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It is a common point for politicians and political-economists to say that wages have been stagnant since the 1970s or even 1960s.
However this is not true - not for individuals. Perhaps wages could have increased more than what they have, but wages have increased for individuals virtually across the board.
(1) Paul Krugman, Elizabeth Warren, and Bernie Sanders simply use bad logic. They have pointed to starting wages for certain entry level jobs/openings in 1980 compared to 2010, which show little gain. However, how many people work for 30 straight years in an entry level job without advancement, without raises that beat inflation, without promotions, etc?
It doesn't take a genius to realize that a teacher doesn't maintain their starting years salary throughout all 30+ years of teaching. They get raises and they get more pay for getting a masters' degree and they also pick up new paid assignments like coaching, department head, some even become principals, etc... This works across the board for many careers. It is foolish to not understand that starting wages may be little changed after adjusting for inflation, but not realize there is a ladder that most are climbing up.
(2) The studies that show wage stagnation not only fall into the trap above of NOT looking at individuals they ignore that companies pay more benefits for their workers. In 1964 American workers had 10% of their total compensation come from benefits. In 2014 that number had nearly doubled to 19%.
You may be thinking, "but many companies are making their workers pay more for the healthcare plan." Keep in mind healthcare costs have risen dramatically - employers are passing much of that rise off on the employees...but total benefits as a percent of compensation has doubled and increased in real dollars over the timeframe in question and is still rising.
(3) Studies that look at individuals show that individuals overwhelmingly have wages that beat inflation.
The University of Michigan studied over 50,000 individuals over the course of 30 years people had wages that beat inflation to some degree. Also:
Quote:
Less than 1 percent of the sample population remained in the bottom 20 percent during the 1975-1991 period.
More than half of the families surveyed in the bottom quintile in 1975 rose to a higher bracket within four years.
Individuals and families starting in the bottom quintile in 1975 had a gain (adjusted for inflation) of roughly $27,000 by 1991.
The Congressional Budget Office did a study on households and concluded the same thing. An IRS study also showed that overwhelmingly households were seeing wage increases over time. Perhaps not as much as we would all like, but certainly not stagnant.
(4) Incomes when studying individuals isn't just up, but consumption per capita has grown dramatically at the same time wages have been supposedly stagnant.
Quote:
Average real wages and benefits have risen by nearly 40 percent since 1973, after adjusting for inflation. Sensational claims that 80-90 percent of Americans have experienced low and stagnant real incomes since 1973 are also shown to be incorrect . . . real consumption per person increased 74 percent from 1980 to 2004—a rate of improvement that far exceeded the trend from 1950 to 1979.
(5) Other errors...many of the stagnant wage claims include more recent wages with part time workers thrown in, which skews the numbers. They also ignore that since the 1960s we've had millions of women enter the workforce in large numbers often starting out low and millions and millions of immigrants also mostly starting out from the bottom, which has skewed the statistics downward.
My household was making about $70K in 2007 and we made about $135K last year. We are set to make about $150K this year due to small raises and a bonus. A few of those years we had no wage growth at all. Some of those years we had large wage growth. At least one year we lost wages.
However, over time we have seen large wage growth. We consume more. We have more gizmos. We have more luxuries like highspeed wireless internet. We take more vacations. We waste more money on crap we don't need. We also importantly invest more.
What about you? Are you like most Americans in studies that look at individuals' income? Even if it is lower wage growth than you would like, do you still have wage growth over the course of time?
The average American hasn't had a raise in 40 years, quit fooling yourself.
Purchasing power is the ability to consume with your wages. Americans are consuming at their highest rates ever. Stop being fooled by politicians not smart enough to know that you can't compare entry level wages from one decade to the next to see if the typical American worker is getting wage increases.
Quote:
The broadest and most accurate measure of living standards is real per capita consumption. That measure soared by 74% from 1980 to 2004, an unprecedented gain in that short of a period. If we measured it just during the 25-year Reagan boom from 1982 to 2007, the increase would be even more. From 1973 to 2004, about 30 years, such real per capita consumption in America nearly doubled. Over 75 years, 1929 to 2004, real per capita consumption by American workers increased by 5 times, and even faster since 1961 than before. The fastest growth periods were 1983 to 1990, and 1992 to 2004, during the 25-year Reagan boom.
The unemployment rate among those with a high school education is 3.9%. The poorest quintile of Americans have seen their post-tax incomes increase 80% since 1979, according to Congressional Budget Office data, and post-tax and transfer income for that quintile has skyrocketed 32% since 2000. The upper-middle class in America constituted 13% of the population in 1979; as of 2014, it constituted 30%. According to Pew Research from 2015, when it comes to standard of living, "The U.S. stands head and shoulders above the rest of the world. More than half (56%) of Americans were high income by the global standard ... and 2% were poor."
I've already cited university and government studies that show US household income when looking at individual households are beating inflation.
Their consumption is growing at a slightly faster rate due to poor choices and people "needing" every new product and luxury.
Math is crazy huh...How if you make more and consume more you can still possibly run a deficit. True story, one year when I was single and fresh out of college I lived at about the poverty level and saved/invested about half my income. My highest savings rate ever was when I made the least amount of money that I ever made...Your mind is blown! Math is so complex!
Have you been able to increase your wages over your working life? Vote in the poll. If not, why have you been unable to increase your wages? What kind of work? How old?
Not who you were talking to. However, read my original post. The University of Michigan, which is known as a politically liberal school, did a study that showed that wages increased when they looked at over 50,000 individuals over the course of 3 decades.
Only 1% of those observed in the bottom quintile remained in the bottom quintile after 25 years. Why? They got promotions, raises, etc...and new young workers/poor immigrants/etc filled in the bottom quintile. Their real wages went up too.
You cited a forbes article from a member of the Heartland Institute: The Heartland Institute is an American conservative and libertarian public policy think tank founded in 1984 and based in Arlington Heights, Illinois, in the northwest suburbs of Chicago. The Institute conducts work on issues including education reform, government spending, taxation, healthcare, education, tobacco policy, global warming, hydraulic fracturing, information technology, and free-market environmentalism.
#1 The University of Michigan is liberal. The CBO had people in both parties perform and agree to the results.
#2 You didn't read my post, which shows a dishonesty on your part, because your PEW source has the same faults I have pointed out. Like ignoring the increase in benefit spending. Like averages adjusted for inflation can remain a constant, but individuals typically climb within those averages and new people start at the bottom.
#3 Have your wages increased over your working life? If not, why have you personally not been able to get ahead?
That's one study, Bucko. Americans are doing worse now, overall.
1 study of over 50,000 people over the course of 3 decades...plus the CBO study and the IRS study...
...but you have vacuous political talking points that look at averages without any understanding...
#1 Would you applaud Bernie/Warren/Krugman if they say teachers don't see wage growth. Look at their starting pay in 1980 and their starting pay adjusted for inflation in 2010? Would you think this was a solid point? Or would you think that most individual teachers increase their pay over their 30 years of service even if starting pay and average pay were similar from 1980 to 2010 after adjusting for inflation?
#2 Have you personally increased your wages? Studies that look at averages and ignore a lot of things suggest Americans haven't gotten an increase. Studies that look at individuals show overwhelmingly US households are beating inflation. What about you as an individual?
There is some time and a half which helps about 20% of the time.
Otherwise the benefits are the real gold.
Not that we don't need the $$ also.
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