Why Americans feel gloomy about the economy despite falling inflation and low unemployment
Why Americans feel gloomy about the economy despite falling inflation and low unemployment
Inflation has reached its lowest point in 2 1/2 years. The unemployment rate has stayed below 4% for the longest stretch since the 1960s.
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No one is asking for deflation. They're asking for wages that don't decrease every year due to inflation and companies not giving raises or giving raises so small that it's still a pay decrease since it's not keeping up with inflation.
Wages are now out pacing inflation. So it sounds like you're saying your gloomy about the economy because the president hasnt come in and forced your boss to give you a raise, or hand you a different job with more pay.
Where are you that minimum wages are going up?
Less than 1% of people make minimum wage, so minimum wage isn't really relevant to any discussion.
Edit: Wrong by a tiny bit. It's 1.3%
Yes it is, it is the absolute floor that someone can be paid.
Yes I am aware. That's still not relevant whatsoever.
But it is relevant?
Just like when massive unions get better pay rates (or weekends) it raises the bar for what all other workers expect, except the min wage has MORE effect since it applies across all employment.
"A rising tide lifts all boats"
Yeah sure, less than 1% of working Americans make minimum wage. Gonna need a citation for that one.
It's 1.3%
https://www.bls.gov/opub/reports/minimum-wage/2022/home.htm
And that's counting all laborers, including young people and the heavily disabled who have work programs
And $7.50 is a pointless figure to use as representative of minimum wage. When established, the minimum wage was equivalent to $26 today, and most states had higher minimums even before they went up to $15.
I think we should tie the minimum wage to local (probably generally county/parish) COL, updated biannually.
But the minimum wage currently shapes a miniscule amount of people's bargaining power.
Dude, that is the federal minimum, which hasn't been raised in over 30 years. The states had minimums closer to $10 to $12 in the last 20 years, and many went up to $15 in the last 3 years. That is still much less buying power than minimum wage was at its establishment.
That's not relevant to any discussion tho. 1.3% of people are at the federal min
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Dude I corrected you on this EXACT BS you posted earlier.
You might just be a chat bot.
If someone is claiming that the rise In minimum wages in many states does not impact the "wages are growing faster than inflation" assertion, it is entirely relevant as many of those people saw a 33% raise over the last few years, and that is way more than 1.3% of wage earners.
What rise in federal min wage are you talking about?
You are a troll, and I refuse to continue explaining things you refuse to understand.
Lol ok bud.
Words just don't mean anything to you at all, do they
You are one to talk.
Your number leaves out all of the people whose pay rates are above minimum wage, but are still poverty wages. There is quite a large gap between minimum and poverty, and not in the direction that benefits the working class.
Furthermore, raising the minimum wage leads to people in that gap also getting raises. People can and do benefit tremendously from the minimum wage being raised, even if they have never personally worked at minimum wage. As such, the minimum wage is relevant to far, far more workers than are actually getting it.
Your number leaves out all of the people whose pay rates are above minimum wage, but are still poverty wages.
This is because minimum wage has nothing to do with this discussion
This is my original point.
Furthermore, raising the minimum wage leads to people in that gap also getting raises.
They're already getting raises because wages are up across the board. There are two jobs for every person right now and that isn't likely to change for a long time.
I'm sorry, how in the fuck is the minimum wage not related to the fact that rising prices and inflation are causing people to struggle financially? That's like saying the tides have nothing to do with surfing.
And sure, wages are up, the problem is that if you bother to account for inflation and COL, the purchasing power they provide is down. That's what people mean when they say "real wages." I'm sure you know that on some level, even if for purposes of this discussion, you're pretending not to.
I’m sorry, how in the fuck is the minimum wage not related to the fact that rising prices and inflation are causing people to struggle financially?
Because a small enough people make.minimum wage that it has no bearing on overall price pressures for labor.
Idk why you think I'm "pretending" anything.
