Meanwhile I don't see any evidence education in the past 20 years in the US has yielded a significantly higher quality and efficiency of candidate.
If you want more money all else equal you have to bring something more to the table. If all you bring to the table is being able to use a more efficient machine it's not clear why your wage would elevate rather than the value of the machine (capital) elevating. Merely having as good an education as the guy 20 years ago isn't going to cut it.
The market works because all actors are buyers and sellers, and when buying, you are seeking the lowest price, and when selling, you are seeking the highest price.
If you stop doing that, someone will outcompete you by allocating resources better (absent corruption). It even applies on a household level, where if you spend extra on charity or groceries or whatever, you will have a smaller downpayment to compete for the house you want.
Also, generally, employee pay is highly correlate with the employer’s profit margin (outside of healthcare due to heavy government involvement).
Capitalism is about competition which inevitably leads to minimizing the cost of labor, and includes no inherent safe guards to protect workers other than what skills they might have. This is why unions had to be formed and is why there is the tension between workers rights and companies today.
There used to be a high $ hurdle to opening investment accounts.
The issue is that everything they buy has gotten more expensive. When groceries, rent, cars, medical bills, etc all go up but wages are stagnant, people get crushed.
Some luxury goods have gone down over time, like electronics. But the essentials have all gotten worse.
That seems either extremely naive or intentionally deceptive.
Globalization began in 1972 with the opening of China.
Which of course perfectly lines up with the stagnation of American wages.
https://en.m.wikipedia.org/wiki/1972_visit_by_Richard_Nixon_...
Trade with China was insignificant before 2005; more often than not the US had a surplus with China. We sold them a lot of wheat.
Imagine country A makes a product (like say wheat) where the number of jobs needed to make that value is low; while country B makes a product like say, apples, which takes a lot of jobs to produce.
So country A sells say a $1mil load of wheat (10 jobs) and buys $2mil of apples (1000 jobs.)
If we're just measuring trade, the A buys more from B. If we're measuring jobs then B "buys" more than A.
So, maybe, instead of just measuring the value of yhe trade, we need to consider the labor cost of the trade?
I'm really starting to think that maybe national economics and it's relationship to global trade is, you know, complex, and not somehow magically "fixed" with simple stupid tarrif formulas....
Something to consider in your thought process - take two relatively recent stimulus efforts - 2008 and 2020 - the first was primarily quantitative easing - a classic trickle down effort since all the money went to bank balance sheets and trickled down to individuals, the QE stimulus had almost no impact on inflation. Vs Covid which was direct household stimulus and immediately led to inflationary pressure.
A link I don't see mentioned often is most central banks didn't start an inflation targeting policy until the 90s. Prior to that it was still an objective but managed much worse. https://www.richmondfed.org/publications/research/econ_focus.... this link contains a chart that looks at the inflation volatility over time.
I happen to think that a consequence of managed inflation, balanced against aggregate employment is consistent wage pressure. In essence, wage growth in my mental model on this is a consequence where upward inflation swings drive wage gains, while downward ones drive more unemployment. If inflation is managed closely to avoid volatility, then redistributive effects of volatility are limited.
https://chinese-legal-studies.law.columbia.edu/sites/chinese...
The US didn't have persistent trade deficits until 1982, and even that reversed by 1992. It was 1997-2006 that the trade deficit as a share of GDP exploded.
* Union Busting
* Wall Street pushing growth above profits
* US Gov policies since 1981
You're right to suggest it's really multiple reasons that need to be considered to get the full picture. They're interconnected. Gov policies weaken unions. Weak unions allow corporation to take advantage of workers, at the behest of wall street. Money gets concentrated, gov policies get bought. The cycle goes on. In this way, we can say the effect is systemic, and fixing the issue will take undoing most, if not all, of the causes.
Why would that be hard to understand? When companies don't need to compete for your labor they won't.
Also it's not just wages. The entire market is stagnant. Innovation has ground to a halt and billions are poured into wasteful deadend technologies.
Valid hypothesis. Needs to be substantiated, as the author has done, and explain the stagnation and real wage increases.
This as most here can imagine allowed via recurrent acceleration for the profound wealth inequality we experience today, and directly produced our current collapse of democracy into literal kelpto-oligarchy backed by overwhelmingly powerful surveillance.
The 1% perceived and perceive no self-interest in a rising tide.
Now that hunter-killer machines both online and soon off shall reliably keep what people are still needed at bay, why would they?
I wish this were hyperbolic.
Neither diagnosis nor prediction is.
More workers vying for the same jobs--supply and demand driving down labor costs?
