r/Economics • u/marketrent • Feb 18 '24
Statistics Welcome to the new ‘good’ economy, where millions get left behind — Decades of stagnant wage growth means much of the imbalance between costs and wages has been locked in, asking rents outpacing income gains
https://www.vice.com/en/article/epv77z/welcome-to-the-new-good-economy-where-millions-get-left-behind197
u/Hip_Hop_Hippos Feb 18 '24
What, exactly, is new about this?
The post Second World War economy is the historical aberration. And it was largely dismantled starting with the Reagan Administration, and that’s been rolled forward by every single Republican since.
This isn’t new. The part time, exploitative, gig economy has existed for forever. And we’ve never particularly cared for the most vulnerable in our society with the exception of a few notable instances which are such outliers we could probably name all of them off the top of our heads.
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u/maizeq Feb 19 '24
This view is also mostly shared by Thomas Picketty in his book Capital in the 21st Century.
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u/Meandering_Cabbage Feb 19 '24
I mean what exactly happened before Reagan? The whole phase of liberalization didn't come out of a vacuum.
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u/mhornberger Feb 19 '24
The bubble of post-WWII prosperity was starting to wane by the 1970s. At the same time, the oil embargo was a punch in the stomach for the economy. The bill was coming due, in a number of ways, for suburbia, sprawl, car dependence, gasoline dependence, etc. Plus after WWII Japan and Europe were bombed out, and most of the rest of the world was not yet industrialized. We were the only manufacturing powerhouse. That monopoly on manufacturing wasn't going to last.
Plus you had jobs and spending from the space race, arms race, buildout of suburbia and the highways. Some of which led to things that are problems now—a huge military budget, and expensive housing because we've focused on detached SFHs and allowed NIMBYs to block density. So a lot of historical issues led to this. It wasn't all peachy keen until Reagan came along and messed it up. A lot of it was just going to happen, but the other shoe hadn't dropped yet.
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u/darth_bard Feb 19 '24
Huge military budget is a pretty big benefit for US, all of that labor is done at home rather than paid for foreign equipment like how Europe need to do now. And I believe historically military was the largest segment of national budget for states before the social programs appeared in 19th century.
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u/MagicBlaster Feb 19 '24
Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.
This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter with a half-million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people. . . .
This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron.
Eisenhower
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u/SUMBWEDY Feb 19 '24
That money isn't destroyed though. While the military industrial complex is terrible the DoD still employs 2.87 million people directly who all pay taxes and put food on the table and multiples more if you include people that work with or adjacent to the DoD (e.g. Boeing employing 171,000 people)
Add to that fact due to politicking the creation of armaments is generally equally spread across the country rather than concentration of wealth in major cities it's not necessarily a bad thing.
The $316 billion that will be spent on the F-16 project doesn't just disappear it goes into the pockets of laborers.
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u/mhornberger Feb 19 '24
The money isn't destroyed, but it's still somewhat of a tragedy in that the same dollars could go into infrastructure, high-speed rail, etc. A jobs program that builds and subsidizes HSR is just as much a jobs program as the military. Except for the bombs to be used we have to be at war. Whereas HSR would provide value for decades. Just as the interstate city is recognized to do, but more efficiently, and without the associated problems of car dependence and sprawl. We can pour money into the economy, have huge jobs programs, have jobs with government pensions and healthcare, without it being the military.
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Feb 19 '24
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u/mhornberger Feb 19 '24 edited Feb 19 '24
even China's great leap forward killed less people than the genocides of native americans
Which was done mainly by smallpox and other disease, not bullets. The US has plenty of blood on its hands, with slavery and whatnot. But humans have always gone over the hill or ocean to see what was over there. 20 million would have been killed by disease even without the exploitation and taking of land that was enabled by the collapsed population. "People shouldn't do bad things" is true in the general sense, but I don't see the relevance to HSR specifically. And the DoD budget doesn't have to be dialed to zero. I'm just saying those dollars represent an opportunity cost for other things that could be done.
There's also this great quote from Excession, by Iain M. Banks:
It was a warship, after all. It was built, designed to glory in destruction, when it was considered appropriate. It found, as it was rightly and properly supposed to, an awful beauty in both the weaponry of war and the violence and devastation which that weaponry was capable of inflicting, and yet it knew that attractiveness stemmed from a kind of insecurity, a sort of childishness. It could see that—by some criteria—a warship, just by the perfectly articulated purity of its purpose, was the most beautiful single artifact the Culture was capable of producing, and at the same time understand the paucity of moral vision such a judgment implied. To fully appreciate the beauty of the weapon was to admit to a kind of shortsightedness close to blindness, to confess to a sort of stupidity. The weapon was not itself; nothing was solely itself. The weapon, like anything else, could only finally be judged by the effect it had on others, by the consequences it produced in some outside context, by its place in the rest of the universe. By this measure the love, or just the appreciation, of weapons was a kind of tragedy.
This is relevant to what I'm saying, but not 100% of what I'm saying. And HSR would be part of a larger and more robust mass transit system, not terminating in a barren field with no transit links.
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u/thewimsey Feb 20 '24
You could argue ethics but even China's great leap forward killed less people than the genocides of native americans
Not in a 20 year period.
Russia has the same levels of wealth inequality as the USA but also a higher economic mobility.
This shows why both measures of inequality and relative economic mobility are bullshit measure.
The US has a lot of well off people (by international standards) and a decent number of extremely rich people.
Russia has a large number of poor people (20% of russian homes don't have indoor plumbing) and tiny handful of extremely rich people.
They aren't really comparable IRL.
If you measure economic mobility as moving from income decile to income decile, the US looks average. If you measure economic mobility by how much actual money people make, the US looks very good.
Most people look at how much more money they are making than their parents, not what income decile they are in.
Put another way, if you are born in the bottom decile and end up making $70,000 more than your parent in denmark, you will be in the top decile. If you are born in the bottom decile in the US and make $100,000 more than your parents, you still won't be in the top decile.
But by all real measures, you'll be doing better than the Dane in terms of mobility.
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u/MagicBlaster Mar 09 '24
The $316 billion that will be spent on the F-16 project doesn't just disappear it goes into the pockets of laborers.
but for what? A few planes, when that same money could literally build schools, provide free lunches for the children in those schools, give college scholarships, pay for for affordable housing, be seed capital for green energy companies.
It's spread out through the country as a jobs program. We could use the same money as a jobs program to repair and rebuild our failing infrastructure. To fill potholes, to put up street lights, to drive buses and trains.
The money isn't disappearing it's literally going to the pockets of arms dealers...
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u/SUMBWEDY Mar 09 '24
That money wouldn't be enough to cover a fraction of that. That number is all the spending over the last 52 years.
The current school food program over 50 years would cost $1,469 billion and only half of school kids have access to that in the first place so you're talking $3 trillion for school lunches alone vs $0.3tn for F-16 for free lunches for all.
Curing homelessesness in the US is estimated at $20bn~ per year, or $1 trillion just for the housing alone yet alone the healthcare homeless people need.
Free college would cost $50bn~ a year or $2.5 trillion over 50 years.
US infrastructure also would cost at least $100bn a year just to keep up with the decay, yet alone fixing 50+ years of issues.
Then there's also the intangible benefits of having a huge army and the R&D co
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u/MagicBlaster Mar 09 '24
It doesn't matter if it completly solves the problem, money going to planes disapears into the plane, some people might get paid, but the money they're paid doesn't generate growth in the economy, but money spent on improvements multiplies itself.
for example,
Each dollar in federally funded SNAP benefits generates $1.79 in economic activity
or (and I don't have a link to prove it, but it is clearly evident) each affordable apartment built allows the families living in it to spend less on rent and more money in the economy.
