Real Wage Growth at the Individual Level in 2022 | Hacker News Reader

Real Wage Growth at the Individual Level in 2022

stlouisfed.org

5 pointssafaa199312 comments

As someone without an econ degree, but with a finance degree, I have a hard time believing these metrics are a meaningful representation of economic reality. The more I look at inflation measures, the more they seem massaged. Even 'non-establishment' pundits like Kyla Scanlon insist the economy is like-really-good-for-sure-guys.

But I saw my parents' and their peers' lifestyles at my age +/- 10 years and things were dramatically different. Cars, houses and vacations possible on a single non-doctor/lawyer/etc. income. And they weren't outliers! Sure, we have sci-fi toys, but life milestones are unachievable for so many, even on full-time dual incomes.

It seems like mainstream economics is a kool-aid party.

The FOMC was a mistake.

So because your personal anecdote varies from official data, your stance is that the data is fraudulent? Do you have any proof of that?

No proof at all, just anecdotes from everyone I know and everyone I interact with online who doesn't work in high finance, medicine, or tech.

You seem awfully confident in the official data. What proof do you have?

    You seem awfully confident in the official data.

What makes you say that?

You don't seem to have any doubt. When I broach this subject, it always goes one of two ways (so far):

1. Other party either agrees or doesn't agree entirely but acknowledges the disparity between common experience and economic reports

2. Other party is an economist and believes the official data is more-or-less beyond reproach.

Maybe I jumped the gun. I figured since you were demanding proof, you are likely to belong to the latter option.

I'm just asking questions. I apologize if the first one was a bit leading. I'm genuinely curious if you have proof that this type of data is massaged, as you say.

You can take the official inflation values for decades, compute compound growth, and then check old prices to see if the rates were lies.

Hint. They're not. I've done this,and sometimes convince people like you that are convinced rates are lies to do this carefully, and such people then either believe the evidence they checked, or continue believing nonsense supported only by selection bias.

This is the proof. Go do the work, and if you want to claim things are wrong, present the data and calculation.

I didn't read the original comment as saying the data was fraudulent. They were just doubting that "these metrics are a meaningful representation of economic reality", which includes buying a house.

If I'm not mistaken, property prices are not part of the CPI, which makes your comment and the original comment both true. I don't think it's controversial that asset prices have been rising faster than wage growth in general.

I'm no expert on the matter, but sometimes I speculate that the discrepancy between the "data" and the anecdotal experiences is that instead of wages keeping up with inflation, it's more like the core necessities (food, etc.) that comprise the bulk of the inflation index has gotten much cheaper. Which makes buying things outside that group of mass produced stuff feel more expensive.

And then there's also the wage gap between different types of jobs. IIRC lawyers/doctors didn't earn as much more than blue collar jobs in the past. So while in the past a hard working blue collar worker could live a somewhat middle-class life, the pay discrepancy today might not enable them to do so.

As I said, this doesn't mean the official data is wrong, just a matter of how we're "interpreting" them.

I have a hard time with this as well. I do get the feeling that we're looking at KPIs that, if not rigged/manipulated, perhaps aren't terribly relevant. RFK famously said that the GDP doesn't capture the character of a nation, and I doubt he was the first to realize that.

I don't feel like my parents really lived it up when I was a kid; we lived in a modest house and drove modest cars and went on vacations in-state at the largess of my Grandmother plus the occasional road trip. My mom said that only rich people flew. Before them, I have no actual experience of how people lived. I think a lot of families only had one car or no car, for instance. It's just hard to compare without having lived it myself.

I will say that I'm over hearing apologists for the current situation say that because we have smartphones, we're richer than ever. An iPhone SE is like $400 and a smartphone is essentially a requirement to participate in modern society (not really a development I'm thrilled about either). Shitty food is quite cheap, so if all you want is calories (turns out you need a bit more nutrition than just carbs, but I guess you can live off it for awhile), then you are indeed in boom times. Housing seems like a nightmare though it's calming down a bit lately. Paying for education would scare the crap out of me if I had kids or if I have to go back to school; my cousin's daughter's 3rd birthday is coming up; his ask - no gifts, only money for college please. At 3 years old, but I can't blame him.

And healthcare is it's own nightmare - the costs stagger belief. I may need a hip replacement (I'd like to hold off, but the pain might force the issue), and I'm wary of every aspect of the system. Amazingly, I could fly to Lithuania and have the surgery plus a few weeks in rehab for maybe a quarter of the cost in the US. Hopefully I don't get laid-off before I can work up the courage to do the surgery and lose my health insurance, because then Lithuania might be the best option.

So yeah, if you like empty calories and whizbang tech (and I mean, I can enjoy those in moderation), then I think the economy is doing better than ever. But I (and I think most) feel less secure than ever as forces far beyond my control conspire to extract every dollar I have to my name and put me into debt for the dollars I don't.

One thing to note is that there has been a systematic divergence between the implicit GDP deflator and the CPI (this is noted, e.g., by a 2012 article in Slate by Yglesias[1]). More generally, inflation is always measured using a basket of goods (and services) but there is no guarantee that a specific basket you're using for one purpose is suitable for any other.

[1]: https://slate.com/business/2012/08/the-price-index-divergenc...

Goodhart's law at work. People often use it in reference to work performance metrics, but aptly applies to inflation metrics, because we try to target/control inflation.

> Cars, houses and vacations possible on a single non-doctor/lawyer/etc. income. And they weren't outliers

It seems that the dual-owner bonus did not accrue to families and might have been consumed by increased costs for housing, health care, higher education...

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