> Update: Some people have been asking me if the wage stagnation of 1973-1994 might have been caused by the mass entry of women into the U.S. workforce. Here’s the employment rate (also called the “employment-population ratio”) for American women:
[see article for graph]
You can see that the first part of the timing doesn’t line up here. When the wage stagnation began, American women had already been entering the workforce at a steady clip for 25 years. (The labor force participation rate for women looks much the same). Also, empirical evidence suggests at most a small effect of female labor supply on male wages — and if you look at the breakdown for men and women, you see that the stagnation for men was worse than for women over 1973-1994.
And theoretically speaking, women’s mass entry into the workforce shouldn’t produce an overall decline in wages. Just like immigration or a baby boom, women’s entry into the workforce is both a positive labor supply shock and also a positive labor demand shock at the same time — when women earn more, they spend most of what they earn, on things that require labor to produce.1 So we shouldn’t expect the addition of women to the workforce to hold down wages.
Thus, this theory also doesn’t line up with the timing of the stagnation, and it’s not clear why we would expect it to be a major factor in the first place.
EOF
Uh, what happens if the labor to produce things costs pennies because it's all been shipped out to China?
Previously (example numbers): Median compensation is $55k + health insurance.
After: Median compensation is $55k + health insurance.
"So nothing changed?"
"Wrong! Health insurance costs more for the same benefits, so really, you got a raise!"
Yeah, sorry if I'm not celebrating.
The business-owner class benefits from the health system, because the business-owners are the gatekeepers of healthcare (typically, people get healthcare only through their employer). The worker class is less likely to benefit from the free part of the "free market" because their healthcare is tied to their employer; it's just harder to do anything except work a typical 9-to-5 for a business-owner.
The healthcare industry also benefits because they get to suck up a large portion of the GDP; trillions of dollars.
So wages aren't only flat, but the wage growth that should have happened instead went into a corrupt system. Wages aren't honestly flat, they are corruptly flat.
I have seen companies turn down good candidates for jobs too many times, as a result of speculating that the candidate is too good (they'll expect to get paid more). You don't even have to ask for high wages, you have to dumb down your resume and underplay yourself at some point if you want to be considered for a majority of non-junior roles these days, just so you get a shot at an actual interview and low-ball offer.
The argument isn't that any of this began with NAFTA. The argument as I've always understood it was that it began as the Neoliberal project which started in the late 60s, and early 70s.
The 1973-1994 period wasn't before globalization. It was the period where the groundwork was laid to make labor vulnerable to the type of globalization that neoliberals wanted.
The threat of capital flight for example was already being used to attack workers.
The breakdown of the Bretton Woods system was the start which aligns perfectly with the time period.
Noam Chomsky on the topic
"Bretton Woods restrictions on finance were dismantled, finance was freed, speculation boomed, huge amounts of capital started going into speculation against currencies and other paper manipulations, and the entire economy became financialized.
The power of the economy shifted to the financial institutions, away from manufacturing. And since then, the majority of the population has had a very tough time; in fact it may be a unique period in American history. There’s no other period where real wages — wages adjusted for inflation — have more or less stagnated for so long for a majority of the population and where living standards have stagnated or declined." - https://chomsky.info/20090210/
So we start off with an flawed view of the world, and then we move forward with the argument to explain it through other means.
The 1973-1994 wage stagnation isn't a "mystery" caused by a patchwork of unrelated events. It's a direct consequence of a fundamental, politically driven shift in the economic regime, specifically the dismantling of the Bretton Woods system in the early 1970s and the subsequent financialization of the economy and deregulation.
asdff•1h ago
I'm not sure exactly the relationship between wage growth and restriction of housing growth but the fact that these phenomenon seemed to happen in lockstep merits some reflection. Prop 13 also came in 1973.
yonran•1h ago
asdff•40m ago
bryanlarsen•1h ago
ty6853•38m ago
They managed to find the one fucking way to make additional housing make being a new homeowner even more expensive, and I believe it was not by accident.
onlyrealcuzzo•31m ago
No politician wants more affordable housing in a place where >65% of voters are property owners...
Ericson2314•15m ago
Nothing against allowing lot splits, but this is the wrong reason to be for it. The reasoning in the previous to replies reaks of "homeownership is more virtuous than renting" which is not true. And besides, if you really want more homeownership, the most important path forward is condos, and thus condo defect liability reform.
ty6853•11m ago
In the philosophical extreme, if zoning allowed infinite density you could stick a hong-kong style condo skyscraper for the entire population on 0.1 acres and the rest of the land would provide no additional housing utility pushing prices down to whatever the value it is as farmland/business/recreation. The housing value of surrounding land would plumet.
Low land prices are indicative of less restrictive zoning. In more restrictive zoning that punishes building houses on small plots, land becomes more valuable because the land is the license to build a house. i.e. where I live I had to buy more land than I needed because without it I could not build my house, which drives up land prices (increased demand).
The reason why california ADU increase parcel prices is because it prints an additional house license while being illegal to split it off. Otherwise you would be left with two cheaper parcels, although in sum they may be more expensive, but you would still pay less for enough land for license to print a house.