What caused the change in wages over the past 20 years ?

[BoberFett]

This is a common myth. Here is a good lecture from a Harvard Law professor regarding the very issue:

http://www.youtube.com/watch?v=akVL7QY0S8A

The lecture essentially concludes that the real spending habit of middle-class Americans has not really changed over time. Things like child-care and 2nd car were due to the demand of having 2-income household, rather than "luxury" spending. Most discretionary spending, such as cloths, remained the same( oops, it's actually LESS!). For things like gadgets (TVs, computers, and what not), I think many of us here have biased outlook. Spending on those items, in general, did not significantly impact the family budget of typical middle-class family. Remember, most middle-class Americans don't buy LCD TVs and Quad-core PCs every year.

The biggest impact against middle-class budgets were housing, education and health, according to that lecture. Housing has increased dramatically, despite the average size of houses have remained largely the same. Education costs has skyrocketed well beyond rate of inflation. Educational requirement to maintain middle-class living also dramatically increased. Health spending has also increased dramatically beyond rate of inflation. These costs aren't something that your average family can "control".

More and more people are financially in trouble NOT because they couldn't resist buying a new iPhone. They're getting screwed because of broken real-estate market, massive student debt, or catastrophic health problem.

I think the biggest point from her lecture is this. STOP BELIEVING IN YOUR ANECDOTAL EXPERIENCE. Just because you see kids running around in iPhones, doesn't mean your everyday middle-class household is a consumer whore.

Bullshit. The average American has far more crap cluttering a far larger house than they did 50 years ago. Fact.

And as for second income, if many of those people actually looked at what their take home pay for the lower income earner was after factoring in day care, eating lunch out, second car, etc. cost they'd quickly decide to keep that spouse home. My wife tells me about the co-workers she listens to bitch about how everything costs too much as they shove a $7 Chipotle burrito down their gullet. Gee, ya fat sow, maybe if you brought a lunch from home that cost $1.50 to make you'd have an extra $1400 per year, and maybe you wouldn't weigh 300 pounds.

Sorry if you fall into this group, but the average American consumer is a moron.

 

[BoberFett]

On the one hand, you say the middle class did it to themselves by being consumer whores, then you say the wealthy "extracted everything the middle class had" in an accusatory tone. Which is it? Is it the wealthy that have the problem or lack of personal restraint on the part of the consumer to have to keep up with the Jones' regardless of income?

Just because credit is available doesn't mean you max out your credit card / house to live a lifestyle you can't support long term. As far as I'm concerned, those people (and there are a LOT of them) deserve to be wiped out.

It's a combined effort. Consumers were more than happy to give their wealth away and capitalists were more than happy to help them do it.

I'd say that consumers are more to blame, but the fact is that now the capitalists are coming back after the system begins to break down and demanding that those same people give them "stimulus money" to keep the system going.

Wait a second, why do major corporations need taxpayer help if they've been taking wealth from the rest of us this whole time? The capitalists have gotten so used to the neverending American credit card financing their effort to offshore and increase their profit that they forgot that at some point it stops working. Now they expect us to continue financing their massive profits using government influence. Well I say fuck them too.

 

[shira]

Competition from China and India and Japan in the early part of the decade. The US spent too much time nation building in those years and too little time worrying about ourselves.

I guess you're both blind AND stupid. The chart clearly shows that wages have been flat SINCE AT LEAST 1975. Where do you get "early part of the decade" from that, genius?

 

[Elias824]

I rather agree with this post. Shame people sort of glossed over it, but I'll give it a free bump to the top.

Cliff notes, immigration and globalization.

Thanks for the bump, also
From what ive seen it seems more like there is becoming a big division of the educated labor force v.s the non educated labor force. You used to be able to get a high school degree and work in some factory and make a decent living, this isnt really the case anymore. Either you become educated and make 60k+ a year, your you dont and make more like 20k+. The middle income jobs are dissapearing, to compound this problem education is becomming vastly more expensive, as someone above mentioned.

