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'Your pay is still – not – going up too fast'
- EchoChamberMan 3y agoStarving your workers to death is not a good long term strategy.
- hinkley 3y agoI’ve worked for businesses that were starved to death by customers who told us they needed our services to function. Management is not nearly as smart as they want us to think.
- bee_rider 3y agoWhat if your customers were smart, but also lying? (Able to get by without your product, but willing to buy it for cheap).
- ramesh31 3y ago> Starving your workers to death is not a good long term strategy. It is when you have an unlimited supply of workers with zero protections. The breaking of the social contract makes all the old rules no longer apply. They will drive us to the absolute edge of torches and pitchforks and keep us there, forever. They will come up with newer and better ways of determining where that line is, and just how far they can push it. And we will sit here like obedient dogs and take it.
- lotsofpulp 3y agoThe unlimited supply of workers parameter is less and less true as the days go by.
- Tycho 3y agoYour reply is rather hyperbolic.
- ramesh31 3y ago> Your reply is rather hyperbolic. I had a grocery store clerk eyeballing my checkout yesterday with absolute amazement at the "luxury" of buying TWO boxes of name brand cream cheese. We live in two completely seperate worlds at this point, and I don't think you have any idea how bad things have gotten for the bottom 90% in this country earning <$100k.
- scruple 3y agoI'm also feeling reluctant to buy name brand anything in a grocery store these days, except Wild Turkey 101 I guess.
- gambiting 3y agoIt's not just US - there is a very interesting article in the British Guardian on this very topic at the moment, how people on £60k-100k are still struggling, even though this was always traditionally a very decent pay, nothing super fancy but definitely a nice middle class income that would let you pay off your house, have a modest car and go on holidays once a year. Now everything has exploded in price so much that people earning £70k get nearly nothing left at the end of the month after paying their mortgage/rent, bills, childcare, plus some money for fuel to just get to work. I understand that they are all "privileged" in the sense that they can still afford all of those things while many people in this country can't, but the margins are getting thinner and thinner. People can't save up, they can't buy new stuff(which hurts the economy even further), they spend less money on their kids.....it's not great. Like, me and my wife have a very decent combined income of over 100k, but even then - 10 years ago I would have thought that with that kind of money we'd be living like kings, but in reality it just lets us save some money at the end of the month and not a whole lot else. If we actually wanted to move up from our 900sqf house or get a slightly newer car, it would eat up into all of that quickly. I think we've reached a point now where I literally don't understand who in this country is buying all these new cars and goes on holidays twice a year(forget expensive ones - I mean a few days in Spain with a budget agency). And I definitely don't understand how a teacher on £27k a year(or a nurse) is expected to make ends meet. It feels like an erosion of society from the very core, where unless you are in the top 1% you just aren't even playing the same game.
- malka 3y agoDont have kids. Starve the bourgeoisie.
- cupcakecommons 3y agoPlease do follow this strategy if you are convinced of its merit.
- malka 3y agoPlease dont, if you think you'll enjoy watching your children being worked to death by the bourgeoisie.
- cupcakecommons 3y agoI'm in total support of you not having children "to starve the bourgeoisie". I want to do all that I can to help you remain true to this strategy as long as you feel this way!
- NoMoreNicksLeft 3y agoI'm not sure collective suicide is a solution, but if it were, I'd still be reluctant to implement it.
- InCityDreams 3y agoIt would send a very convincing message, though.
- pc86 3y agoWho would be left to receive it?
- malka 3y agoThe bourgois, whom would have to fight among themselves to determine who will dominate, and who will be dominated. Or they would have to resort do massive immigration, destroying culturally their own country in the process, and laying the path to being replaced in the long run. None of this path is good for them.
- SoftTalker 3y agoYes and just look at history. This has been the way most people live and have lived. As peasants, toiling for landowners in exchange for survival. It is a good long term strategy in that it has been the norm throughout history. The occasional violent uprisings are a cost of doing business.
- EchoChamberMan 3y agoSo the guillotines are coming?
- AnimalMuppet 3y agoMany businesses trying to hire these days would take issue with your "unlimited supply of workers".
- ryandrake 3y agoWhich businesses are "trying to hire" and what compensation are they offering? At the right wage, there is practically an unlimited workforce.
- EchoChamberMan 3y agoMost businesses have self-imposed requirements that make it impossible.
- doctorwho42 3y agoBut in the short term it pays dividends, bonuses, and raises. It's kind of a tragedy of the commons type problem, none of the leadership and investors care about the long term (the negative effects on the corporation or society) as long as individually they succeed.
