Comments on: Wage deflation charts of the day http://blogs.reuters.com/felix-salmon/2013/07/09/wage-deflation-charts-of-the-day/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: TFF http://blogs.reuters.com/felix-salmon/2013/07/09/wage-deflation-charts-of-the-day/comment-page-1/#comment-47631 Thu, 11 Jul 2013 11:38:29 +0000 https://blogs.reuters.com/felix-salmon/?p=22229#comment-47631 Moopheus, the cost of benefits to employers is nonetheless increasing. Health insurance is through the roof the last few years.

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By: Moopheus http://blogs.reuters.com/felix-salmon/2013/07/09/wage-deflation-charts-of-the-day/comment-page-1/#comment-47630 Thu, 11 Jul 2013 04:18:30 +0000 https://blogs.reuters.com/felix-salmon/?p=22229#comment-47630 Realist50–you make a good point, but one that is unlikely to show a gain in most workers’ favor. The press is not full of stories about employers becoming more generous with benefits. Certainly many companies have been trying to push more costs, esp. health care, onto the employee.

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By: gojomo http://blogs.reuters.com/felix-salmon/2013/07/09/wage-deflation-charts-of-the-day/comment-page-1/#comment-47629 Wed, 10 Jul 2013 22:23:28 +0000 https://blogs.reuters.com/felix-salmon/?p=22229#comment-47629 The grouping by occupation then quintile and reporting as averages makes me very suspicious as to whether this data means what the advocates who compiled it imply it does.

Compositional issues like “Simpson’s Paradox” that could be at play.

But even as reported, these numbers don’t rule out the possibility that every single person surveyed may have had an increase in their wage, or have moved from unemployed (zero/uncounted income) to low-wage (but better than before) employment… while the occupational/quintile *averages* still decline.

In fact, such average-declines might even be a sign of a healthy recovery: lots of young, low-skilled, and career-switchers re-entering the (bottom wage rungs of) each occupational category, bringing down averages. (Also maybe: accelerated retirement or increased voluntary lesiure-taking by the top-wage-rungs, no longer holding on in panic.)

You’d have to compare to similar analyses in prior cycles, or zoom in on narrower age/occupational cohorts, to have a better picture.

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By: tom_the_bear http://blogs.reuters.com/felix-salmon/2013/07/09/wage-deflation-charts-of-the-day/comment-page-1/#comment-47624 Wed, 10 Jul 2013 02:53:14 +0000 https://blogs.reuters.com/felix-salmon/?p=22229#comment-47624 I see this as something comparable to Dutch disease. In some areas, the US.is uniquely productive, and theres no reason why people creating great wealth shouldn’t enjoy most of it. In most areas the US has overly high costs relative to productivity, so the pressure on most wages is down, and most new jobs are low wage.

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By: tom_the_bear http://blogs.reuters.com/felix-salmon/2013/07/09/wage-deflation-charts-of-the-day/comment-page-1/#comment-47623 Wed, 10 Jul 2013 02:53:02 +0000 https://blogs.reuters.com/felix-salmon/?p=22229#comment-47623 I see this as something comparable to Dutch disease. In some areas, the US.is uniquely productive, and theres no reason why people creating great wealth shouldn’t enjoy most of it. In most areas the US has overly high costs relative to productivity, so the pressure on most wages is down, and most new jobs are low wage.

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By: realist50 http://blogs.reuters.com/felix-salmon/2013/07/09/wage-deflation-charts-of-the-day/comment-page-1/#comment-47622 Wed, 10 Jul 2013 01:17:28 +0000 https://blogs.reuters.com/felix-salmon/?p=22229#comment-47622 “This chart shows where a lot of the current stock-market strength is coming from: capital is taking more than 100% of real productivity gains, with labor steadily losing out.”

Do these figures include benefits (and employer payroll taxes, though those rates haven’t changed much if any over this time period)? If so, the quoted argument is valid. If not, we also need to look at benefits, as productivity growth could have gone to capital or it could have gone to employee benefits.

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By: FifthDecade http://blogs.reuters.com/felix-salmon/2013/07/09/wage-deflation-charts-of-the-day/comment-page-1/#comment-47620 Tue, 09 Jul 2013 21:42:09 +0000 https://blogs.reuters.com/felix-salmon/?p=22229#comment-47620 This pattern can also be seen, I believe, in Europe, particularly places like the UK and others where wages are significantly higher than in China and the developing world. Ed Milliband, leader of the Opposition Labour Party, coined the expression “the squeezed middle” to describe the phenomenon.

With free trade favouring the evening out of world wages, it looks like more of the same in the future with the West getting poorer and the East getting richer. So who in the West is benefitting from having pushed all this free trade? Clearly industrialists who enhance profits by making stuff in China; the managerial and executive classes who are monetarily incentivised to export jobs to low cost economies; and consumers (temporarily) who can buy cheaper products imported from the cheaper producers – until they have no jobs or insufficient income to pay for all the high-living and debt they take on, mortgaging their children’s futures for a newer, bigger, brighter TVs or cars before they have saved up for them.

And people have the gall to blame a Government which is actually trying to stimulate growth at home instead of in China against the tide of upper class greedypants stuffing their own pockets as the cookie jar empties.

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By: wigwamca http://blogs.reuters.com/felix-salmon/2013/07/09/wage-deflation-charts-of-the-day/comment-page-1/#comment-47618 Tue, 09 Jul 2013 19:08:45 +0000 https://blogs.reuters.com/felix-salmon/?p=22229#comment-47618 One thing that is missing from this is that there is typically a general ascent from low paying jobs to higher paying ones, e.g. the part-time hamburger flipper graduates from school and gets a better job.

But these data do show that inequality is growing, as in order to improve your lot in life (or even stay even) you HAVE TO move up to a better job or you’ll fall behind.

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By: RyanTate http://blogs.reuters.com/felix-salmon/2013/07/09/wage-deflation-charts-of-the-day/comment-page-1/#comment-47617 Tue, 09 Jul 2013 18:43:47 +0000 https://blogs.reuters.com/felix-salmon/?p=22229#comment-47617 Wouldn’t there be a survivor bias here in the top quintiles?

That is, the bottom quintile would, I theorize, contain more jobs that can’t simply be eliminated – janitor, customer service, retail register operator, dishwasher – but whose wages, in boomtime, may have room for reduction. The top quintile would arguably have more jobs that can simply be eliminated – bizdev VP, credit analyst, commercial real estate broker, and so on.

When a job with a given title is eliminated, it drops out of the wage reporting for that occupation, presumably, rather than reporting as $0 wage. The only people who continue to report their wages are those who were not laid off. And how many VPs of bizdev will tolerate wage cuts?

(If anything this cements your broader point of falling wages for labor vs growing returns for capital holders, btw. Just thought I’d bring it up.)

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