Hacker News Reader

Comment by gruez | Hacker News Reader

>There's no evidence that wages or employment are rising. [...] Wages haven't even come close to keeping up with inflation

BLS data begs to differ: https://fred.stlouisfed.org/series/LES1252881600Q

Wages have been slowly creeping up for the last 2 years. Now, you might point to the giant spike during the pandemic and conclude that means wages are actually down, but that's an artifact of how the data is collected. Since the dataset only measures the wages of employed people, lockdowns hit the retail/hospitality sector disproportionately, and those sector also tend to have lower wages, eliminating those jobs bumped up the average. If you look at the last quarter before the pandemic (Q4 2019) wages are either very marginally higher or at least flat.

View on HN

https://fred.stlouisfed.org/series/LES1252881600Q

This easier to interpret. Wages have not grown for almost 40 years since 1980.

That is because healthcare costs are eating up all compensation gains: https://fred.stlouisfed.org/graph/?g=hXPw

Total compensation has gone up a lot, most of it is to insurance premiums.

> Wages have been slowly creeping up for the last 2 years.

Meanwhile inflation has been skyrocketing.

Maybe wages "slowly creeping up" is not remotely enough when the price of basic necessities is wildly out of control.

>Meanwhile inflation has been skyrocketing.

That's factored in.

>Units: 1982-84 CPI Adjusted Dollars, Seasonally Adjusted

>>Units: 1982-84 CPI Adjusted Dollars, Seasonally Adjusted

And there's the issue. CPI is arguably doctored to downplay inflation.

> CPI is arguably doctored to downplay inflation.

Turns out that if you don't trust the government data and want to fudge it, you can come up to whatever conclusion you want!

So what does their data say about the cost of a house in 2019 vs today? The cost of a vehicle in 2019 vs today? it could just be the BLS not fully capturing inflation

The CPI is composed of a basket of goods, and there's always going to be items in that basket that's rising higher than average, so there's always going to be things you can cherry pick and complain about "the BLS not fully capturing inflation".

>The cost of a vehicle in 2019 vs today

BLS data says it's 30% higher. Does that seem about right?

https://fred.stlouisfed.org/series/CUSR0000SETA

>cost of a house in 2019 vs today

Houses aren't directly in the CPI for complicated reasons, but the short version is that they're an investment. Americans buy 401ks too, but it would make little sense to factor in the S&P 500 into the CPI. Housing is factored in though, through imputed rents and rental prices.

Health Insurance is another fun/annoying one, because it's not like you can reliably standardize 1 standard unit of insurance and it's difficult to compare across plans. (Perhaps by design, the Confusopoly at work.)

That said, BLS is starting to tweak how they measure health care costs. [0]

[0] https://www.bls.gov/cpi/additional-resources/improvements-cp...

My understanding, as someone who bought health insurance on the healthcare.gov marketplace, is that the ACA did in fact standardize health insurance into “bronze,” “silver,” and “gold” tiers. The tiers are defined by actuarial math that I don’t recall at the moment.

> and there's always going to be items in that basket that's rising higher than average

This argument is so weak. Housing is unlike those other items in that it's both by far most households' largest expense, and difficult or impossible to substitute a cheaper version: you can move to a cheap area, but there are no decent-paying jobs there, leaving you in the same or worse boat.

And there are precious few cheaper areas left: even Vegas, long known for low cost of living, is approaching $500k for a just-ok home. At today's interest rates, that's like $3300-4100 per month all-in. Almost no one can reasonably afford that; even software development jobs barely crack $100k here.

>This argument is so weak. Housing is unlike those other items in that it's both by far most households' largest expense

that's reflected in the CPI basket construction. "Rent of shelter" which includes rent and OER makes up 34.8% of the CPI basket.

> and difficult or impossible to substitute a cheaper version: you can move to a cheap area, but there are no decent-paying jobs there, leaving you in the same or worse boat.

that's also factored in because they sample prices according to where people actually are. They're not taking prices across 50 states and doing a simple average.

OER also does not capture the cost of buying a house today, but of renting an already owned home. Rents do not seem to have gone up nearly as much as prices + interest rates.

Reply on news.ycombinator.com