US Wages Finally Get Back to Where They Were in 1973
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That and we figured out how to make really tiny transistors and the entirely new industry set up shop here.
Grammar edit, guess we still don't value education.
Quite doable now for the enterprising middle-schoolers making ASMR and unwrapping videos.
The changes you're talking about regarding quality of life more have to do with increased costs for housing in developed coastal areas. A teacher and a part-time worker can still afford to raise a family today, they're just doing it in Texas or Iowa rather than the Bay Area. You can buy a beautiful 3BR house in a good school district in Des Moines (and frankly, tons of other places in America) for a bit over $200k.
If anything, including benefits, you have less than you did at the start of the millennium.
Though reading the article you linked, I'd be pretty surprised if insurance costs in the USA are not suppressing wages.
In other words, the health care industry in the USA is doubly stealing from those in it. It's flat out affordable, and may be why you didn't get a raise...
Despite the article not mentioning benefits, the primary reason for the increase in benefit costs is the skyrocketing increase in cost of healthcare (which is mentioned in the article you provided), which we know has inflated faster than the CPI for decades:
https://en.wikipedia.org/wiki/Health_care_prices_in_the_Unit...
The only other significant component of employer-provided benefits, retirement contributions, has if anything been cut back via defined contribution plans of today (i.e. 401ks), rather the generous defined-benefit (AKA pension) plans of the past.
And things like transportation subsidies, etc are marginal compared to healthcare expenditures.
So it's not as if the increase in employers' benefit spending is being experienced by most workers as in increase in utility. Therefore, the spirit of the article, which is that workers have received little real[1] value from the GDP increases of the last 40 years, is still correct.
What the article doesn't address, but your article does, is the fact that wages are recovering unequally, with most of the gains going to the highest earners.
1. I'm not counting ever cheaper electronics and entertainment in my definition of "real".
And the implications are different for policy. If labor compensation isn't going up, that suggests a structural problem in the economy. If labor compensation is going up, but it's being eaten up by increasing healthcare, education, and housing costs, then that suggests targeted reforms are necessary in those sectors.
Both are true, simultaneously.
For the majority of workers, wages are historically static despite rising GDP, and that requires reconsidering the structure of the economy (in particular how it has changed in recent decades).
And indeed we need targeted reforms of the highly inflationary sectors.
If we assume the status quo in 1970 was acceptable, then the data shows no need for "reconsidering the structure fo the economy." Rather, labor compensation grew just as fast as it was "supposed to" but that growth was eaten up by a handful of sectors.
But the paper completely avoids the problem of how those gains are distributed across workers in the economy, that is, it doesn't address income inequality trends at all (the author was an economist for Reagan, so that's not terribly surprising).
Even if the paper's statistics are taken at face value (that labor share of GDP has been consistent since the 1970s) it's simultaneously true that the majority of GDP growth has gone to those at the high end of the income distribution in the time period it covers. You might not call that an economic structure problem, or even consider it a problem at all, but many would reasonably disagree.
I can guarantee you right now, you could buy a home and a plot of land that will be out of reach for most people 40 years from now.
The question is - where will that be? Your grandparents probably had no idea Millbrae and Lake Tahoe would be as popular as they are today.
Hell, in the 1970's, people were leaving SF in droves as people wanted to get out of big cities.
Yeah but they were moving to the peninsula and the south bay, e.g. Millbrae, San Mateo, and San Jose. That's what my family did in the post-WWII period along with many others.
That probably took Lake Tahoe from “expensive” to “astronomical”.
One difference is they didn’t have to think about whether it would pan out in the long run. They needed a bigger house. They could get one 15 minutes away from SF, where my grandpa was stationed at the time.
The fact is that americans are not very frugal people and waste their money. If immigrants who came to this country in the 80s managed to do this, there is no excuse for a native born American. My mother even went to college again because her degree wasnt accepted and she wanted to be a teacher. Thrift and sacrifice go a long way
Racial disparities along with systemic racism could provide an explanation. Attained education levels as well. Just some thoughts.
EDIT: All of these things affect immigrants of color (who may come from worst circumstance) but they have a “blank slate”, not fighting a legacy.
The point of this anecdote is to point out what we often take for granted. Even if a sizable minority of Americans are subject to systemic racism native born Americans at least have the ability to transact business in English which gives them a pretty good head start and I think that on average that more than make up for a systemic disadvantage applied to a fraction of the population.
https://www.census.gov/hhes/www/housing/census/historic/valu...
Like I said, thrift. We were certainly poorer than our friends and had less stuff. Americans do not like that idea.
I suspect it was just a bubble though since his parent's generation were mostly farmers working 12 hour days.
Nominally yes, but PPP is generally more apt.
> GDP comparisons using PPP are arguably more useful than those using nominal GDP when assessing a nation's domestic market because PPP takes into account the relative cost of local goods, services and inflation rates of the country, rather than using international market exchange rates which may distort the real differences in per capita income.
https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
As an example - it's likely in adjusted terms someone in the top 1% a 100 years ago would be close to the top percentiles today, and yet it's pretty easy to argue that the average person today is still doing much better in almost any measure than a 1%-er from a century ago.
