, which serves to show that what people purchase on average (CPI) are getting more expensive faster than what the economy produces on average (IPD). (by about 30% on average according to FRED)
Insisting on intentionally using less useful evidence to support your claims is like making a strawman of your own argument, when clearly a stronger argument exists.
[FRED]: https://fredblog.stlouisfed.org/2023/03/the-differences-amon...
everyone can cherry pick data to whatever economic conclusion they seek
with a much higher chance of dying in 1975 Cessna 182? I suspect most rational consumers won't.
Because of safety improvement they aren't comparable goods.
My friend, the 2026 Cessna 182 is basically the same airplane as it was in 1975, with digital screens instead of analog gauges, except now it costs about $750,000.
That's a whopping $735,000 increase over its base price of ~$15,000 USD back in 1975 for a brand-new airplane.
I promise, those avionics aren't worth $735,000. We've just gotten much, much poorer.
EDIT: Heck, if this doesn't convince you, here's another set of numbers:
1. $15,000 of 1975 dollars is about ~$95,000 of 2026 dollars
2. A heavily used 1975 Cessna 182 today costs about $150,000
> with a much higher chance of dying in 1975 Cessna 182
Tell me you're not a pilot without telling me...
What improvements in GA since 1975? They are very slow to change from what I understand. There are a ton of airframes from that era still flying today.
I mean, yeah at the top end things have gotten nicer.
>What improvements in GA since 1975? They are very slow to change from what I understand.
Which is exactly why they make a great comparison point. Harder to get bad faith sidetracked by "but your modern car has airbags" and "but your modern house is marginally bigger" type commentary when the actual product has barely changed.
I guess RSUs aren't really "real wages" but mine vested over four years to the extent that by the time I left they were worth barely 25% of what they had been when I signed the offer. Happened over time, too, so quarterly vests took a decent hit in that timeframe.
RSUs are great for workers because if the value dips 75% you can just leave and get a new job and get new RSUs at a reasonable price. Of course it's not trivial to switch jobs but at a 75% cut it's surely worth at least looking around. I don't think you can really consider it a fault of the economy if you didn't.
I did that once. The company doubled rsus the next quarter (still didn't make up for it), then the stock price 5xed over the next 3 years. By the end of it, if I had stayed, I would have cleared 1.2M per year.
Although I heard they also fired some of those people with high rsus! So it goes both ways.
I'm sure you know this but RSUs are such a fraction of a percent of real world compensation that they might as well round to zero.
This was not my experience working at FAANG. RSU's started out as 30% of my comp and ended up well over 60% by the time I left.
Either way, definitely not "might as well round to zero". I have never worked anywhere where that was the case.
They’re saying that few workers get RSUs
Which I worried was so obvious it wasn't worth remarking... but here we are.
Well, with all due respect you could've worded that better. It sounded as if you were making a blanket statement over all individual jobs that involve RSUs, as opposed to a statement over all jobs as an aggregated statistic.
For jobs with high compensation, RSUs are such a high part of the compensation that it's often more than the base salary.
That isn't true outside of tech? Finance/big law/consulting/healthcare etc... all primarily work on cash bonuses.
So 63% didn't. I wonder what the average netted out to. Increase or decrease and how much?
This thought occurred to me too, but then I realized even 37% is very high. In a reasonable society, most individuals' earnings should go up all the time. The downward pressure that should exist is high earners retiring and low earners just starting their career. A mildly idealized society should probably have 3% go from unemployed to employed, 3% go from employed to (voluntarily) unemployed, and the remaining 94% increase their earnings.
Nothing is "idealized" in the real world forever.
The only thing that surprised me about this article is that more people didn't see real wages decline. 2021-2024 was a period of peak inflation that the US hadn't seen in decades. And of course the primary cause of this inflation was governments flooding dollars into the market by literally paying people not to work, which while perhaps faulty was at least a reasonable response to Covid. The ironic thing is that, in the US at least, the inflation rate was coming down before we decided to install the guy who instituted massive tariffs, an unprecedented deportation program, and an unprovoked war in Iran, all of which are highly inflationary.
So it's completely unsurprising to me that wages, especially of people who stayed in the same job, didn't accelerate faster than inflation. This feels a bit like picking your dates to tell a narrative. I'd be much more interested in the percentage of folks whose wages fell in real terms by looking at multiple overlapping 5 year timespans.