- polygamous_bat 3y agoSo many of us know about Goodhart’s law but willfully ignorant about how that applies to modern economies. We made money to be the metric we judge things by, and now we get to enjoy or suffer the results of overoptimization on that metric.
- EchoChamberMan 3y agoUntil the whole thing collapses and blows up in your face.
- deleted 3y ago[deleted]
- burkaman 3y agoGenerally the people in charge are old and don't need a long term strategy.
- yborg 3y agoAI models don't eat.
- EchoChamberMan 3y agoThey also don't know fact from fiction!
- mschuster91 3y ago> The idea of bringing down wages to tame inflation is rooted in the theory that if we reduce the costs of labor in the production process, firms won’t have to increase prices as much, and thus the rate of inflation would fall. The root cause IMHO is that especially in the US there is barely any competition any more. No matter where you look, it's at most five to six different (multi)national megacorporations... and so they can extract many billions of dollars from the economy every month. Enshittification, just on macroeconomic scale.
- deleted 3y ago[deleted]
- mhuffman 3y agoCan you imagine a situation where the cost of labor suddenly came down and then the managers of a company telling the investors, "hey, looks like the cost of labor went down, which means the cost of all of our inputs went down, so I am just going to lower prices even though we already know the wtp price point, and you are going to get less profits!". Those managers would be fired that day, and replaced.
- ctxMatters 3y ago[flagged]
- deleted 3y ago[deleted]
- pc86 3y agoIf there's one thing I learned studying economics, it's that the layperson's gut intuition about how something works from a macroeconomic perspective is usually not only wrong, but pretty close to the opposite of how things actually work.
- ctxMatters 3y ago[dead]
- throwitaway222 3y agoThe shortsightedness of the entire thing is funny. Everyone should be making $20 per hour minimum wage! $20 minimum wage granted (walmart, tons of others) Everyone should be making $40 per hour minimum wage!! Ugh...
- deleted 3y ago[deleted]
- polygamous_bat 3y agoWhen I think about falling trust in so called “mainstream” media, pieces like these come to mind. Used to be that newspapers were the fourth estate, existing independently and keeping powers in check by being a source of transparency. Now in the age of web driven advertisement that business model doesn’t work anymore, and what we get is the shells of the old behemoths used as corporate mouthpieces and the crumbling democracy and freedom that entails. What an absolute shame.
- okintheory 3y agoWhen was mainstream media not advertising driven? When was media not beholden to corporate interests?
- kdmccormick 3y agoCable has always been ad-funded as far as I can tell. Big print newspapers were mostly independent and subscriber-funded, so they answered to their subs rather than advertisers. The Economist is still independent and subscriber-funded. But, most sub-driven publications now have to fight tooth and nail to stay above water, so the writing needs to be tailored towards engagement/clicks :/
- skhunted 3y agoAt the local level newspapers weren’t beholden to business interests to the extent they are now since there were much fewer ways to advertise to potential customers. At the national level there was sufficient competition in media ownership to allow for real investigative reporting. Now that media has consolidated they don’t have to try as hard to attract viewers/readers. Also consolidation in the corporate world means exposing wrongdoing in one brand means pissing off that brand’s owner who also owns many other brands. In the past exposing shenanigans in a cereal brand didn’t mean that you lost out on advertising from a whole slew non related food brands. There was also more a desire to serve public interests prior to Reagan getting rid of the rules on media consolidation. It wasn’t perfect but it was much better than what we have now. News media is much more beholden to corporate interests now than in the past.
- 3y ago
- bradybd 3y agoHumans are getting priced out
- ramesh31 3y ago>Humans are getting priced out Yup. Soon enough it'll just be two guys arguing over a fair price for Canada.
- deleted 3y ago[deleted]
- fasteddie31003 3y agoI wanted to know how my income history has been keeping up with inflation and I couldn't find an easy way to do it. I made https://askforapayraise.com/ https://askforapayraise.com/ to help visualize how much you are keeping ahead of inflation or falling behind.
- helboi4 3y agoWould you consider adding features for countries/currencies outside of the US/dollar? And/or do you have a github repo that I could PR against to add it if you'd prefer.
- loceng 3y agoCould be an additional benefit to provide a tool-interface to educate people that [manufactured] inflation helps large companies with their debt - because their amount of $ debt owed doesn't change, yet if they generate revenues - they are now generating more $ to pay off their debt faster; this will work slightly different between governments-states amassing debt vs. companies that have debt.
- deleted 3y ago[deleted]
- 6DM 3y agoIn firefox adding a couple raises causes the site to crash for me when trying to add my salary. edit: the site layout seems completely messed up in chrome
- fibers 3y agothis whole morning i tried entering the data from oldest date to newest date and it kept crashing but if you start with your newest data points and work backwards it should work.
