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Are stagnating wages a myth?

Jack Hays

Jack Hays

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This is interesting. I wonder if it will have any effect on the political rhetoric of victimhood.

Have U.S. wages stagnated? Probably not.


The impression that most people in the middle class are slipping backward seems overwrought.

How many times have you heard that Americans’ wages have stagnated? Countless commentators (including me) have repeated this complaint. Naturally, politicians of both parties — Hillary Clinton and Donald Trump — deplore it. It’s conventional wisdom that wage stagnation has contributed to the sluggish recovery and the downcast attitudes of millions.
But what if it’s not true?
A new study from the Federal Reserve Bank of San Francisco suggests just that. It concludes that widely cited figures showing stagnation are mostly a statistical fluke. Workers continuously employed in full-time jobs received wage increases higher than inflation from 2002 to 2015. Last year, the gain was a 3.5 percent increase after inflation, up from 1.2 percent in 2010. . . .
 
Jack Hays said:
An example:

[h=3]A plan to raise American incomes | Issues | Hillary for ... - Hillary Clinton[/h]https://www.hillaryclinton.com/issues/plan-raise-american-incomes/


Hillary understands that in order to raise incomes, we need strong growth, fair ... With near-record corporate profits and stagnant wages, the deck is stacked ...
Click to expand...

Clinton is just spewing more Democratic party rhetoric...the same playbook they have used for decades.

Cut taxes (good) and spend, spend, spend (bad).


I strongly believe the American middle class ARE falling 'behind'...and both parties are to blame.

And I believe the reasons the middle class is falling behind are (among many reasons) a) taxes are too high to pay for the massive increase in government spending over the last few generations.
b) the central bank is now far too meddling and it's policies aid the rich and do virtually nothing for the poor/middle class.
c) government has gotten far too hands-on with the economy...when it clearly has no idea what it is doing.
d) the military industrial complex has gotten completely out of control and is costing taxpayers FAR too much - especially considering the Cold War is long over.
e) the masses have gotten too used to government's baling them out whenever they make stupid mistakes...which fails to teach the masses by trial and error.
f) the Fed's insane ZIRP (zero interest rate policy) has strongly encouraged people to go massively into debt. Saving money has become a swear word since Bernanke/Yellen have run the Fed.

Solutions?

-Kill the Fed. At the very least remove ridiculous 'full employment' mandate and force full audits/disclosures of EVERYTHING the Fed does.
-Balance the budget...no deficits except during a declared war against another country.
-Slash military spending...by at least 25%. 50% is better. Bring all troops home. Close all foreign military bases. End all military aid. Leave NATO.
-Slash income taxes for all, make capital gains tax rates the same as income tax rates (right now they can be far cheaper - which helps the rich/super rich).
-Kill Obamacare...replace it with free, basic government health insurance for all who cannot afford it and free 'Cadillac' (insurance equivalent) government healthcare for all children.
 
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Jack Hays said:
The thesis of the OP article is that the middle class is not falling behind.
Click to expand...

I know and I disagree with the thesis of the article.

As for the San Fran Fed report? They are assuming the official inflation rate is accurate. I think the official inflation rate hugely underestimates actual American inflation.
 
Jack Hays said:
An example:

[h=3]A plan to raise American incomes | Issues | Hillary for ... - Hillary Clinton[/h]https://www.hillaryclinton.com/issues/plan-raise-american-incomes/


Hillary understands that in order to raise incomes, we need strong growth, fair ... With near-record corporate profits and stagnant wages, the deck is stacked ...
Click to expand...
You, RS...and the paper from the FRBSF argues that we cannot look at part time wages, we have to limit the view of wage gains to only full time wage earners 2002-15. I wouldn't call that cherry picking entirely, but it sure comes close. Those that were able to hold on to full time work through the Bush recession and the Obummer recovery were a blessed demographic. Meanwhile, in the real world, we have this sort of picture:

fredgraph.jpg
 
DA60 said:
I know and I disagree with the thesis of the article.

As for the San Fran Fed report? They are assuming the official inflation rate is accurate. I think the official inflation rate hugely underestimates actual American inflation.
Click to expand...

Good for you.
 
Gimmesometruth said:
You, RS...and the paper from the FRBSF argues that we cannot look at part time wages, we have to limit the view of wage gains to only full time wage earners 2002-15. I wouldn't call that cherry picking entirely, but it sure comes close. Those that were able to hold on to full time work through the Bush recession and the Obummer recovery were a blessed demographic. Meanwhile, in the real world, we have this sort of picture:

fredgraph.jpg
Click to expand...

Fair enough, but still begs the question whether that graph is driven a real decline, or by replacement in the workforce of senior (retiring) workers by junior (entering) workers.
 
Jack Hays said:
This is interesting. I wonder if it will have any effect on the political rhetoric of victimhood.

Have U.S. wages stagnated? Probably not.


The impression that most people in the middle class are slipping backward seems overwrought.

How many times have you heard that Americans’ wages have stagnated? Countless commentators (including me) have repeated this complaint. Naturally, politicians of both parties — Hillary Clinton and Donald Trump — deplore it. It’s conventional wisdom that wage stagnation has contributed to the sluggish recovery and the downcast attitudes of millions.
But what if it’s not true?
A new study from the Federal Reserve Bank of San Francisco suggests just that. It concludes that widely cited figures showing stagnation are mostly a statistical fluke. Workers continuously employed in full-time jobs received wage increases higher than inflation from 2002 to 2015. Last year, the gain was a 3.5 percent increase after inflation, up from 1.2 percent in 2010. . . .
Click to expand...

