Rapid Technological Growth: Why is the Cost of Living Still So High?

[JSt0rm]

???

my bad.

 

[nonlnear]

nonlnear: but some people DO only want to work 10, 20 or 30 hours. How ridiculous is it that someone who wants to work 25 hours a week cannot find a job to provide that amount of hours unless they want to work for minimum wage? Is it not ridiculous that people with professional skills can't choose to live a simpler life and work a little less? Instead almost everyone is forced into the 40+ hour work week (salaried managers work way more than 40) whether they want to work that much or not. Many people may be perfectly happy working 30 hours a week for less money. Also, I can bet you that unemployment would be a lot lower if employers had some jobs split into two part-time ones.

I fully agree with your desire for more flexible terms of employment. I'm still pretty sure the majority of Americans today would continue to work full time hours because they are so invested in consumerism, but that could change, especially if the nature of the labor market were to change enough that the alternative (shorter hours) held the prospect of a decent life.

The main cause of the lack of choice in employment terms is the bizarre tax structure set up around benefits, and the full/part time distinction. If we ended all tax discrimination between direct pay and pre-tax benefits, as well as taxes favoring fewer employees (better yet, just eliminate payroll taxes and let employees see the true cost to the employer) we would see some real progress on that front. Not that it would be huge and sudden progress, but I suspect talented people would find it much easier to demand more amenable terms, and eventually attitudes would change for the whole labor market.

 

[werepossum]

I fully agree with your desire for more flexible terms of employment. I'm still pretty sure the majority of Americans today would continue to work full time hours because they are so invested in consumerism, but that could change if the nature of the labor market were to change.

The main cause of the lack of choice in employment terms is the bizarre tax structure set up around benefits, and the full/part time distinction. If we ended all tax discrimination between direct pay and pre-tax benefits, as well as taxes favoring fewer employees (better yet, just eliminate payroll taxes and let employees see the true cost to the employer) we would see some real progress on that front. Not that it would be huge and sudden progress, but I suspect talented people would find it much easier to demand more amenable terms, and eventually attitudes would change for the whole labor market.

Amen.

 

[BoberFett]

Don't forget health benefits, which is one of the very few reasons I would actually support some sort of universal health care. Freeing employers from providing it as a benefit would drastically change the face of the employer/employee relationship in this country.

Of course, I still believe the US government would royally f up any attempt at universal health care, but the above would be one of the largest benefits to the average American.

 

[nonlnear]

Don't forget health benefits, which is one of the very few reasons I would actually support some sort of universal health care. Freeing employers from providing it as a benefit would drastically change the face of the employer/employee relationship in this country.

Of course, I still believe the US government would royally f up any attempt at universal health care, but the above would be one of the largest benefits to the average American.

That's a big part of what I was saying. (Actually the biggest.) There are so many things wrong with having health care tied to employment I don't want to start on that tirade.

Thanks a lot FDR.

 

[billdotson]

To summarize:

You would think that with such amazing increases in productivity and technological growth that that would mean not as much work would be required to make the economy go. If it took 40 hrs/week to make the economy go in 1980, and we are 50% more productive now, then wouldn't it make intuitive sense that everyone would only have to work 20 hrs/week to maintain a similar standard of living (I'm just giving an example, I don't know how much more productive we are)?

I think everyone understands that technological growth has improved the standard of living. There are treatments for medical issues that were once incurable, etc. There aren't nearly as many jobs that rely on physical labor as there once were. Working hours are lower than they used to be (although the move from the 12 hour work day was largely the cause of a social change, that is, workers demanding shorter work days to have more of their life).

Thinking more recently though, like 1980s-1990s, has much really changed? Many of the quality of life improvements that I mentioned were around then.
Everyone in a modern industrial society pretty much needs the following:
- A car (or public transit, although it doesn't seem reliable enough for anywhere but big cities)
- Car insurance (this is mandatory in most US states)
- Health insurance (if you don't have it better hope you never get sick or you're bankrupt)
- Food
- Housing
- Heating/Cooling
- Education

The cost of health care in the United States has been increasing double the rate of inflation (I hear, not completely sure)
The cost of housing is more and more expensive, even if you get a moderate house. If you get a house too small then you risk not being able to sell it later because "most" people want a "nice" house.
The cost of an education has increased way faster than inflation. If you want to make enough money to live decently you had better get a four year degree (expensive, lots of work), start a successful business (not that easy to do) or get some very prestigious two year/technical degree (not a lot of these). II would say for most people that don't go to college though their fate is that of low paid work.