>In a reasonable society, most individuals' earnings should go up all the time.
I don't think this is a reasonable expectation at all. In the absence of economic growth I would expect the average individual's earnings to be flat.
The only way for wages to go up across the board is if productivity increases. If you're not creating more wealth than last year, the only way for one person's wages to go up is if someone else's goes down.
Assume you have no overall economic growth, but workers get more productive over their lifetime (as they accumulate experience).
In that scenario, each individual worker sees increases over their lifetime, even though the average stays flat.
I read it as 3% retire, 3% enter the workforce, and everyone else is slightly better / more senior than the year before. So the average wage could be flat.
Isn't that the core issue? Productivity isn't being shared with the workers who actually produce it.
> The downward pressure that should exist is high earners retiring and low earners just starting their career.
> and the remaining 94% increase their earnings.
This is an extremely unrealistic expectation. There are a multitude of reasons for people's incomes to fluctuate other than retirement. People make career changes that result in lower income for many reasons, like taking a better job, changing careers, transitioning to a lower demand job when they have children, or moving to a new city with lower wages for personal preference.
For many jobs the earnings are also dependent on the company's earnings. Incentive structures, bonuses, RSUs. Even low paying companies scale their staff up and down based on demand. They can't hold a monotonically growing set of staff and also monotonically increase their wages when the incoming demand for their product is not monotonically growing.
The only way to come close to an "idealized society" like you're proposing is a totally self-sustaining, command and control economy where a central authority determines not only everyone's income, but their expenditures too. It's not possible to keep the entire economy and everyone in it moving in the same direction unless you're dictating where all of the money goes in society to a fine degree. Variations of this have been tried. The members of that society do not find themselves more well off.
Its interesting, I thought it was pretty well established that COVID era stimulus helped lower earners make real gains, even adjusted for inflation, while higher earners who did not get stimulus checks lost ground?
From page 36 of the paper: All deciles during this earlier period experienced annual real wage growth, with the growth being the largest for the bottom two deciles of the wage distribution.
I’m pretty confused where you’re coming from. Stimulus checks were a one or two time payment of a couple thousand dollars, but stocks and corporate profits went absolutely parabolic.
The share of wealth owned by the richest people went up far more than the bottom 90 (or even 99) percent. The data absolutely supports this perspective as well: https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...
The stimulus was not just the checks, it was also pretty generous unemployment, and the discussion was about incomes of workers, not wealth.
Unemployment almost by definition means they’re not getting as much money as they were before.
We can focus strictly on wages, but for higher earners, it doesn’t tell the entire story, especially if we’re focusing on my new detail details like a couple thousand dollars per person.
Many people were making more money on unemployment than their standard wage due to the covid increased pay. The fed paid $600 on top of state benefits for a few months and then $300 for more than a year after that meaning people were seeing 16 -> 24 dollars an hour in wages for not working in my state of Georgia for instance. It was often smarter to stay unemployed until that ran out compared to local wages.
While losing a job is a pretty unpleasant disruption to one’s life, it can also be the case that the next job will be better and one ought to (in hindsight) have changed jobs sooner. Potentially the shake-up of employment in low-productivity sectors was also good for the economy (and in hindsight I think this strategy worked better than subsidising people in their current jobs, ie furlough, which is what many other countries did).
My cousin and many others I knew were getting more money from unemployment than when they had their jobs during covid. Though I don’t believe that caused inflation. Inflation was an international phenomenon and countries experiencing inflation had very diverse stimulus responses to COVID. It seems the Russian invasion of Ukraine, a pivot to a goods based rather than services based economy, coupled with climate changed caused shortages and retiring boomers caused it.
Sustained inflation is always caused by money printing. Most of the mechanisms you are describing would only effects shifts in relative prices.
Don’t forget about the PPP loans.
Yeah agree, share of wealth definitely went up for folks who had the money to be invested in the stock market.
My recollection is that some combination of stimulus checks / COVID dynamics made it much harder to hire low wage workers, so employers were "forced" to raise wages in response. At the same time, higher wage workers who got "normal" raises were not keeping up with inflation.
https://www.reuters.com/business/us-job-growth-picks-up-may-...
The median worker saw a small wage growth, on the scale of ~.5% a year.
However, it does says that 58% of all workers failed to keep up with the real wage growth trend we saw in the years leading up to the pandemic.
>So 63% didn't.