 

[ElFenix]

This is a common myth. Here is a good lecture from a Harvard Law professor regarding the very issue:

http://www.youtube.com/watch?v=akVL7QY0S8A


The biggest impact against middle-class budgets were housing, education and health, according to that lecture. Housing has increased dramatically, despite the average size of houses have remained largely the same. Education costs has skyrocketed well beyond rate of inflation. Educational requirement to maintain middle-class living also dramatically increased. Health spending has also increased dramatically beyond rate of inflation. These costs aren't something that your average family can "control".

the stat she quoted was number of rooms. that hasn't changed much. what has changed is the size of rooms. this was pointed out last time this video was posted.

http://www.infoplease.com/askeds/us-home-size.html
that's a 66% increase.
i'll also bet the curve has gotten flatter.

 

[woolfe9999]

I guess you're both blind AND stupid. The chart clearly shows that wages have been flat SINCE AT LEAST 1975. Where do you get "early part of the decade" from that, genius?

True, however, the real value of benefits went up until the last decade to offset the stagnation of wages. In the last decade, the real value of benefits has stagnated or gone down. Hence, the real problem has arisen in the last 10 years.

- wolf

 

[shira]

You make some very good points I agree to (you should read Vonnegut's "Player Piano" or at least the wiki on the premise).
Manufacturing never really left, its just the number of jobs didn't grow-- because we moved to more and more automated processes, increasing efficiency-- this is a good thing, always. The number of jobs stayed the same, while the rest of the economy grew.

New investment opportunities are available when human capital is freed (through efficiency growth) to engage in more productive occupations. Manufacturing is not productive anymore. Anything in the medical sector is. They need to get re-educated.
One sure way to undermine the recovery is to pass a health bill which limits profits pharmaceuticals and doctors can take home, to 10%. Great way to kill all investment in that sector, when you might burn through 100 cures to find just one that works.

There would be no doctors if we were all farming our own land with a plow because someone like you said we shouldn't allow tractors, because the tractors are produced abroad. They produce the tractors, we produce the doctors that everyone else in the world with money travels to receive treatment from, because they are the best, bar none.

History speaks for me: in the long run, protectionism is bad for all parties involved. If all people would be fiscally responsible, then they would not take on $1,000,000 houses when they're making 10% of that; no matter what the bank tells them. Then we would not have the huge problem we have now. The systemic problem is humanity, which no amount of federal government or stimulus can fix: we have to let the market forces work; lay off government workers left and right so they can start being productive again (anybody who has worked in gov't knows you simply. can't. get. fired.) and participating in the private sector.

As they become willing to take jobs for less money more opportunities for employment open up. As they have less money, fewer companies in the economy make obscene profits, as they are unable to charge so much for their items.

If we would let the market function as it should and get government out of the way, these pressures WOULD return our country's economy to efficiency.

Of all the ludicrous arguments in favor of unfettered capitalism I've ever seen, this is the tippy-top, most outrageously idiotic of all.

Taking soccerballtux's argument to its illogical conclusion: as the middle class collapses into slave wages, more and more slave-wage jobs will open up. But our standards of living will GET BETTER because (get this), prices will go down even faster. Hyper-deflation?

And what is soccerballtux's model for this analysis? Where have we seen DEFLATION on a massive scale? Why, during the Great Depression, naturally, when our standard of living peaked. Oh, wait . . . .

Wiki must be totally incorrect:

Currently, mainstream economists generally believe that deflation is a problem in a modern economy because of the danger of a deflationary spiral. Deflation is also linked with recessions and with the Great Depression, as banks defaulted on depositers. Additionally, deflation also prevents monetary policy from stabilizing the economy because of a mechanism called the liquidity trap.

 

[stateofbeasley]

Bullshit. The average American has far more crap cluttering a far larger house than they did 50 years ago. Fact.

Elizabeth Warren has a lot of data to back up what she says. You have provided nothing.

 

[piasabird]

Off-Shoring and h1b visas.
Influx of cheap foreign labor accross our southern border.
Government regulations causing rise in energy costs.

 

[BoberFett]

Elizabeth Warren has a lot of data to back up what she says. You have provided nothing.

Because this has all been discussed before. The size of homes being built has gone nowhere but up in the past 50 years. Fact.

 

[piasabird]

Ponders what size of houses has to do with wages? At Least construction workers are keeping busy.

 

[Ozoned]

Ponders what size of houses has to do with wages? At Least construction workers are keeping busy.

When you have a house big enough for 15 illegal alien families to live in, they can undermine the wage structure and cause a race to the bottom...