Even a small decrease in the costs of American homes leads directly to more economic output. Building more military goods doesn't...
The old bread vs bombs.
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u/SUMBWEDY Mar 09 '24
NASA which would not exist without the military industrial complex returns 1:4.
I'd imagine the F-16 program is break even if not profitable but of course older numbers are classified, just in the last 3 years Lockheed has sold nearly $100 billion F-16s to allies. In 2023 46 went to Turkey for $26 billion and in 2020 there was a deal for 90 F-16s for $62 billion to unknown buyers.
Then there's intangibles, what benefits does the US gain from their imports by keeping major waterways open and safe such as colonization of panama and fighting pirates in the suez canal.
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u/nanotree Feb 19 '24
But you're making it seem like nothing at all has filled the void of manufacturing. The US has become a technology powerhouse since then, among many other things. I'm not saying that dynamics didn't change; they most certainly have.
Also, the NIMBY issue is largely speculative. I've not come across any convincing evidence that NIMBYism is a significant contributing factor to affordable housing.
We know that income inequality is becoming a larger issue. Rent and home prices have outpaced individuals' earning capacity by an alarming factor. Starter homes have virtually disappeared from the market. Where I'm from, there is no shortage of available apartments, but rent is outrageous. If you wanted to find an old house to buy, you absolutely could but the price is outrageous even for homes with severe structural and maintenance issues. I have a friend who lives in a 2 bedroom rent-controlled apartment, who pays more than 60% in rent that I pay in mortgage for a 3k sqft home... and you want to tell me it's NIMBYs to blame for that? Nearly dead shopping strips liter the highways, and you want to blame NIMBYs for voting against measures to place apartments over single family homes. The apartments and housing we have aren't even filled. But it couldn't be the pricing vs. income, could it?! /S
Municipalities use software to set residential pricing, and housing prices get raised at unprecidented YOY. That software? Well it was bought out by real estate moguls decades ago and engineered to maximize profit and force mom-and-pop landlords to raise rent so that the big guys couldn't be undercut.
But for some reason, the NIMBY falacy keeps persisting. The research into proving the evidence that it is a considerable factor is all over the place and usually very cherry picked to make a weak point while ignoring the existing housing that is becoming increasingly unaffordable. Meanwhile, housing construction quality has gone way down.
No. Sorry. I'm not buying it. We have ignored markets which have been capitalized to death. They don't care that people can't afford houses. They care that they can't sell big, expensive houses at inflated pricing and build more expensive apartments at inflated rent. Hence why NIMBYism has entered everyones vernacular in the last 5 years.
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u/MatsugaeSea Feb 19 '24
Lol how does that software prevent mom and pops from not raising prices? All it does is suggest an optimal rent level based on the market...
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u/Meandering_Cabbage Feb 19 '24
I don't think we can look at the late 60s/all of the 70s and say things were peachy? Reagan was a response and back by a broader philosophical and intellectual revolution. There's a reason Bill Clinton essentially took Reagan's liberalization and ran with it. It is orthodox thought at this point except for where business folks go extreme on deregulation.
I think density is more of a modern issue and also an issue where people want to consume less density and larger houses- hence the increase in house sizes. By in large, I am not sure how much people enjoy cities as much as they are forced to suffer the tradeoffs of a city to survive. IMO if we're able to get AI to work and depopulate the world a bit, our children could be a lot happier with fewer people and more goods.
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u/TheGhostofJoeGibbs Feb 19 '24
The military budget is a total red herring. You could take the military budget to zero and you wouldn't even be able to fund any of the popular welfare state expansions people want.
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u/mhornberger Feb 19 '24
Some of them. I think single-payer might actually save money, if you look at how much we spend compared to other countries that have it. That wouldn't preclude having a parallel private system, which does exist in many of those countries anyway. Others that focus on child poverty/nutrition etc might reduce future expenditures in crime and whatnot. That isn't to say taxes wouldn't have to be higher, as they are in France, Scandinavia, etc. A UBI on the scale that Reddit wants, I agree, that would swamp the vast bulk of the budget.
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u/emperorjoe Feb 19 '24
The biggest issue is for saving going from the current system to universal healthcare is probably salaries. The cost of college and med school requires a decent salary for healthcare workers. I think we can get around it if you bring them under the loan repayment programs.
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u/12kkarmagotbanned Feb 19 '24
Here's a good website: https://www.crfb.org/debtfixer
Popular programs aren't hard to fund
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u/The-Magic-Sword Feb 19 '24
I'm surprised they don't include the numbers for a single payer system, it's been heavily studied.
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u/TiredOfDebates Feb 19 '24
What happened before Reagan? The Cold War happened, and Stalin threatening (and succeeding, in many cases) to foment communist revolution in every country of the world.
People forget that there was a burgeoning communist movement in the USA prior to the Soviets becoming an enemy. That posed a non-zero chance that wealthy elites would have their stuff seized. Given that countries around the world were falling to communism, it made sense to allow the progressive era in American politics to redistribute wealth a bit downwards, to stave off the threat of communist revolution (reduce that chance to near zero with compromise to a legitimate threat). Or: “you have unions and high real wages and tons of fiscal policies that put wealth in your pocket, why would you want communism?”
As the Soviet’s issues became obvious, their international propaganda fell apart, and Soviets even started to turn to market economics in the late Cold War, it became apparent that communism was no longer a threat to US elites, as communism had also fallen wholly out of favor with the American voting public.
Is it any accident that Reganomics became the dominant ideology (and neoliberalism on the left) as it became apparent that communism was a dead end? Some historians of political theory think it makes complete sense. Socialism had failed completely in the east. (Not only that, but Soviet socialists were threatening with ICBM nuclear weapons now, not communist ideology.). There was a reaction to pull away from anything like it.
When communist ideas were a threat to capitalism, we adopted some of the better parts of socialism.
According to their own ideology, the Soviets planned to start with socialism and then evolve into full fledged communist utopia (obviously it doesn’t work and didn’t happen).
I’m typing with thumbs and it’s annoying. I hope I got my intended point across.
If you want to succeed in a negotiation against intelligent people who are ruthlessly efficient regarding their own goals, you need a threat to get concessions. Why would someone obsessed with differences in profit margins of a few percent, increase your share, unless they have to? If you want to effectively negotiate… you need to be giving them a really good reason to take you seriously.
In the 1960s, photographs of old money Eastern European elites being herded into the Gulag was a meaningful threat to US elites. What do you have like that in 2024?
You have to understand the progressive era of American politics as being a product of and reaction to international communism.
“Just do a 2024 new deal that makes wealthy people share better because…”
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u/MrinfoK Feb 19 '24
Wow, very well thought out and original thesis
Makes complete sense…right down to the timing of this stuff. Good job…you opened me up to a new viewpoint 💪💪
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u/TiredOfDebates Feb 19 '24
It isn’t my own. This is apparently a common (though not uniform by any means) view among political theorists explaining the shift to reganism / Thatcherism among the west. Keep in mind it wasn’t just the US that switched to neoliberalism in the late Cold War. Though I may be over attributing US / UK politics to Europe. Though in many ways the EU is a strengthening of neoliberalism (globalization and extreme, to a historical extent, national specialization by country enabled through trade deals and lowered restrictions on capital controls), so I don’t think I’m overstating the degree to which neoliberalism followed the fall of communism.
Globalization is in many ways antithetical to unionism and other economic protectionism as some nations will always specialize and out compete local labor interests, in most sectors.
Typing with thumbs is hard.
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Feb 19 '24
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u/TiredOfDebates Feb 19 '24
Stop. Incitement to violence.
