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.
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 close to the poverty line then raising the minimum should increase overall happiness more than just raising the median.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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).
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).
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.
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.
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.
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.
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.
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.
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.
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)
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.
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.
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.
>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.
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.
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
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.
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.
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.
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)
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.
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.
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.
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.
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 close to the poverty line then raising the minimum should increase overall happiness more than just raising the median.
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.
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.
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.
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.
> 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.
Why are tech wages lower in Scandinavian countries than in the United States?
Not to look a gift horse in the mouth, but it's always been puzzling to me why American tech wages were so high.
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.
> 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.
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.
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.
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.
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
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.
> 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).
Or hiring practices that can remain irrational longer than you can stay solvent?
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).
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...
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.
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.
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.
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.
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
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.
That is completely expected. If you don’t shop around, why would you get the best price?
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)
So 63% didn't. I wonder what the average netted out to. Increase or decrease and how much?
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.
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.
Don’t forget about the PPP loans.
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.
>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.
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.
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.
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
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.
Anything below 100% seems like a potential warning sign in a growing economy.
What does that have to do with anything?
Mine increased 2.75x. If you count bonuses and other benefits it definitely increased more than 3x.
good for you
chat, what were the immigration numbers for 2021-2024?
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.
Riding the boom times doesn't have merit either.
Nothing you include in "total compensation" is guaranteed by employment.
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.
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.
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
Health insurance premium subsidies being the big one. 90% of US workers probably are not getting any or any increase in the other ones.
Who would have guessed printing a bunch of money would be a working class tax
Title is: Sticky Wage Norms and the Real Wage Cost of Unexpected Inflation
Interactive brief: https://bfidatastudio.org/project/sticky-wage-norms-and-the-...
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.
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.
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
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.
All of it. lol
Me for example.
Dot Com 2.0 was 2008-2016
These youngsters talking about 2020s have no idea!
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.
...and the money printer went brrrr
About fucking time someone called bullshit.
You'll never believe what happened next
LOL
During/immediately after a global pandemic? No!