 

[brencat]

Wait a second, why do major corporations need taxpayer help if they've been taking wealth from the rest of us this whole time? The capitalists have gotten so used to the neverending American credit card financing their effort to offshore and increase their profit that they forgot that at some point it stops working. Now they expect us to continue financing their massive profits using government influence. Well I say fuck them too.

And I say fvck them too! You'll get no argument out of me -- I was dead against bailouts from the very beginning and would have gladly let them squeal like pigs, even if it meant higher unemployment short term. Except those in power disagreed and decided we can't have suffering in the 21st century (read: no deflation of anything allowed, not even a little).

Under no circumstances are prices to be allowed to reset to their natural floor that would restore affordability to the housing market and other goods people paid too much for during the credit binge.

I'm sure some of these capitalists never expected the word "bailout" to be mentioned or taken as far as it did. But they're not going to turn it away, nor any other opportunity to make money. I wouldn't either. It's the nature of our jobs on Wall Street. It's what we do best.

 

[nobodyknows]

I see that nobody has commented on this post. I guess the fact that they can't blame a Republican president for the vast growth of executive wages knocks down their little house of political cards.

Like the President sets CEO wages? Grow up little one.

 

[BoberFett]

Like the President sets CEO wages? Grow up little one.

After attempts to blame middle class wage stagation on Reagan IN THIS VERY FUCKING THREAD, you're going to try this argument?

You fail at life.

Reagan happened.

America is sick. It has a powerful party of death and hate that cannibalizes it's own children. God is used to make you feel worthless and undeserving and to treat others as you feel about yourself.

Rayguns' reforms, what else? Timeline tells it all.

 

[heyheybooboo]

After attempts to blame middle class wage stagation on Reagan IN THIS VERY FUCKING THREAD, you're going to try this argument?

You fail at life.

Perchance .....

I'm assuming you voted for Michele Bachmann ???





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[Jhhnn]

After attempts to blame middle class wage stagation on Reagan IN THIS VERY FUCKING THREAD, you're going to try this argument?

Let's review-

Middle class taxes went up during the Reagan era, in the form of payroll taxes. Tippy-top echelon taxes went down, radically.

Middle class job opportunities diminished as a consequence of offshoring, Capitalist money-making opportunities increased radically thru the same mechanism. The effect of reduced taxes and compound interest on investment income created an explosive growth in top tier income share.

Federal deficits exploded at the same time, stimulating the economy, serving to moderate/ disguise the effects of offshoring and income shifting wrt the middle class. They also provide safe haven for capitalist investment.

If you find fault with the above statements, express your reasoning, not just your emotional reaction to them.

 

[StageLeft]

You've hit on one of the problems. Some of the finance "experts" around here like to say that debt is good but fail to say how. Probably because their livelihood depends on it.

As off-shoring occurred, and it was inevitable that it would, Americans started financing everything. If the amount of available money to spend on any given product shrank as did our average incomes, prices would have to come down to match. Instead, when Nike started laying off Americans, making shoes in some 3rd world country, then charging that same American the same price to buy the more cheaply manufactured shoe who then has to buy it on a credit card, that's a straight transfer of wealth to the top.

Essentially, middle class America allowed this to happen by being consumer whores. Newsflash to Americans: You don't need to buy every goddamn thing the commercials on the idiot box try to sell you.


Edit: I see jhnnn hit upon this, and he's exactly right. Consumer credit was a blight on this country, it allowed the wealthy to extract everything the middle class had.

This is why, overall, I think credit cards have been a detriment to the country. Ignoring some of their legitimate benefits if you took 100 people and told half of them them they'd be shot in the head if they ever used a credit card and ignored the other 50 and returned in five years I guarantee you'd have 50 of the credit card users left, maybe 47 of the others, but those 47 would be doing financially much, much, much better. The whole concept of debt has quite practically poisoned the general consciousness. Ostensible adults have the fiscal intelligence of a toddler and the impulse control of a new born.

Every time some stupid sh*thead is paying interest on his big screen TV that money straight from his wealth to somebody elses.

This is a common myth. Here is a good lecture from a Harvard Law professor regarding the very issue:

And that's a good video, one I alluded to earlier at least in concept. Being consumer whores is not a new problem, but it is I feel an contributing one and it is accelerating, too. I know this because quite simply the level of consumer credit available now just was not around 50 years ago. You weren't offered a store card when buying a $60 toaster oven.