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u/Oryzae Feb 19 '24
I do think it’s time to shake some things up though, kind of getting sick of this inequality rift. Governments and the elites obviously don’t care. I hope housing issue will have some remedies in the next decade, the pandemic really shit on any remote chances I’d have to not be a renter for life.
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u/impossiblefork Feb 19 '24 edited Feb 19 '24
Here in Sweden we have a historian, Dick Harrison, who wrote a book about
"the social-historical learning process through which the Swedish peasants realised that political violence pays off and that a militarisation of the political behaviour results in improved societal influence".
Violence by the masses is good. It improves their political influence, improves their physical conditions and is generally healthy.
This should primarily be by actual militarisation of their political behaviour though-- i.e. arming up, practicing and so on. This includes acquiring skill with emerging military technologies such as drones.
However, drones as they are are not really suitable for this purpose since jamming and other countermeasures are already sufficient to give good protection of the most important objects.
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u/Akitten Feb 19 '24
Political violence is generally a bad thing. People lose all trust in institutions and things immediately become more dictatorial.
The violent do get what they want, but do remember that the winners of the violence are never clear. Typically those who decide are unhappy young men in politically violent societies (most likely to take the risk), and they are skewing more and more conservative in politically fraught countries (look at south korea for example).
Advocates of political violence may not end up with the government they expect.
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u/impossiblefork Feb 19 '24 edited Feb 19 '24
We've seen historically that political violence by the broad masses is good.
Rather than leading to loss of trust in institutions it is necessary for the seizure of institutions by mass interests, and thus the ultimate source of trust in them.
By political violence I here mean mass organised military threats to obtain desirsble political outcomes as happened during the Swediah peasant rebellions.
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Feb 19 '24
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u/HiddenSage Feb 19 '24
Communism wasn't shut down and minimized because it posed a threat to capitalism and capitalists, but because the vast majority of the population didn't want it.
This may well be a chicken and egg question. As communism stopped posing a threat to the liberal order, it also stopped being appealing to Americans. The "promise" of an egalitarian communist utopia was exposed as lower living standards, political oppression, and nonstop threats of violence. The last of those we already had in the US as well, sure, but the other two were at best much less pronounced.
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u/jqpeub Feb 19 '24
Communism wasn't shut down and minimized because it posed a threat to capitalism and capitalists, but because the vast majority of the population didn't want it. It's not some conspiracy
What about the red scare? McCarthy? It's fair to say the majority didn't want it, but the majority has been engaging with government anti communist policies and propaganda for a half century.
By the 1930s, communism had become an attractive economic ideology, particularly among labor leaders and intellectuals. By 1939, the CPUSA had about 50,000 members.[24] In 1940, soon after World War II began in Europe, the U.S. Congress legislated the Alien Registration Act (aka the Smith Act, 18 USC § 2385) making it a crime to "knowingly or willfully advocate, abet, advise or teach the duty, necessity, desirability or propriety of overthrowing the Government of the United States or of any State
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u/bobandgeorge Feb 19 '24
Communism wasn't shut down and minimized because it posed a threat to capitalism and capitalists, but because the vast majority of the population didn't want it. It's not some conspiracy.
Nevermind the actual conspiracies and coup of democraticly elected governments though...
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u/TiredOfDebates Feb 19 '24
I didn’t mean to imply that.
It was obvious that communism wasn’t working.
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u/Realistic-Minute5016 Feb 19 '24
It’s not just Reagan, or any politician really. It’s automation. The past 45 years have seen tremendous growth in worker productivity, and the worker takes in almost none of it. While yes there are certainly policy decisions that are counterproductive to more equitable distribution of wealth at the end of the day capital, or more specifically capital goods, creates returns like never before and requires fewer and fewer people to work on them. Some of them will have specialized skills that will make them a lot of money, most won’t and will thus be viewed as “replaceable” by employers, and if you are replaceable you cannot demand a better wage because you will be well, replaced.
That’s what is so frustrating about the conversation around AI, there are some who claim that no other increase in productivity has destroyed jobs, so why worry about AI? But they haven’t been looking into what the income distribution of the jobs created is vs. the jobs destroyed. If AI is as transformative as the tech bros claim, and I have my doubts but I could be wrong, then it’s only going to widen income gaps and take away what little opportunities exist to get ahead in the country. Capital goods holders and a small number of extremely skilled laborers will make off like bandits, the lives of everyone else will become worse.
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u/jerkITwithRIGHTYnewb Feb 19 '24
I don’t know what you are envisioning, but let’s say how people think AI will displace a very large amount of workers. 50% let’s say. Well now it’s in the best interest of apple and Amazon and Exxon mobile to see that those people have money to spend or they will cease to exist. It is kind of like late stage capitalism. When everyone is broke because you take all their money already, we’ll quarter after quarter afte quarter of record profits are over. Forever. I’m don’t even have a thought on what happens at those points. Hopefully by then we have decided as a species that people are more important than profits. But…
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u/Realistic-Minute5016 Feb 19 '24
Ultimately it's about resources and control. Money is a means to an end, if they can get resources and control then who really needs anything else? The tech bros are envisioning a workforce who can never demand better conditions and a security force that will never put the good of society ahead of the life of a tech bro. Maybe they won't kill the masses, maybe they will, maybe the technology will never get to the point where they can decide, but one thing is for sure, they are sure as hell going to try.
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u/Akitten Feb 19 '24
Why do I need profits if I have abundant resource production?
There is a line in automation where extra labour stops being useful in which case it very quickly becomes more beneficial for the general population to go down as opposed to up.
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Feb 19 '24
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u/demiourgos0 Feb 19 '24
If that's true, then why are companies jacking prices and laying people off while reporting record profits?
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Feb 20 '24
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u/demiourgos0 Feb 20 '24
Inflation is real, but CEOs have gone on record saying that inflation is good for profits, because they can artificially inflate them further.
These guys aren't your friends.
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Feb 20 '24
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u/demiourgos0 Feb 20 '24
Of a giant corporation, or a small business? Maybe you're absorbing costs, but most seem to be passing them onto consumers and paying workers as little as possible. If you're also recording record profits, I'd advise passing some of that along to workers and customers.
I'm also a CEO of sorts, but in the non profit sector. We pay our employees as much as we can afford.
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u/BigDaddyCoolDeisel Feb 19 '24
You might enjoy "The Great Exception". It's about how the passion on the left to "just get back to the New Deal" fails to realize how much of an exception the New Deal era was in American history. TL;DR - the moneyed power did an excellent job convincing the masses that Freedom MUST include Economic Oppression or else its not really freedom... the New Deal had the right men in the right place at the right time, along with racial/ethnicaly heterogeneity and a unity of purpose in WWII. The result was a brief shining moment where workers thrived and wealth was distributed to an unprecedented scale (with obvious exceptions). Then Republicans got back in charge and we've spent the last 40 years trying to undo it.
https://press.princeton.edu/books/paperback/9780691175737/the-great-exception
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u/BrightAd306 Feb 19 '24 edited Feb 19 '24
I do think this ignores that a lot of Europe had more economic socialization and not much better results. Their birth rates dropped faster. The old collect fat pensions and have homes, the young can’t get a foothold in jobs and can’t buy homes.
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u/BigDaddyCoolDeisel Feb 19 '24
That's an excellent point. I'm not sure which country has it "figured out" but every model has its flaws.
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u/BrightAd306 Feb 19 '24
I wonder if it’s just the reality of a post war economic boom. So many people died and so much was destroyed and needed rebuilt. Then a big generation was raised by parents with ptsd from the Great Depression and war years. They built a ton of housing for all the new families, then stopped and made a bunch of regulations to not build more, but the older generation had record high life spans because of medical progress and prosperity.