Right now it seems like we're worse off. Everyone works about the same amount, and has similar levels of stress, but we haven't gotten any significant improvements to the basics in a couple decades at least. Having the internet and all these technological advancements is nice, but if they aren't making the fundamentals cheaper then what is the point?

I'm sure there are some things related to quality of life that I've taken for granted, but I wouldn't consider there to be any meaningful economic progress until the "middle class" wage is high enough so that people could afford the basics with 30 hrs/week or less. I find it problematic for those that value their free time (and reduced stress levels) that there is no way to choose to live a little simpler but work a few hours less a week. You can work really hard and get minimum wage, or you can work really hard and get paid $100,000 a year. However, the end result is still the same: you are going to be working really hard for 40 hours a week. I can't tell you how much more enjoyable it would be to be able to work 30 hours a week in place of having a fancier car or a bigger house. Your bigger house or fancier car isn't going to make that extra 10-15 hours you spend at work any less frustrating, mind numbingly boring, and/or stressful.

Ultimately I feel like this problem isn't going to be solved by technological improvements, it is going to have to be fixed by reorganizing society in some way. The only reason we aren't still working 12 hour days is because workers protested and employers saw some medical research that said that in general, working that much actually made employees less productive in the long run.

 

[nonlnear]

Communications have improved by orders of magnitude since the 90s; by a quantum leap since the 80s. It's easy to make too big a deal of consumer electronics so let me just say it in as unsensational a way as I can: many gadgets' prices have followed the exponential decay of IC costs. Air travel has become MUCH cheaper since the 80s, and a bit more since the 90s too. The internet has brought millions of products to everybody's fingertips in ways that nobody imagined back then too, and brand new sales and information channels like ebay, craigslist, zillow, etc. I know that's part of communications, but the knock-on effect to the economy as a whole is worth noting. There has been steady improvement in medical imaging and minimally invasive surgeries. That's a benefit whose dividends will be reaped far into the future - even for people who have received these services in the last decade.

As for the overall standard of living, well that's a tough one. I think it's unfair to look at just the prices of basic necessities (food, housing, education, transportation) because that overlooks many more subtle differences in the general well-being. Some of the basics can be compared across generations (food, transportation), and some can't. (It's virtually impossible to compare the cost of 80s health care with the cost of equivalent services today because equivalent services don't exist today - assuming you're comparing something better than totally crappy care.) Which world would I rather live in? I think I'd pick today over the 80s without much hesitation, even though I would have had a much easier time finding my job of choice back then.

 

[billdotson]

I'm talking about quality of life by looking at the prices of the basics. To me, traveling at a cheaper cost isn't making life that much better for me because it is such a small part of life. If I could afford all the basics plus some in the 1980s, but now I must work about the same amount just to scrape by then that means in general I'm worse off. If I needed to take a flight somewhere then that would be better, but the cost of feeding, educating and providing housing for myself is something that affects me a lot more of the time. Having cool consumer electronic gadgets at lower prices is great too, but having the latest smartphone doesn't markedly improve a person's quality of life. Yeah, a smartphone could be fun and be convenient, but it isn't a life changing experience unless it improves the cost of your fundamentals (like cellphones do in developing countries that lacked prior telephone infrastructure). As far as people just enjoying life there are a lot of activities people enjoy that were still just as fun 20-30 years ago (reading a good book, watching a TV show (high def doesn't make it that much better), seeing a movie, playing a sport, going out to eat with family, playing music) and haven't really changed all that much.

When I think of measuring the quality of life, people's (quality) free time and stress levels rank pretty high on the list. That doesn't mean what you've said about travel, etc. getting cheaper isn't important though, not by any means.

 

[nonlnear]

I'm talking about quality of life by looking at the prices of the basics. To me, traveling at a cheaper cost isn't making life that much better for me because it is such a small part of life. If I could afford all the basics plus some in the 1980s, but now I must work about the same amount just to scrape by then that means in general I'm worse off. If I needed to take a flight somewhere then that would be better, but the cost of feeding, educating and providing housing for myself is something that affects me a lot more of the time.

Below a certain income level the basics become the driver of quality of life, you are right. But by the time you get much above the 30th percentile you are looking at spending patterns that are largely discretionary - even when it comes to the "basics". At that point comparing standards of living by just attempting to assemble equivalent baskets of goods across generations can be very misleading.