- pc86 3y agoNeat idea and I really want to use it, but if I add any custom amounts the site crashes with a TypeError and white page. Uncaught TypeError: Cannot read properties of undefined (reading 'value') at Q (App.js:694:57)
- csours 3y agoI'd love to see more analytical humility in this area. > "The problem – economics research has repeatedly shown that this is not the case." And economics research has also repeatedly shown that this IS the case. I'm not supporting that argument, I'm just saying that you have conflicting bodies of research. Everyone here is engaging in motivated reasoning, depending on who they think the boogie-man is. Humility means being clear about how much you can possibly say from the evidence at hand. Humility means thinking more about confounding factors than about things that you believe to be true. I'd also love if we talked more about access to resources instead of money.
- burkaman 3y agoDo you know of research that disagrees with this post? The Economist article doesn't mention any, in fact there is only a single sentence supporting its headline: "Although American pay growth has subsided from more than 5.5% year on year to around 4.5%, that is probably still too high for the Federal Reserve’s 2% inflation target." It seems like an editor may have chosen a headline that doesn't match what the article says.
- 0xbadcafebee 3y agoYou can always find research that supports a contrary finding in economics. Economics is black magic.
- burkaman 3y agoI'm familiar with this stereotype, but again, do you know of any such research in this case? I'm not an economist but I can't immediately find any, even if I add stuff like "conservative think tank" to my search terms.
- Closi 3y agoI mean it seems fairly econ 101 in some respects: * Companies have normal profitability in the long run in a competitive market. * If costs go up, companies must raise prices to maintain normal profitability. * If wages increase, costs go up. Here is the paper I assume is referenced in this article: https://www.google.co.uk/books/edition/Wage_Growth_and_Inflation_in_Europe_A_Pu/0skaEAAAQBAJ?hl=en&gbpv=0 https://www.google.co.uk/books/edition/Wage_Growth_and_Infla... But the blog article says: "The Economist piece appears to have repeated the old theory that wage growth causes inflation spirals. As discussed, empirical evidence shows this is not true" I don't think many economists would argue that wage inflation causes no price inflation, and that also doesn't seem to be the finding of the paper they are referring to - which finds that wages CAN create inflation. The debate is about the amount of passthrough (e.g. how much an increase in wages affects an increase in the price of goods). Then the blog article says: > there is evidence that it is elevated inflation that causes wage increases. But that can be true while the opposite is also true. Inflation can cause wage increases. Wage increases can increase costs. Increasing costs can lead to price increases. Price increases cause inflation. Inflation can cause wage increases. Each step in diminishing quantities, but still multiplying the initial effect of inflation. I think this article is very cherry-picky of the facts.
- nolongerthere 3y ago[flagged]
- deleted 3y ago[deleted]
- ryaniscool 3y agoanecdotally, I have noticed massive wage growth for non-college educated workers. My teenage son who was still in high school at the time went from $10/hr to $17/hr as a restaurant worker in small town Florida. This was 2022-2023. In the same period, my salary as a principal software engineer went up 3%
- twojobsoneboss 3y agoYou and your son are literally on opposite ends of the current economy. Tech is in possibly the worst recession since dotcom, while in-person services and retail pay is booming So the pay situation you describe isn’t surprising at all
- jpalawaga 3y agoTech stocks seem to be doing quite well. Of course, it's a convenient narrative to say that our sector is struggling. For corporations who don't have a money machine, yes, it's not a good time. You will not get new funding. For established corporations, I'd say that it's pretty sunny days, especially considering layoffs.
- EchoChamberMan 3y agoWhat do you mean by "sector" here? The only ones doing well are massive corporations and their stock owners.
- paulryanrogers 3y agoBetter to be a shareholder than an employee. Because as profits increase most of it will be captured by the former. Leaving the latter to fight tooth and nail for their share.