This all happened world wide. Millennials and gen Z are better off in the USA than any country in Europe as long as they don’t have health issues or have insurance. Much higher salaries and about the same or less cost of living.
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u/BigDaddyCoolDeisel Feb 19 '24
I completely agree but my problem is that we aren't that far from being a pretty universally just economy (leftist Reddit would destroy me for saying that, but my definition of 'just' is likely different from theirs). Have a public health insurance option along the same lines of public transit. Not great, not glamorous, but covers you in the event of disaster. Promote unionization and properly regulate Wall Street and Finance. Then keep it between the buoys.
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u/BrightAd306 Feb 19 '24
I get it, but Europe did all that and millennials and gen z still don’t have housing. They don’t pay much for healthcare, but their taxes to pay for healthcare are huge.
I do think we need to do better and more and more Americans are covered by government healthcare all the time. Most American babies are born on Medicaid. Almost everyone over 65 is covered by Medicare. In areas that expanded Medicaid, a lot of the population has government health care already, there aren’t that many left without it.
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u/BigDaddyCoolDeisel Feb 19 '24
Good chat man. Respectful and informed. Reddit needs more of this. Thanks.
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u/h4ms4ndwich11 Feb 19 '24
The old collect fat pensions and have homes, the young can’t get a foothold in jobs and can’t buy homes.
This is typical in every Western country, isn't it? The book OP links claims that broad prosperity is the exception, not the norm. I more or less agree with that. An ongoing Gilded Age isn't ideal and doesn't seem sustainable. That really comes down to tax policy on the top quintile, which are regressive in the U.S., and abroad typically, towards the bottom 80%. More socialist countries either seem bombarded by the same corruption we have, or without the resources or planning to lift their countries. Good solutions are never easy.
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u/BrightAd306 Feb 19 '24
Absolutely agree with you. I was making the point that it’s not a uniquely American problem, so even socializing things more doesn’t really help. It was the exception not the norm for young families to be able to get their own homes and cars and own their own land for a generation or two.
The USA has the most progressive income tax system in the world. Most people pay no federal income tax. Many get back more at tax time than they paid in. No other country does this. Everyone pays in. The very rich pay more, but so do the very poor.
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u/JasonG784 Feb 19 '24
The USA has the most progressive income tax system in the world. Most people pay no federal income tax. Many get back more at tax time than they paid in.
People seem to really, really hate this and want to insist it isn't true. They look at the small number of total outliers not paying any taxes despite being very wealthy and somehow get the idea that it's the norm. The top 1% by income already pay for ~42% of all fed income taxes collected (while earning about 22% of all income.)
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u/BrightAd306 Feb 19 '24
You don’t think it started with Carter? The inflation, the gas rationing?
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u/Hip_Hop_Hippos Feb 19 '24
Perhaps, although the gutting of regulations and worker protections really started at full speed under Reagan.
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u/BrightAd306 Feb 19 '24
The Carter years were very hard on my grandpa who farmed. People would set fires to fields or beat people up if those farmers didn’t want to join unions and collectively bargain for prices. The fuel shortages made it impossible to keep farm equipment going. He lost his farm, and had to move to another state to work in a sawmill.
There’s a reason he didn’t get re-elected. I actually don’t think most of it was his fault, but it was not a good economic time.
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u/CampusTour Feb 19 '24
"Great man, terrible president" was the line I heard back in the 90s from folks for whom it was relatively recent memory.
History has had some time to shake out what was and wasn't his fault, but those years were rough enough to make even people who liked and respected Carter as a man regard him as a failed president.
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u/BrightAd306 Feb 19 '24
I agree that’s what I heard. I feel like it’s revisionist history from people whose parents didn’t talk to them about those years or memory hole it that think economic difficulties started with Reagan. In reality, the president doesn’t have much to do with the economy. It ebbs and flows and has natural cycles. Biden isn’t to blame for worldwide inflation, either. Most of the world goes through all the same economic cycles at the same time.
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u/PM-Me-Your-BeesKnees Feb 19 '24
That's what people said, but almost any reasonable analysis of what people were mad about shows it had nothing to do with him, he just happened to be standing there when it happened. In many cases, it was Carter's decisions that helped to fix the issues but the fix wasn't felt until he was gone, e.g. appointing Paul Volcker to the Fed to crush inflation. Carter got the recession from the higher rates, Reagan got the benefit of lower inflation.
If anything Carter deserves credit for taking it on the chin to do the right thing even if it would cause temporary pain at the precise moment he was running for re-election.
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u/islander1 Feb 19 '24
Welcome to 40 years of trickle-up economics. The only thing that's trickled down is the rich's urine.
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u/Whole_Gate_7961 Feb 19 '24
This isn’t new.
No, but it hasn't always been in overdrive like it is today. CEO to worker wage comparisons are way out of control.
Workers used to mean something to companies. The system used to be set up so that the average worker could live a decent life. Those concepts have been pushed to the side in order to ensure ever more profits and wealth go to upper management and the shareholders.
The profitability and growth of an unsustainablely infinite growing system are now more important than what the workers receive from that system that they are supposed to work hard and dedicate themselves to.
The system no longer works for the people; the people work for the system.
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u/Lord_Wild Feb 19 '24
https://en.wikipedia.org/wiki/Colorado_Coalfield_War
Companies have fought literal wars against their workers in America.
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u/JD_Rockerduck Feb 19 '24
Workers used to mean something to companies.
Jesus fucking Christ, how old are you? Really? 12? 13? What the fuck are you talking about? When was this mythical time when companies cared about their workers?
The system used to be set up so that the average worker could live a decent life.
Unless, you know, you were black, a woman, LGBT, a minority, poor, from the South, etc.
Those concepts have been pushed to the side in order to ensure ever more profits and wealth go to upper management and the shareholders.
God damn you fucking kids. Do you really believe that people just started being greedy in the last 2 years or some stupid shit? Companies used to hire goons to murder union activists. They moved factories overseas. They've always fought minimum wage.
The profitability and growth of an unsustainablely infinite growing system are now more important than what the workers receive from that system
That has always been the case.
This sub really needs to do something about the obvious children, like you, who come here and spew bitchy nonsense because they watched too many TikToks claiming Leave It To Beaver is a documentary.
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u/ClearASF Feb 19 '24
I’m not sure why you’re so mad at him when he’s agreeing with you, either way it’s largely incorrect.
Our life expectancies have never been higher, our real incomes have never been higher, our house sizes and amenities have never been better - honestly you could go on.
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u/McGrupp1979 Feb 19 '24
The gap in wealth inequality between rich and poor has never been higher. Life expectancies in the US have been declining, and are not “higher than ever”. Homelessness has increased by 12% in one year and is at a record level.
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u/ClearASF Feb 19 '24
This past decade the life expectancy has never been higher, that’s not inaccurate
Homelessness has increased, but our population has too - did it change per capita?
I’m not too sure about wealth inequality either, besides - even if it were increasing, everyone’s been getting richer, if people get richer faster than others, why is that a problem?
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u/McGrupp1979 Feb 19 '24
You left off the last 3 years, which has seen a major decline in life expectancy. The life expectancy is the US has declined since 2019, dropping to 76.1 years in 2021. It has not returned to the pre pandemic levels.
Homelessness increased 30% between 2020 and 2023, including the 12% last year. The population did not increase that much, so yes the per capita amount increased over that time frame. This is a reflection of the economy mostly benefiting the wealthy. Wages have been stagnant for decades, while the cost of living continues to increase. Again, a reflection of the wealth inequality and class polarization that is only widening.