Average joe is at the world's mercy for health costs and education but he can choose not to buy a house that chews up half his take home.

Off-Shoring and h1b visas.

H1B are a trivial scapegoat; they just do not have the numbers behind them to impact this issue hugely. I think off-shoring is far more to blame, whether it's companies outsourcing (minority) or simply buying from an external company located offshore (majority). However, the saved money is going somewhere, it's not disappearing, but it's going and staying with those who are at the upper end, so Jim gets canned from his machine job but his boss gets a bonus and manages some factory relationship in Brazil.

 

[zephyrprime]

This is caused by a shift from being an industrial nation to a post industrial nation. We automate everything, and it takes less man power to create more products, which means less jobs, which means lower labor demand, which means lower wages. Add on top of that mass immigration and workers who are willing to do almost any job for minimum wage, and greater competition from china/india and you have you answer.

First, I would to point out that the industrial revolution itself was enabled by automation. Need I remind people of the cottin 'gin?

Increases in automation cause labor value to go up. Even if labor demand goes down (which it doesn't, it just moves to china), the value of the remaining labor would go up on an hourly basis so that the total value to labor would be constant.

Automation is THE reason we are not all subsistance farmers anymore.

 

[BoberFett]

Perchance .....

I'm assuming you voted for Michele Bachmann ???





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No, if I were in her district at the time I'd have voted against her. I did vote for Keith Ellison however.

Got any thing else you want to pull out of your ass or is your head in the way?

 

[BoberFett]

Let's review-

Middle class taxes went up during the Reagan era, in the form of payroll taxes. Tippy-top echelon taxes went down, radically.

Middle class job opportunities diminished as a consequence of offshoring, Capitalist money-making opportunities increased radically thru the same mechanism. The effect of reduced taxes and compound interest on investment income created an explosive growth in top tier income share.

Federal deficits exploded at the same time, stimulating the economy, serving to moderate/ disguise the effects of offshoring and income shifting wrt the middle class. They also provide safe haven for capitalist investment.

If you find fault with the above statements, express your reasoning, not just your emotional reaction to them.

You tell me. The dipshit I quoted said the president couldn't affect CEO compensation. So which is it? You guys are on the same team, better get your talking points straight.

 

[Jhhnn]

You tell me. The dipshit I quoted said the president couldn't affect CEO compensation. So which is it? You guys are on the same team, better get your talking points straight.

The president and congress don't directly set executive compensation, at all. They do, however, have a great deal of influence in creating and regulating (or not) the framework in which executive compensation is awarded. When banking, insurance and investment companies are allowed to be consolidated into a few very large players, then obviously compensation for those few execs will be enormous... If there were 10x the number of players, then exec compensation would be 1/10 as much for each one, and the tendency to engage in risky behavior bordering on theft wouldn't be nearly as great. A few years of it wouldn't set the perps up for life the way that the current system allows.

You're just dodging, anyway, as are the other Righties contributing here, desperately avoiding the topic, diverting and distracting when possible...

 

[Elias824]

First, I would to point out that the industrial revolution itself was enabled by automation. Need I remind people of the cottin 'gin?

Increases in automation cause labor value to go up. Even if labor demand goes down (which it doesn't, it just moves to china), the value of the remaining labor would go up on an hourly basis so that the total value to labor would be constant.

Automation is THE reason we are not all subsistance farmers anymore.

Perhaps a more detailed explanation is in order. The problem really lies in the unskilled labor force, unskilled labor seems to be more and more available(thanks to immigration and globalization) as we need less and less of it(automation). The demand for unskilled workers is going down and there isnt anywhere else for them to go. It used to be in the good'ol days that you could just get a job in a factory and make a decent living, well those days are long gone. Meanwhile the educated labor force are the ones being left the high paying jobs, the guys designing the factories and system that are putting the others out of work. Then there is also the problem of hugely increasing costs of education that makes it very difficult for people to make the change from unskilled to skilled labor. Though that's just my theory anyways

 

[nobodyknows]

You tell me. The dipshit I quoted said the president couldn't affect CEO compensation. So which is it? You guys are on the same team, better get your talking points straight.

Listn you fucking little dipshit liar, I said the President doesn't set CEO wages and if you can prove he does then pony up. Otherwise shut your fucking mouth and piss off.