But more than a third of Americans did. You can't "glass two-thirds full" tens of millions of people seeing their actual purchasing power decrease.
You can't glass one third empty it either. It's complicated and needs more numbers.
For that 1/3 of Americans, that's a very real statistic to be frowning over.
Maybe it's very bad. Or maybe it's negligible. And which third of americans is it, the poor the middle or the rich or a mix of everyone? These factors are important before we can draw more than the most shallow of conclusions.
There's a chart of the average that looks pretty bad. But also I don't have time to read 78 pages right now.
I feel like people are blind to the obvious. The price of everything has gone up and it has outpaced most people’s wages.
I don't think the "average" is a good metric for the social impact of this. Everyone (or almost everyone) being at a standstill would be the minimum that governments should worry about. When even a sizable minority loses ground, that could create unrest.
I wouldn't mind the minority near the top losing ground if the majority near the bottom got more.
By getting more, you just mean getting the value of their labor.
That's indicative of a growing economic inequality though, which in any orthodox economic book is bad
Actually the opposite was stated in the paper.
> This compression accelerated in 2021: real wage growth in the bottom two deciles remained positive and close to its pre-period pace, while all other deciles experienced declines of about 2 percent, roughly four percentage points below their pre-period growth
Isn't deciles every 10%? The top 90% is too rough, you need to compare the top 0.09% and the rest to see how much the social gap has widened
That’s true, and you could even use any measure you’d like. Perhaps the Gini coefficient. I should specify that I’m not trying to make direct claim about inequality.
Only that, for anyone against the ails of inequality, the bottom wage earners getting more (and even outpacing other deciles) is a win.
Not by itself, they all need to be at least outpacing inflation
They (the bottom deciles) were outpacing inflation. By a significant margin too.
That’s at the very least, a good stride against inequality’s problems.
You can't put electricity, meat, coffee... in the same bag as Teslas and iPhones, otherwise you'll hide the type of inflation that makes the lower classes unable to pay rent and buy food while still being able to access the latest smartphone and SUVs.
https://www.indexbox.io/blog/food-inflation-hits-us-consumer...
I'm not sure averages are that interesting, because the people at the high end have an extra-ordinary amount of influence on the average. You might want to look at the shape of the distribution?
What does that have to do with anything?
One could make the point that in a society that is primarily driven by capital, it is wise to keep an eye on the health of it from those that are within said system.
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Anything below 100% seems like a potential warning sign in a growing economy.
That's a bit silly. There's always some noise.
Time frame is '21-'24 (Biden term) and from U Chicago. Pretty sure this is right-wing propaganda.
Mine increased 2.75x. If you count bonuses and other benefits it definitely increased more than 3x.
good for you
Inflation is not just an increase in prices, it's basically a money pump. Under weakened labor it is redistribution from workers to the parasite class.
> from workers to the parasite class
I hope to retire some day - to do that, I'm going to have to save up enough money in a brokerage account that it generates enough money for me to live off of. Will that make me a member of the parasite class? I'm willing to be a worker for as long as I can, but at some point I will be too physically old to keep doing it (plus which, nobody really wants to hire old people).
In your plan is an implicit assumption that those that cannot work do not deserve to have housing and food. This is a political choice made by a society.
The paper only mentions total compensation as: "total compensation (base wages plus bonuses)"
Total compensation includes stock options, stock grants, health insurance premiums, 401k contributions, so-called "employer social security contributions", retirement contributions, time off with pay, etc. Total compensation averages 146% of wages.
This is not a triviality.
The paper doesn't cover this, and so the conclusions don't have merit.
There are also some fairly interesting trends in labor productivity.
Labor Productivity for Manufacturing: Household and Institutional Furniture and Kitchen Cabinet Manufacturing: (has flattened out in the last decade-ish)
https://fred.stlouisfed.org/series/IPUEN3371L000000000
Construction has been DOWN for decades (and is 7 percent of the labor force).
https://www.richmondfed.org/publications/research/economic_b...
Food Manufacturing is in decline as well:
https://fred.stlouisfed.org/series/IPUEN311L000000000
The situation with construction is fascinating, it’s similar in the UK.
Riding the boom times doesn't have merit either.
Health insurance premium subsidies being the big one. 90% of US workers probably are not getting any or any increase in the other ones.
Nothing you include in "total compensation" is guaranteed by employment.