Or much poorer. Smartphone means FOMO, constantly accessible to bosses, less interaction and more wasted hours with BS apps (people are starting to treat it as addiction), and the "easier to produce insulin" is balanced by skyrocketing healthcare costs, much more stressful lives (including being worked to the bone, and with no "company loyalty" anymore), and loss of quality of life in many important ways...
It's just that for many US people, "access to BS gadgets" (which nobody missed in the 70s because they didn't exist anyway) trumps other qualitative life factors that don't even register. I think e.g. Europeans would appreciate those much more...
>As an example - it's likely in adjusted terms someone in the top 1% a 100 years ago would be close to the top percentiles today, and yet it's pretty easy to argue that the average person today is still doing much better in almost any measure than a 1%-er from a century ago.
Regarding quality, meaning of life, friends, lifestyle, etc, or just based on access to stuff?
It's interesting to look at this graph through the lens of demographics & generations. The post-war wage boom from 1949-1963 corresponds almost exactly to when the Silent Generation (those born during the baby-bust years of the Depression & WW2). The peak of the graph in 1973 corresponds to the initial entry of the peak of the Baby Boomers (1955) into the workforce. There's a rise from the 90s onwards corresponding to Gen-Xers entering the workforce (at 22 now, since college degrees have become more prevalent) and the G.I. Gen retiring, but it stalls out in 2005 just as the first Millenials start entering the workforce.
Maybe there's actually something to the Econ 101 models about factors of production and how a relative shortage of labor increases labor's share of national income relative to capital while a glut does the opposite.
HS-educated members of generation after Millenials (born 2001-onwards, and tiny - fertility has been dropping to record lows) start entering the workforce in 2019; college-educated ones in 2023, and the peak of the baby-boomers starts retiring in 2020. Perhaps we'll see another sharp rise in wages in the near future, assuming we don't destroy ourselves because of the coming stock market crash as all the baby boomers try to cash out their 401(k)s at once.
The median salary only accounts for the top 30% of Americans, and almost every job that pays more than $23/hr requires a college degree, not to mention that training / education / certification is financed through families and individuals, increasing their debt burden, which brings down their real wages. And that's one parameter, individual debt has also been increasing, as well as the gradual decline of the interest rates since the 70s.
All-in-all the bigger picture is more complex, and with every metric of inequality increasing, globally, I think the numbers calculated for inflation adjusted average wages for production and non-supervisory workers are antiquated.
I'm not a mathematician but this doesn't sound right to me.
All sufficiently large economies should protect their domestic industries with tariffs. Otherwise its a race to the bottom for labor wages.
He looked into jobs in us and Japan / China.
When he looked at the US it was basically : planning canceled, canceled, stopped, pushed back for later etc etc. So he moved now to China.
So, from a data point of one. It does not look so great...
I'll never understand what compels journalists (or wannabe journalists) to insert words like "finally" into their headlines. It would have been just fine without that one word.
http://www.littlehouseinthevalley.com/cost-of-living-compari...
2. What was the average wage?
https://cdn.howmuch.net/articles/price-changes-in-usa-in-pas...
TVs are definitely more affordable, but Hospital Services and College is really not. Somewhat surprisingly it looks like Housing is more affordable (rising, but less than average earnings).
I think these longitudinal studies of the wage/cost relationships are really valuable as they provide a lot of insight into what people feel about the economy and where things are going.
Back in the early 80s you could buy a house in an expensive state (NY) for about 50-60k but today a similar house goes for around 400k.
But a lot of people in the 80s and early 90s made equal or more money than they do today, like a legit dollar for dollar amount more. Certain industries paid 35k-40k a year back then but pay 30-35k today, which is a massive difference considering how much more things are today than back in the 80s.
We should be comparing now with now. And most importantly, we should be comparing wealth inequality because wealth translates directly to power and wealth inequality means power inequality.
Nobody is competing against anyone from 1973 or 1873. We are competing against people today. And the accumulation of wealth and power by a small group of elites should concern everyone regardless of the price of insignificant trinkets.
Yes, we should account for technological improvements in the quality of our lives. In fact, it's the only way to have long-term improvement in real, appropriately measured consumption. And yes, there are creature comforts you can buy today that were darn near impossible back then.
But ... you need to weight these improvements by relative impact. Yes, TVs are better. But how much utility they can really add to your life is limited. They're little comfort when the important things -- like not being bankrupted by health care costs -- eat up all the rest.
If you buy too much into the importance of better TVs, you end up like Fed banker William Dudley, and insist that living costs went down, even as every bill went up, because iPads are faster.
https://www.reuters.com/article/us-usa-fed-dudley-ipad-idUST...
Edit: nor were the jobs provided by that factory a proximate cause.