It is true that the above shows that wages are not stagnant. However that does not mean the figure is a statistical fluke. What it shows is that this median number has two sides. True those with consistent jobs have overall gotten raises over the last 15 years. The flipside is folks who have lost their job have often found work at materially lower levels. This fact not only explains why the numbers are not a fluke, but also the fact that there are so many angry people out there. Thus Sanders and Trump.
 
washunut said:
It is true that the above shows that wages are not stagnant. However that does not mean the figure is a statistical fluke. What it shows is that this median number has two sides. True those with consistent jobs have overall gotten raises over the last 15 years. The flipside is folks who have lost their job have often found work at materially lower levels. This fact not only explains why the numbers are not a fluke, but also the fact that there are so many angry people out there. Thus Sanders and Trump.
Click to expand...

I don't think the study's authors would disagree, but they might suggest the problem has been over-hyped.

The larger implication is that the study compromises the prevailing economic narrative, which emphasizes the stagnation of wages and living standards. Clearly, millions of households — especially the recently unemployed — have suffered large losses, and the gains of many others are underwhelming. But the impression that most people in the middle class are slipping backward seems overwrought. The anxiety about the future is real, but its causes must be more complicated than commonly thought.
 
Jack Hays said:
Fair enough, but still begs the question whether that graph is driven a real decline, or by replacement in the workforce of senior (retiring) workers by junior (entering) workers.
Click to expand...
Um, REAL household income....is just that. If a household is seeing DECLINES in income as those workers move into supposedly higher paying positions from where they came, then something is amiss.

What I think is sort of funny is that cons for years were arguing that the declines in workforce participation was NOT the result of retirements, yet here we see them embracing the concept as an explaining away of stagnant wages......or even REAL declines in household incomes.
 
Gimmesometruth said:
Um, REAL household income....is just that. If a household is seeing DECLINES in income as those workers move into supposedly higher paying positions from where they came, then something is amiss.

What I think is sort of funny is that cons for years were arguing that the declines in workforce participation was NOT the result of retirements, yet here we see them embracing the concept as an explaining away of stagnant wages......or even REAL declines in household incomes.
Click to expand...

Not sure who are the "cons" you are talking about with regard to this OP.
 
Jack Hays said:
I don't think the study's authors would disagree, but they might suggest the problem has been over-hyped.

The larger implication is that the study compromises the prevailing economic narrative, which emphasizes the stagnation of wages and living standards. Clearly, millions of households — especially the recently unemployed — have suffered large losses, and the gains of many others are underwhelming. But the impression that most people in the middle class are slipping backward seems overwrought. The anxiety about the future is real, but its causes must be more complicated than commonly thought.
Click to expand...

Thus the issue of outsourcing (one such cause) brings out such passion.
 
And to add, if the argument is that the declines in real median household incomes is the result of older, retiring full time workers, I say that I doubt many retiring full time workers are a representative of MEDIAN households, I would expect they are/were far above median ($54K) US households.
 
Jack Hays said:
Not sure who are the "cons" you are talking about with regard to this OP.
Click to expand...
Um, you and Samuelson.

Are you going to distract from my counter-argument, not have to prove your contention that declines in RMHI are the result of retirement?
 
Gimmesometruth said:
Um, you and Samuelson.

Are you going to distract from my counter-argument, not have to prove your contention that declines in RMHI are the result of retirement?
Click to expand...

I have no idea what is Samuelson's political orientation, and I doubt I qualify as a conservative. As for RMHI, I have no contention. The OP authors have made a suggestion I found interesting. I'm uninterested in arguing about it.
 
Jack Hays said:
I have no idea what is Samuelson's political orientation, and I doubt I qualify as a conservative.
Click to expand...
Funny, now we are getting into jokes and pronouncements of ignorance.
As for RMHI, I have no contention.
Click to expand...
False, you did make the contention:

Fair enough, but still begs the question whether that graph is driven a real decline, or by replacement in the workforce of senior (retiring) workers by junior (entering) workers.​

Your begging the question is there for YOU to answer, it IS your contention.

The OP authors have made a suggestion I found interesting.
Click to expand...
You are the author of the OP, you quoted Samuelson.
I'm uninterested in arguing about it.
Click to expand...
WTF?

You are ALREADY arguing about the third-hand referenced FRBSF paper, defending it....or at least trying to defend it. I am saying it is cherry-picked data that a conservative who has previously argued that retirements were not a major cause of declines in the workforce is now arguing that median wages are skewed by retirements.
 
Jack Hays said:
It's the free market. Some jobs are better and some are worse.
Click to expand...
Most are worse, that is evident by the declines in wage gains since 1979 which have not kept pace with productivity gains.
 
Gimmesometruth said:
Funny, now we are getting into jokes and pronouncements of ignorance. False, you did make the contention:
Fair enough, but still begs the question whether that graph is driven a real decline, or by replacement in the workforce of senior (retiring) workers by junior (entering) workers.​

Your begging the question is there for YOU to answer, it IS your contention.

You are the author of the OP, you quoted Samuelson.WTF?

You are ALREADY arguing about the third-hand referenced FRBSF paper, defending it....or at least trying to defend it. I am saying it is cherry-picked data that a conservative who has previously argued that retirements were not a major cause of declines in the workforce is now arguing that median wages are skewed by retirements.
Click to expand...

Here is my entire contribution to the OP: This is interesting. I wonder if it will have any effect on the political rhetoric of victimhood.

Otherwise, I don't care. You're debating yourself.
 
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