Why would that make any difference? What an employer spends on an employee is what the employee gets. If the employer spends less, the employee gets less, and hence is a pay decrease, even if not in nominal terms but in real terms.
Premiums for a silver plan can easily be $30k per year for a family of 4. If an employer decides to cover 70% of it instead of 80%, that is literally a pay decrease of $3k, not to mention possible changes in coverage, deductible, and oop max.
For example, the employer could keep the 80% subsidy, but increase deductible from $1k to $10k. Unless premiums go down a lot that is basically a huge pay decrease too.
Employment ain't guaranteed either, so I'm not sure that guarantee is worth much.
And you can be pretty sure that many workers would walk if the extra goodies they are accustomed to but which ain't guaranteed were to be withdrawn. Assuming the competition still provides them.
There are good reasons for companies to provide those benefits. And they most definitely are part of their total compensation. When a study does not take this into account, their results are not valid.
I think we are in agreement.
Employer contributions to SS taxes are guaranteed by employment. Also other payroll taxes added on by states.
Not so. I'm part of a religious community for whom FICA is something we can opt out of via IRS Form 4029, and I can avoid contributions to FICA more broadly (not just SS taxes!) by handing HR the approved 4029 that I receive in response to filing.
I don't know how available this is to folks who aren't Mennonite or Mennonite-adjacent, but it's there.
About 0.14% of the population is Mennonite. By filing 4029, you assert that your community is going to provide the equivalent of SS and Medicare, so it amounts to about the same thing.
My remark was a rebuttal to the assertion that these contributions were guaranteed. That notwithstanding, I'm unsure that I agree that it amounts to about the same thing; we tend to take care of each other as a matter of due course and not as a transaction.
The mainstream Anglo-American attitude around this kind of support leaves me scratching my head a lot of the time.
It is a kind of transaction. While I don't know the details, isn't it some form of you support the community, and the community supports you when you're in need?
Not at all. Tithing[0] is contributed as one is able, but assistance in the face of hardship is no questions asked. For my congregation in particular while I was growing up, this extended even to non-members, and there was a strong thread of volunteerism.
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0: Tithing can take many forms beyond giving cash. I tithed my RSUs.
>The paper doesn't cover this, and so the conclusions don't have merit.
Fairly weak criticism. These benefits you're mentioning don't help people pay for groceries, pay their mortgage/rent, pay for gas, etc.
I haven't had a pay raise since about 2021 so yes, that makes sense. Purchasing power is definitely down.
Title is: Sticky Wage Norms and the Real Wage Cost of Unexpected Inflation
Interactive brief: https://bfidatastudio.org/project/sticky-wage-norms-and-the-...
Count me in the unlucky 37%. I job hopped for more stability in 2022. I got more comp but then proceeded to get 2% raises. I'm making less now adjusted for inflation than I did in 2022.
Sounds like it’s time to hop again then
https://fred.stlouisfed.org/series/LES1252881600Q
> Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over
> 1982-84 CPI Adjusted Dollars, Seasonally Adjusted
> Data measure usual weekly earnings of wage and salary workers. Wage and salary workers are workers who receive wages, salaries, commissions, tips, payment in kind, or piece rates.
For the Tech sector, inflation speeds up companies crashes as staff leave for startups due to wages being extraordinarily "sticky-up" in large companies.
In terms of GB of DRAM it looks even worse.
This was at the tail end of Covid where a lot of in-person workers were out of a job.
No big surprise- were making mess money and terrified of losing our jobs, afraid of losing healthcare and can’t afford our homes, less social because of doom scrolling
Welcome to the progress and “better world” that Tech Bros promised while they reaped billions of the VC/PE economy
Dot Com 2.0 was 2008-2016
These youngsters talking about 2020s have no idea!
Me for example.
Who would have guessed printing a bunch of money would be a working class tax
The working class doesn't hold that much in cash, do they? Competition in the labour market means nominal wages go up when inflation goes up. Many working class people have mortgages (though I'm not sure whether they have fixed rate mortgages?)
Working class typically rely solely on wages and have little to no wealth. So any purchasing power decrease is often referred to as a hidden tax on wages.
https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite...
Competition as a sellers’ market drives wages up, like anything AI connected today. Buyers’ markets drive wages down - GFC, H1Bs.
Working class mortgages got obliterated after the GFC and never recovered.
https://fred.stlouisfed.org/series/WFRBSB50210
Mortgages are about 92% fixed rate (vs ARM).
https://www.stlouisfed.org/on-the-economy/2024/feb/which-hou...