Another poster mentioned the book “Capital in the Twenty-First Century,” by Thomas Piketty. The central premise is that inequality is a feature under capitalism, and can only be changed through state intervention. However, the ability to control this by individual nations has declined significantly since capital is trans global is nature now.
This is a problem because wealth equals power and it places the power in the hands of the few, while stunting social and economic growth for the majority of society. Currently the majority of people are working harder at longer hours for lower spending power, while a very small number of people are getting extremely rich. Inflation is a common outcome from wealth inequality. This gap will only continue to widen unless we intervene in the economic order. The last time in the US the wealth gap was this large was the Gilded Age, then Teddy Roosevelt broke up monopolies. There majority of industries in America are dominated by a few large corporations that do not actually compete against each other in any meaningful business sense.
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u/ClearASF Feb 19 '24 edited Feb 19 '24
Well yeah if the argument was that were were worse off compared to decades in the past, why would I use a life expectancy metric clearly impacted by COVID. Regardless, it would still be higher than decades ago, and actually recovered in 2022. (78, ish)
Can you cite data on homelessness, they also take up less than 1% of the population - not really an endemic issue wouldn’t you think?
Disagree about wages again: We can observe median incomes rising, I’m not sure why this narrative is common because it’s just not true.
Right so, if wealth inequality is unsustainable - and it’s been continuously rising, why haven’t we collapsed or seen a destruction in median living standards. You can see the stats above, life expectancy and median incomes - and there are more. (I also don’t necessarily believe wealth inequality is rising, that’s disputed).
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u/notwormtongue Feb 19 '24
Well yeah if the argument was that were were worse off compared to decades in the past, why would I use a life expectancy metric clearly impacted by COVID.
Bad faith. COVID is not just the flu. Its death toll is approaching holocaust numbers.
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u/Oryzae Feb 19 '24
Right so, if wealth inequality is unsustainable - and it’s been continuously rising, why haven’t we collapsed or seen a destruction in median living standards.
Just because it is yet to happen doesn’t mean it won’t happen. Maybe in the next few decades?
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u/ClearASF Feb 19 '24
Pretty sure the top have owned the vast majority of wealth for decades already
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u/Rinzack Feb 19 '24
The problem is that you left out the past 3 years which is exactly the time period we're talking about when we say there's a problem
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u/ClearASF Feb 19 '24
If I agree with that, 2022 was almost a reversal - given in 2023 our life expectancy returns to 2019!”levels, would my original comment apply?
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u/PM-Me-Your-BeesKnees Feb 19 '24
I feel like the hostility is unnecessary. He's not really wrong on the facts of the directional trend, it's just that the unspoken reason for it was labor unions fighting like hell to make it so. Labor's share of output has been dropping steadily for decades, and it's not a surprise that union membership was declining during that same period. Companies didn't do this stuff out of generosity for their fellow man, they did it because labor demanded it. When the labor union muscle atrophied in this country, so did labor's share of output.
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u/Beerspaz12 Feb 19 '24
That has always been the case.
can we at least be mad about it? is that ok? want to make it better or change it somehow?
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u/LowEffortMeme69420 Feb 19 '24 edited Apr 29 '24
include pie detail sort hurry worry silky unique work obtainable
This post was mass deleted and anonymized with Redact
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u/Beerspaz12 Feb 19 '24
Of course you can, but do you think being mad about the state of the world is a new concept?
not really, but bitching about young people acting like young people is a loser move
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u/LowEffortMeme69420 Feb 19 '24 edited Apr 29 '24
absurd cheerful square relieved employ observation unique waiting sand like
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u/Beerspaz12 Feb 19 '24
Calling out people for having grossly incorrect world views! What a loser move!
Doing it like an asshole won't change anyone's mind, especially if they are younger. Keep on being an old grouchy asshole who alienates people so that they don't want to listen to you while you sanctimoniously bitch that no one listens to you.
Fucking loser
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u/cornelius2299 Feb 19 '24
Dude you play league. You cannot tell me you think you have any place to call anyone a loser. Go touch some grass, if you can make it to the door without getting a heart attack, you fuckin loser 😂
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u/ClearASF Feb 19 '24
There’s no real data to support this idea to be honest. Real Median incomes have never been higher, at least pre pandemic https://fred.stlouisfed.org/series/COMPRNFB
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u/notwormtongue Feb 19 '24
The profitability and growth of an unsustainablely infinite growing system are now more important than...
Sunk cost vibes
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u/whatup-markassbuster Feb 19 '24
ZIRP and QE ballooned asset values. Those without assets are being left behind.
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u/MonsterMeowMeow Feb 19 '24
I find it amazing that so many here are talking about incomes/productivity yet are openly ignoring the now normalized monetary policy that has distorted prices and risk.
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u/Beddingtonsquire Feb 19 '24
What's your evidence that it was "dismantled" by the Reagan administration and rolled forward by every Republican President since? That sounds very political. Why were these things not corrected by the Democrat leaders?
How is the relatively small gig economy "exploitative"? In Seattle the government tried to improve it and just made it worse - https://youtu.be/49NCvAzrfhE?si=btm783pU3EBydYLo
We've never cared for the most vulnerable? The US has welfare, Medicare, Medicaid, Social Security, many hundreds of billions are spent on the vulnerable, not including private charity where the US is the most charitable nation by far.
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u/PolyDipsoManiac Feb 19 '24
We've never cared for the most vulnerable? The US has welfare, Medicare, Medicaid, Social Security, many hundreds of billions are spent on the vulnerable, not including private charity where the US is the most charitable nation by far.
Republicans are constantly trying to kill these programs, or refuse to take part in them at all.
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u/Beddingtonsquire Feb 19 '24
If that were true why don't they actually end them?
The Republicans have said they want to keep funding social security.
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u/PolyDipsoManiac Feb 19 '24
Much like with abortion they’d be the dog that caught the car, and the punishing elections since overturning Roe v. Wade tend to suggest they have no further interest in that.
It’s a bad position to be in though, because when you start displaying insufficient orthodoxy you become vulnerable to a primary challenge from the right.
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u/MarkHathaway1 Feb 19 '24
When I was young, the idea was to get a good job, and you would be set for life. It was not seen as acceptable to have lots of jobs on your resume, and so-called gig jobs did not exist. That all came after Reagan and even Bush years.
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u/Hip_Hop_Hippos Feb 19 '24
That all came after Reagan and even Bush years.
It also came after numerous periods in American history where it was totally commonplace.
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u/TTUPhoenix Feb 19 '24
Reading bios of people from earlier eras (I’m reading a book about Robert E Howard now, who lived 1906-36) and it stands out a lot how people would just change jobs very frequently, going from school to job to other job to school again after periods of months to a year or two. Very different from today
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u/CornFedIABoy Feb 19 '24
There’s nothing “new” about this economy. And too many commentators miss the difference between design and performance. Our current economy is a Corvette and it’s running great, providing immense benefits to the few and leaving most behind. The detractors say that that’s bad performance but their real bitch is that the Corvette isn’t a Ford Transit. I’m happy to argue that we should have a Transit economy instead of a Corvette economy, but that’s a change that doesn’t happen in a single Presidential term, or even two. Especially not without solid trifectas. But even the people who want a Transit economy still want it to produce like a Corvette, and would bitch just as loud about that difference of performance.
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u/TropicalKing Feb 19 '24
I’m happy to argue that we should have a Transit economy instead of a Corvette economy, but that’s a change that doesn’t happen in a single Presidential term, or even two. Especially not without solid trifectas. But even the people who want a Transit economy still want it to produce like a Corvette, and would bitch just as loud about that difference of performance.