- twojobsoneboss 3y agoHave you looked at the sw Eng hiring landscape recently? One reason stocks are doing so well is cause of the cost cutting, layoffs, and hiring and promo freezes. Stock prices have nothing to do with the employment landscape
- bdw5204 3y agoThe elephant in the room that is driving inflation is energy prices. Every good has to be transported and that requires energy. Every production facility also requires electricity to run machines. Energy prices happen to be going up because some people are ideologically committed to raising energy prices and reducing energy production in order to stop climate change. This includes the current US president, who signed a bunch of executive orders right after taking office that increased gas prices by restricting fossil fuel production. The sanctions on a certain gigantic gas station that is currently at war with one of its neighbors are also a major driver of inflation. There was also transitory inflation due to pandemic era supply chain disruptions. When factories are shut down for health reasons, less stuff gets made and the price of that stuff goes up. What did not cause inflation? People being able to buy houses, start businesses and find jobs because the interest rates were low. Raising interest rates and putting people out of work is just treating a symptom when the real solution to inflation is to lower energy prices by producing more energy. That means repealing anti-fossil fuel policies[0] and it also means trying to negotiate an end to wars rather than funding the belligerents forever with endless foreign aid. [0]: Climate change is real and should be addressed via technology not austerity. We are not going to solve anything by making people in developed (1st world) countries poorer or by keeping people in developing (3rd world) countries poor. Those advocating climate austerity are the main motivating factor driving climate change denial because many people will assume its just a hoax powerful people made up to make them poorer.
- rancour 3y ago[flagged]
- venachescu 3y ago> This includes the current US president, who signed a bunch of executive orders right after taking office that increased gas prices by restricting fossil fuel production. I'm sorry, what? https://www.cnn.com/2023/12/19/business/us-production-oil-reserves-crude/index.html https://www.cnn.com/2023/12/19/business/us-production-oil-re...
- gotoeleven 3y ago
- ihsw 3y ago[dead]
- deleted 3y ago[deleted]
- cannibalXxx 3y agoThey'll always have the idea of finding cheap labour and we'll continue to be jobless. :D
- deleted 3y ago[deleted]
- cupcakecommons 3y agoInflating the money supply by billions of dollars to fund several expensive conflicts around the world seems like it would have a larger effect on inflation right? We are in the process of regularly shooting down 300$ drones with weapons systems that cost hundreds of thousands of dollars (sometimes millions) per shot. Should we really have deep concern about wages that companies freely decide to pay their employees? Isn't this completely insane regardless of what any kind of "the research" happens to say?
- Shrezzing 3y agoThe US Money Supply (M2 & M1) has been falling pretty consistently since Russia's full-scale invasion of Ukraine in 2022. M0 is also down overall since the invasion, though it's gone through ups and downs. I'm not certain the statement "Inflating the money supply by billions of dollars to fund several expensive conflicts" reflects reality.
- cupcakecommons 3y agoWhere does the money come from that funds these proxy wars? Taxes? Taxes barely cover half of what is spent year to year. Doesn't the rest comes from inflating the currency? Where else could it possibly come from? As long as we are running a massive deficit I can't understand how the money supply can actually decrease unless money is actively being taken out of circulation and deleted (regardless of what the federal reserve charts seem to say). This seems like an impossible task in a basic sense. People obviously notice when money is taken away or destroyed. Please make it make sense - I honestly don't understand.
- nostrademons 3y agoThere's a fair amount of confusion between map and territory in this article. It seems to take macroeconomic indicators like CPI, nominal wages, and real wages as fundamentals and then infer that the economy must behave a certain way because of historical relationships between them, when the reality is that the economy behaves as the economy behaves and the macroeconomic indicators only measure what's going on. A good example is "By definition, inflation-indexed wages cannot result in a higher inflation rate. Wages indexed only to inflation will actually reduce the inflation rate, if productivity is positive, which it typically is." No - if you have an inflation-indexed wage, it will go up when inflation does, regardless of what productivity does. You can't just infer that productivity has risen because the inflation-indexed wage went up - in this specific instance, it's clear that it hasn't, because nothing has changed except the inflation index. Inflation is best thought of as a feedback loop. Every expense is somebody else's income, so if expenses are going up across the economy, somebody is getting more money. That gives their suppliers leverage to raise prices and their customers a need to raise prices or go out of business. The rate is going to be uneven across different sectors, which is where the CPI vs. nominal vs. real wages behavior comes in. Real wage increases are nominal wages * CPI, by definition, so if most of the increase in prices is accruing to labor, real wages will be positive, while if most accrues to capital, real wages will be negative.
- mhuffman 3y ago>so if most of the increase in prices is accruing to labor, real wages will be positive, while if most accrues to capital, real wages will be negative. I am not asking this to be snarky, but do you recall any time in our lives where increase in prices mostly accrued to labor?
- nostrademons 3y agoIt's happening right now - that's what the 1.8% increase in real wages over 2023 is.
- NominalNews 3y agoHi! Author here! You are correct - that we have real wage growth. However, it is worth nothing that productivity has gone up 3-4% over the last several quarters (see FRED data). Wages should grow by this amount in real terms at least. That's where the standard assumption of 3.5% nominal wage growth comes from (2% inflation + 1.5% productivity growth). So the 1.8% real wage growth is, in my opinion, very low given the economy.