Thanks for looking up the data.
> Working class typically rely solely on wages and have little to no wealth. So any purchasing power decrease is often referred to as a hidden tax on wages.
That's only true if wages are fixed. They typically aren't, especially when people move jobs.
Kevin Erdmann has some good writing about mortgages before and after the GFC.
The submitted title ("New paper shows that 37% of workers in US saw real wages decline from 2021-2024 [pdf]") broke the site guidelines, which ask:
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You'll never believe what happened next
LOL
...and the money printer went brrrr
About fucking time someone called bullshit.
this is just a regular reminder that this is by design.
https://archive.nytimes.com/krugman.blogs.nytimes.com/2010/0...
"in the long run, its really really hard to cut nominal wages. [without] inflation, a significant number of workers take wage cuts"
basically, inflation is a way to cheat all laborers out of their earned wealth so that the management class doesn't have to make hard decisions about who to keep.
That might be a side effect, but I'm doubtful it's the cause.
The main cause as I understand it is that the govt prints money to offset the gap between what it collects in taxes and what it spends.
That's not really right either. think about it this way: what would happen if the budget was balanced and the us suddenly had a surplus? you HAVE to print money, where is the interest on debt going to come from.
That was bound to happen with the 8-9% inflation we had during the Biden years. 2026 will likely see a similar decline thanks to Trump’s war in Iran.
Why was that bound to happen? Inflation also raises nominal wages. It's not clear what impact inflation has on the relative price of labour vs goods and services.
How much of inflation during Biden years was from Trump? For instance, Trump agreements to restrict oil production after covid lasted deep into Biden's term. The US still did better on inflation than most comparable peers in the aftermath of covid.
The inflation was obviously mostly due to Covid and the invasion of Ukraine. Gas prices reached their highest points in 2022.
https://www.gasbuddy.com/charts
A big part of it was like $5T in covid stimulus, most of which happened under Trump. Biden piled some more on, probably unnecessarily. It felt like we were balancing on a razor's edge and maybe starting to come out of it by the end of 2024. A lot of inflationary policies since then.
The biggest problems were various supply shocks associated with the pandemic and its aftermath and the Russian invasion of Ukraine.
The Biden admin brought down inflation much faster than even optimistic economists predicted, while maintaining full employment and avoiding a recession. The US economy during that period significantly outperformed most other wealthy countries. (As one indicative example, the cover story of The Economist from October 2024 was titled The American economy: The envy of the world.)
Since then we've had a wide range of completely self-inflicted policy faceplants, including notably several rounds of illegal tariffs and a war with Iran.
The American president: The laughing stock of the world.
Biden's ARP independently caused inflation according to multiple central bank analyses.
However, you are also correct that Trump pressuring OPEC to cut oil production at the end of his first term did cause additional inflation in Biden's term.
We let Trump print $4T in an election year and Biden print $2T in four years. Trump was going 40mph in the parking lot, Biden slowed down to 5mph, and while there is a legitimate discussion to be had about whether or not the latter was too fast when someone is spazzing out about the 5mph and ignoring the 40mph, it's because they have an agenda.
Source: https://fred.stlouisfed.org/series/WALCL
All of it. lol
During/immediately after a global pandemic? No!
Tied to immigration levels, more cheap labor, more labor competition, wages go down. Immigrants willing to live 2 to a bedroom, rise in rent prices.
The paper does not say this.
Based on lived experience in Canada. 5 million new immigrants added to the 36 million population from 10 years ago. So 14% of the total population. Record immigration, crazy increase in housing prices, stagnant wages and youth unemployment.
If the paper came from Academia, it already went through lots of political allegiance filters, and taboo topics like being critical of immigration. Article debunks itself, when source can't be trusted.
You’re welcome to do your own scientific study. “Lived experience in Canada” doesn’t cut it.
I thought Trump fixed that? Shouldn't caging/deporting 2000+ people a day have a dent at some point? What do you blame when the immigrants are all gone?
Personally I'm pretty sure it's more about the value of property and the limitations on construction that wealthy property owners put in place to block development (which would lower property values.) Property values go up -> costs rise (taxes, insurance) -> rent increases. That and the fact that the government and corporate america (same thing really) want all development to happen within existing major metro areas. There's plenty of cities and towns with cheap housing, but they lack employment opportunities.
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