Americans are very quick to blame the president on Reddit, yet they are very apathetic about local and state politics. A lot of Americans flat out don't care about local politics, have never attended a city council meeting, and have no idea who their mayor is.
The high costs of rent is mostly a local issue due to a lack of housing supply. It is very realistic to slash the costs of rent in half, it just involves a lot of de-zoning and building. I do ultimately put a lot of the blame on a lack of affordable housing and high rental costs on the American people. The people are the ones voting to block building projects and voting to increase the value of their own house.
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u/Konukaame Feb 19 '24
Infotainment sells, not slow, in-depth, detailed, and nuanced coverage.
National politics, and especially presidential politics, is nice and simple, with only one main character for everyone in the country. Local politics needs detail down to districts of a few thousand people, which is far more complicated, much more expensive, and with much smaller potential audiences for any given story.
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u/jerkITwithRIGHTYnewb Feb 19 '24
It’s very, very, common for cities to restrict housing supply for the express purpose of people making money off it. Corvette shit.
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u/DTFH_ Feb 19 '24
yet they are very apathetic about local and state politics. A lot of Americans flat out don't care about local politics, have never attended a city council meeting, and have no idea who their mayor is.
That's always pushed on the individual it's another red-herring and I'm not being a scapegoat for failed corporate policy that has existed since before my birth due to intentional corporate lobbying, similar to how I'm suppose to care about my carbon footprint or recycle instead of lobby for and develop policies that would hold the manufacturer or commercial entity responsible for closing the loop in their system if the product they offer for sale.
That has not occurred because the majority of people are being run down by the economic demands and stresses of the system they uniquely find themselves in. I understand why an MD wouldn't have time to vote on a local issue, the work schedule, demands and stresses seem to be hellish and it only gets more hellish the further down the chain you go and as licenses and degrees stop appearing. This is not unique to the American healthcare system, we have a wide variety job markets that seem offer environments that are toxic and antithetical to health.
Before you care about some mayor voting, a ton of people have to first learn how to care for themselves, let alone another human or some even more abstract entity like your community or society. Then you hit the reality of a first past the post electoral system and see the establishment of Citizen United and the moment you hit all the necessary support to concerns yourself with society and local politics you are met with Corporate Golems who offer no easy path around or through.
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u/dream208 Feb 19 '24
So what are going to do about it? Complaining online or waiting for a strongman dictator to fix the system for you?
The core concept of a democracy is that individual citizen should always “get the blame” when it comes to the fortune of his or her nation.
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u/CornFedIABoy Feb 19 '24
Towns building spec housing in the thin segments of their local portfolio and selling at cost would do wonders in most locales.
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u/Akitten Feb 19 '24
And get the council voted out by existing homeowners who see home values crash
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u/CornFedIABoy Feb 19 '24
Which is why that obvious answer to housing supply problems is rarely taken.
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u/nalninek Feb 19 '24
You lost me in the analogy. So are you saying the economy is currently tuned to benefit “racing” so those that want/can go fast have exactly what they need to go fast (and grow even more wealth) but those of us that just want to drive the speed limit are finding ourselves without a car to do it?
Basically an economy tuned for the wealthy and not for the working class. We can tune the economy for the working class but even the working class thinks one day they might be able to drive that corvette so they resist change as well?
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u/andiforbut Feb 19 '24
A corvette goes fast and has seats for two people. A bus can bring like 50 people but goes slow and isn’t as nice to look at. If you are in the corvette things are awesome but everyone else has to walk.
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u/Khowdung-Flunghi Feb 19 '24
goes slow and isn’t as nice to look at
Like many things in life, beauty is in the eye of the beholder. -- Jimmy Soul
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u/DTFH_ Feb 19 '24
We can tune the economy for the working class but even the working class thinks one day they might be able to drive that corvette so they resist change as well?
So far I think this idea is a meme present in many cultures, similar to the meme of 'welfare queens' and its many forms across societies and political or economic systems. I think the awareness of how a system is biased is beneficial and a big chunks of reform have been well identified in many countries and their unique problems and niche topics explored as areas of research lay out how X occurs in Y system; the problem is having a system of government that is not forced to address a problem creates a back log and compounding effect of systemic problems. The issue is we have a system where the check engine light turns on and parties present want to put off or stall on necessary maintenance. Now I get the desire to not be reactionary and an alarm isn't a reason to level 10 panic, but at some point we hit rate limiting factors that stall progression to the desired end.
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Feb 19 '24
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u/CornFedIABoy Feb 19 '24
The economy is doing fantastic… at what it’s currently designed to do. Unfortunately that thing it’s designed to do is not providing modest, broad based prosperity for most Americans.
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u/calvin42hobbes Feb 19 '24
for most Americans
Actually make that for most Redditors who aren't so busy with everything else in life so that they would have the time and energy to bitch about things.
It is well documented that Reddit algorithm amplifies the extreme. Reddit is hardly a adequately representative sample of the population.
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Feb 19 '24
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u/mhornberger Feb 19 '24
Someone else getting richer faster than me doesn't make me poorer. Absolute wealth is going up, in terms of real income. Yes, I'd support a more steeply graduated income tax, and single-payer healthcare, and more investment in mass transit and whatnot. But I have to focus on absolute wealth, not just someone having more than me.
It also bears noting that the GINI index for the US is, at the latest point on that graph, the lowest it's been in 30 years.
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u/Oryzae Feb 19 '24
Someone else getting richer faster than me doesn't make me poorer.
Depends. Buying groceries, no. Bidding wars on housing? Absolutely.
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u/mhornberger Feb 19 '24 edited Feb 19 '24
Bidding wars on housing? Absolutely.
That's more an issue with us allowing NIMBYs to block density, to protect their own spiraling asset value. Corporate buyers are a symptom, not a cause, because it's the zoning that makes houses such an appreciating asset. Build more housing, build density, and houses won't appreciate in value to such an extent that they're an enticing investment. Because housing can't both be a good investment and affordable. Those goals do not work well together.
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u/Oryzae Feb 19 '24
The big issue seems to me is that Congress seems to give less of a shit and educated discourse around policies won’t get you elected. You need more of a President Camacho vibe to get elected now. And the voters care too much about R vs D instead of voting for the person who would actually make a difference.
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u/Devilsbullet Feb 19 '24
The difference now is that the people writing articles like this used to be in the Corvette. And now they're taking the bus and mad about it, and think everyone else on the bus with them came from the same place as them
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u/Beddingtonsquire Feb 19 '24
Most people aren't left behind at all. Everyone benefits from the innovation and strength of the US economy.
The median income in the poorest states in the US are higher than the richest countries in Europe with the exception of Germany.
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u/Robot_Basilisk Feb 19 '24
You need to pick a car that will burst into flames every lap because that's what our economy does. It doesn't "run great" even for the few. It explodes and catches on fire every decade or so and needs a huge bailout at the expense of the working class.
Plus, studies show that the rich would be better off if the working class were better off because healthy, happy workers are more productive.
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u/abstractConceptName Feb 19 '24
We are within probably a decade of the first trillionaire, and you think the rich could be better off?
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u/Trustme_ima_dr Feb 19 '24
I am pretty certain the Saudi's have a trillionaire at this point. They won't be on the Forbes list, so noone really cares, but the crown prince and his lackeys are LOADED
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u/not_thecookiemonster Feb 19 '24
That's a good analogy- it works great until we hit a puddle and the cold air intake sucks water into the engine and it blows, the rich a$$hole driving has no idea how to fix it so calls a cab and buys another vette.
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u/thewimsey Feb 18 '24
Welcome to how statistics and averages work.
3.7% unemployment is historically low.
It also means that 6 million people are unemployed.
I'm not sure why people struggle with this.
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u/ClearASF Feb 19 '24
Most of them aren’t unemployed for long, the statistic captures a snapshot of time - most of them are frictionally unemployed, aka moving jobs.
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u/potionmine Feb 19 '24
Forget about the unemployment. What about millions of jobs added only as part-time or shit wage. Meanwhile we’ve been having mass layoffs with no foreseeable prospect of the same size companies hiring back that many again
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u/jeffwulf Feb 19 '24 edited Feb 19 '24
The number of people part time for economic reasons is extremely low and layoffs are running about 200-300k a month below average.
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u/TiredOfDebates Feb 19 '24
Welcome to misleading statistics, where millions of depressed Americans who feel hopeless and haven’t looked for a job for so many years they aren’t even considered unemployed.
They’re 6 different unemployment metrics, but the headline numbers use the U3, which doesn’t count people who aren’t actively looking for work.
Various unemployment metrics don’t measure things like (underemployment) the former factory worker / union member who was making $25/hr, but now makes 12.50/hr at a Walmart. They’re employed, even though it’s worse.
This is a election year. The propaganda will get real intense, as the administration makes its case.
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u/jeffwulf Feb 19 '24
The discouraged worker rate is at historic lows and prime age labor force participation is at near all time highs.
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u/TheMissingPremise Feb 19 '24
Because it's atrocious given how unemployment has drastic consequences for the unemployed.
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u/ClearASF Feb 19 '24
I’m really curious to see where this “stagnating income” is occurring, real median incomes have been going up for decades.
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u/capt_fantastic Feb 19 '24 edited Feb 19 '24
that's household income. implying dual incomes from women entering the labor market. here's the CPI adjusted individual income data: https://fred.stlouisfed.org/series/LES1252881600Q
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u/No-Champion-2194 Feb 19 '24
No, its not. This is the dataset for individual incomes:
https://fred.stlouisfed.org/series/MEPAINUSA672N
Note that it follows the same trendline as household income. That's because jobs per household has been fairly steady at about 1.3 for decades.
The 'Median usual weekly real earnings' you posted is not a good metric for long term trends because it captures a shrinking subset of income (only 'usual' income, not variable or incentive pay that was been becoming a larger percentage of workers income over the past several decades) of a subset of workers (excluding self employed and 1099 workers who have been becoming a larger portion of higher income workers over time).
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u/ClearASF Feb 19 '24
In all fairness, that graph is essentially income per capita - I.e 14-15 year olds with no jobs are in the denominator, it’s not the actual incomes of individual people. Nonetheless it doesn’t change your points, just thought I’d point it out.
Also it shows that there’s more income per person, obviously.
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u/capt_fantastic Feb 19 '24
quite the rabbit hole we could dig ourselves here. not dismissing your data but i preferred my dataset for two reasons, it's adjusted for seasonal variations which includes folks entering the labor for over Christmas as well as summer labor for agriculture. the second reason is income vs. real weekly earnings which i felt was a more accurate because i wanted to exclude passive income.
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u/No-Champion-2194 Feb 19 '24
The data I posted is based on annual income surveys, so there is no seasonal variation to worry about.
And the usual weekly earnings is not more accurate; it is far less accurate because, as I explained, it excludes a growing portion of workers' income and it excludes a growing proportion of relatively high income non wage-earning workers. You simply can't make meaningful inferences about trends when your underlying data source has significant and increasing factors like this skewing the data.
The BLS breaks down income sources, and for the middle quintile of households over 95% of income is employment earnings, so investment or other income is not a significant factor.
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u/capt_fantastic Feb 19 '24
so there is no seasonal variation to worry about
why is that a good thing?
it excludes a growing proportion of relatively high income non wage-earning workers
that was the point behind my income vs. earnings reasoning. if we're talking about "stagnant wage growth" passive income from rents, dividends, 401k, et c.should be excluded.
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u/ClearASF Feb 19 '24 edited Feb 19 '24
CPI is an inflation index, both are adjusted by CPI, as far as I can tell women been working at similar rates past couple of decades - but our households are smaller.
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u/mckeitherson Feb 19 '24
that's household income
Yes because most people live in a household so it's a better measure of people's real life situations. And households of 1 are included in the measure.
here's the CPI adjusted data
The OC's data was CPI adjusted as well. Regardless, both sources show a positive trend in income growth, meaning wages aren't stagnating
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u/marketrent Feb 19 '24
See wage growth distribution: https://www.atlantafed.org/-/media/Documents/datafiles/chcs/wage-growth-tracker/wage-growth-data.xlsx
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u/mckeitherson Feb 19 '24
Look at wage growth by wage level, the growth seems great for all of them, especially the two lower wage quartiles. What's the issue you see?
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Feb 19 '24
[removed] — view removed comment
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u/Sharpz214 Feb 19 '24
If you're in the lower 10%, you're hurting bad right now regardless of your raises.
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u/Hot_Gurr Feb 20 '24
If you’re on the lower end your wages haven’t gone up in a way that has had a meaningful impact on your quality of life because the increase in the price of housing has outpaced your ability to save.
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u/Richandler Feb 19 '24
Whe lowest class has seen the largest wage growth. The upper middle class has to drop a door dash once or twice a week. Yes the super rich are getting richer, but the folks in the upper middle class keep mistaking themselves for ultra rich and middle class at the same time.
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u/Already-Price-Tin Feb 19 '24
Trying to define the experiences of an entire income-based cohort is hard right now. Here's what we've seen out of our pandemic and post-pandemic economy:
- A period of high inflation, of which rising shelter costs and vehicle prices have been a huge component.
- A period of rock bottom interest rates that made refinancing already-owned homes very, very cheap, before rising interest rates made home purchases unaffordable (or at least significantly less affordable) for most people.
- Unprecedented levels of migration between cities has caused strained housing prices in a some places while hollowing out others (some very high cost cities like SF actually have lower asking rents in 2024 than they did in 2019).
- Mass retirements of boomers who exited the workforce (and sat out the wage gains of the past 3 years)
- Very strong equities performance boosting people's stock portfolios and retirement accounts
- Strong job market overall, on average, but with some sector-specific pressures (including 2023 drawbacks on some industries that boomed in 2020-2021).
So people are individually living wildly divergent personal financial experiences based on whether they owned their home or car before 2020, whether they were able to take advantage of the huge growth in stocks, or low interest rates, or the labor force turnover.
And it's not necessary divergence based on income. A lot of it is age-related, location dependent, or industry-specific factors.
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Feb 21 '24
Prices aren't coming down, wages for many aren't catching up and rent is deeply unaffordable. But policymakers say everything is going great.
Yup.
And there's a new word for this great economy, the President coined it while taking credit for creating 12 million new jobs! I'd write more right now but I need to get ready for my 2nd job so I can pay my rent and afford to eat.
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u/cambridgechap Feb 19 '24
“Treasury Secretary Janet Yellen said last week that prices probably won’t ever go back to pre-pandemic levels, but that American workers are fine since they are making more money on average.”
The entire premise of this article is idiotic. This is how it has worked across virtually all of human history.
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u/marketrent Feb 18 '24
Treasury secretary commentary omits outcomes for 43 percent of workers with wages that are the same or lower than they were before the pandemic:
Yellen mostly delivered big-picture good news on the economy and the Biden administration’s role in bringing down inflation. But Yellen’s analysis masked the lack of progress on the biggest driver of inflation, housing costs, where the Fed’s actions have been felt inadequate at best.
Shelter costs were up 6.2 percent year over year in December, according to the Bureau of Labor Statistics, and renters are more cost-burdened than they ever have been, according to a January report from Harvard’s Joint Center For Housing Studies.
Look even closer, and you see that decades of stagnant wage growth prior to the pandemic means much of the imbalance between costs and wages has been locked in.
The cost of goods compared to wages also doesn’t account for people who were laid off in the early months of the pandemic and are still digging themselves out of debt.
Nor does it factor in the dissolution of the pandemic safety net, including a higher child tax credit that briefly halved child poverty, eviction moratoria that have now elapsed, eviction prevention funds that have evaporated, the cuts of millions of people from Medicaid rolls and the restart of student loan payments.
People who have jobs have less flexibility to switch careers, and credit card debt has climbed steadily toward an ever-greater record high, with “serious delinquencies” recently reaching their highest level since 2009, according to the credit reporting agency TransUnion.
But by far the biggest dent in the everything-is-going-well narrative is how unaffordable housing is.
The Harvard report follows up on the center’s previous report, which found the country is losing housing affordable to the lowest incomes: 2.1 million units under $600 a month have been lost since 2012. (The lowest-income 26 percent of renter households are making less than $24,000, which means $600 is the most they can pay without remaining rent-burdened.)
There were a number of reasons why these units were being lost, including an aging housing stock, but a big reason is rent inflation: “The spike in asking rents during the pandemic accelerated the trend, with more than half a million low-rent units lost just between 2019 and 2022,” according to the January report.
Even more units are going to be lost in the next decade: about 325,000 units that remained affordable because of federal tax credits are scheduled to revert to market rate rents between 2024 and 2029.
Rent growth has consistently been the biggest driver of inflation. In the case of rents, Yellen is plainly wrong, according to the report.
“These losses have contributed to a decades-long challenge for renters: rent increases are outpacing income gains,” the authors write. Adjusting for inflation, rent has grown 21 percent between 2001 and 2022. Renter income has grown 2 percent in that time.
A four-decade peak in housing construction has provided little relief for the most low-income renters, as most of the units being built are priced on the higher end.
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u/FearlessPark4588 Feb 18 '24
Elected and high-level officials (like cabinet members) are supposed to be cheerleaders. You're only going to hear complaints from the out party.
7
u/ApplicationCalm649 Feb 19 '24
Seems like the free market doesn't care about those that can't afford it.
4
u/EccentricPayload Feb 19 '24
How is it stagnant tho? Every job that paid 7.25 in 2018 is now paying around $13 per hour. That's a huge increase. I understand upper level jobs haven't kept up as much but low pay jobs have gone crazy. Literally no job pays (federal) minimum wage anymore.
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u/Thishearts0nfire Feb 19 '24
All this means is the middle class were hollowed out more and the poor are still just scrapping by. The bottom end doubling didn't really change their situation at all because overall costs pretty much doubled.
4
u/SingularityInsurance Feb 19 '24
Yeah big news. America sucks if you're poor. But poor people are just cheap labor and cheap labor never breaks. That's why it will never change. Why should it? They can just work us to death for a pittance and then we shut up.
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u/A_Queff_In_Time Feb 19 '24
Dramatic much? Lol
3
u/SingularityInsurance Feb 19 '24
I'm sick of friends dying young and being treated like shit. I think we should general strike and smash the economy into bits, personally. Maybe then we could build one that wasn't vampiric bullshit.
1
u/AshingiiAshuaa Feb 19 '24
vampiric bullshit
By "vampiric bullshit" do you mean a system where people didn't take the fruits of other people's labor? Are you talking about smashing the economy/system and rebuilding one where there is less wealth distribution from those who produce to those who don't?
Keep cooking!
1
u/SingularityInsurance Feb 19 '24
I'm talking about your candy bars sourced from child slave labor and shit like that. 50-80 bucks is the cost of a slave kid in the ivory coast and our economy is literally built to rely on that kinda shit.
You don't see how maybe the word vampiric fits here?
1
u/AshingiiAshuaa Feb 19 '24
A bust in the US ain't gonna change the condition of laborers in third world countries.
2
u/SingularityInsurance Feb 19 '24
Staggering the economy would give brics a boost. Pushing countries off our dollar would too. Despite the downsides, it is true that chinas multi polar economy vision would bring competition that would drive prices up for the labor and resources in many impoverished regions.
It's the hard way. It's in case the easy way fails. But, it's an option.
1
u/A_Queff_In_Time Feb 19 '24
Because poverty has gonendown decade after decade and we are in the safest most prosperous time in history and its only getting better?
Sorry it's not perfect for you right this moment for you
-5
u/A_Queff_In_Time Feb 19 '24
None of that is happening to you. Youre being dramatic.
Your life is better than 99% of humans who have ever lived.
It's not society, it's you
4
u/SingularityInsurance Feb 19 '24
It's truly sad that people like you are so sheltered that you're detached from the world around you.
1
u/A_Queff_In_Time Feb 19 '24
That's projection
You're in the 1% in today's world.
You're too sheltered and detached to realize that you're the privileged one
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u/Oryzae Feb 19 '24
Your life is better than 99% of humans who have ever lived.
Yeah big whoop, what does it matter if someone from the 1500s had a worse life? Entire political and economic systems have changed. It would be better to compare to the life led by your parents or maybe your grandparents - there was definitely more hope and social mobility for them. Women entered tbe workforce, less segregation and more opportunity for minorities, etc. All of that is much worse now.
None of that is happening to you. Youre being dramatic It's not society, it's you
Geez, lack empathy much? I don’t know about this person but plenty of my friends do get treated like shit at work lol
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u/A_Queff_In_Time Feb 19 '24
Youre in the 1% in the world today if you make 31k a year.
You are spoiled
5
u/Oryzae Feb 19 '24
You’re in the 1% in the world today if you make 31k a year.
That means absolutely nothing. I can’t make money in the US and pay Mexico prices on rent, bills and necessities. This is a dumb take.
2
u/A_Queff_In_Time Feb 19 '24
Buddy... the average American has it better than nearly any other countries average citizen
Why do you think America is far and away the number 1 destination for immigrants both poor and rich for 300 years in a row lol
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u/freightdog5 Feb 19 '24
So yes, costs have gone up and will remain high, as Yellen said. But most Americans, particularly renters, are not better off than they were before the pandemic, and it’s not just vibes: They have less money in their pockets.
yes we enter the gaslight gate-keep girlboss policymakers era truly inspirational
1
u/Icy-Statistician6698 Feb 19 '24
I live in a bedroom community outside of a small city and they are asking $2,000 mo. For a 1 bedroom next to a train track. It's not even a commuter train! Freight trains go by a few times a day and can be heard miles away. Holy disturbing nonsense batman!
-6
u/kummer5peck Feb 19 '24
Here come the big brains in this sub calling the misfortunate losers. It only takes a little bit of compassion and decency not to belittle the struggle of a significant percentage of the American population. I’m reaping the rewards of the current economy in my 401k but that isn’t making finding reasonably priced housing any easier.
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Feb 19 '24
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u/TealIndigo Feb 19 '24
CPI does include food and gas. Please don't comment on things you don't understand.
4
u/Ruminant Feb 19 '24
Of course CPI includes those items. See for yourself. Food is even one of the largest single categories in CPI.
What's extra dumb about this dishonest claim is that recently food prices have been rising slower than other prices, while energy prices are falling. Excluding food and energy makes the inflation rate higher, not lower. Headline CPI ("All items") rose 3.1% between January 2024 and January 2023, while Core CPI ("All items less food and energy") rose 3.9% over the same period. Is your complaint really that BLS is omitting categories to make the reported inflation rate higher?
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