I think you're pretending not to understand the relevance of the minimum wage because two comments ago I said this:
Furthermore, raising the minimum wage leads to people in that gap also getting raises. People can and do benefit tremendously from the minimum wage being raised, even if they have never personally worked at minimum wage. As such, the minimum wage is relevant to far, far more workers than are actually getting it.
And you proceeded to act like I didn't.
He's a troll and not a good faith interlocutor so don't expect honesty from him.
I understand you said it, but that doesn't make it true.
It would be true if any significant number of people made minimum wage, but they don't.
I mean, at least you acknowledged that I said it this time. Even if I'm now slightly less convinced that you deliberately aren't getting it, because you still didn't seem to understand what I was actually arguing.
They say it takes exponentially more effort to debunk bullshit than it does to spread it, and when I'm making a real effort to make a point and your rebuttal is basically "nuh uh," that seems to hold true. Fortunately, I don't have to type out the argument myself when I can just post Charlynn Teter's excellent essay, sources included, about it instead. https://bpr.berkeley.edu/2021/01/30/no-more-lies-the-truth-about-raising-the-minimum-wage/ I look forward to how you "nuh uh" this.
While it's true that less than 1.3% of people make minimum wage, it's important to recognize that the minimum wage sets a baseline for the broader labor market. Even though a small percentage of workers are directly affected, the minimum wage often serves as a reference point for wage negotiations and can have a cascading effect on wages above the minimum. While the direct impact may be limited to a specific percentage of workers, the broader implications of minimum wage policies are relevant to a much larger economic context.
Oh, I thought we were talking about actual wages, not the minimum wage. I'm not even sure how that makes sense in the context.
Most of the places around me pay way less than the actual cost of living, like the average is maybe $12 an hour max but I'd say it's more like $10. Cost of living estimates vary but for a single adult it's often around $2500/month, which is far more than you'll make working at almost anywhere here full time. Even worse, most establishments are actually choosing to short-staff themselves to save money, so most aren't even looking to increase employment.
So you can work full time and still not have enough to just survive, then if you want to do university/trade school and aren't elligible for e.g. HOPE then you could have to pick up 2 full time jobs and still somehow have the time/energy left to do college (which most people wouldn't after that and would just drop out). Some people are able to live with family to reduce or eliminate the housing cost, and a few people are privileged enough to have their family pay for their whole college, but if that's not the case you're completely fucked.
And this is in suburban/rural Georgia. I can only imagine how shit it is for someone who can't afford college, a car, whatever else in a shitty place like Texas or Florida.
One of the things that frustrates me the most about this site (and reddit but it seems even worse here) is the inability of people to follow the context.
The article is about how people, wide spread, are rating the economy as poor despite good economic data. The top level comment is talking about not wanting deflation, but rising wages so they don't lose out to inflation. I point out that wages are rising and outpacing inflation, so by the metric they used the economy is doing well. Then someone inexplicably brings in the minimum wage (FTR, "Workers in the bottom pay quartile also saw median "real" income gains of 6% since 2019, more than the rest of the income distribution."[https://www.reuters.com/markets/us/us-job-market-softens-gains-minority-groups-hang-balance-2023-11-27/#:~:text=Workers in the bottom pay,rest of the income distribution] But who cares about the facts? They don't really mean anything anymore.). I point out that this isn't about the minimum wage (BTW, I agree that it should be raised) and people still go off on how in their anecdotal experience minimum wage is not enough to get by.
It's like anything to ignore reality. It's the same ridiculousness I see from conservatives when I'm debating climate change: just ignore the facts, cherry-pick some data, throw in some anecdotes, and try to reframe the debate.
It's the subjective experience of not seeing the wage growth themselves, combined with things not being acceptable for a longer time than Biden or Trump's presidency. Things are improving right now, but haven't caught up to people having economic security. When you've sunk deep enough, it takes a longer period of rising to finally catch a breath. Basically, the current growth must sustain for longer to get more people into a good position. If things continue on their current path, people will calm down.
It's also true that necessities like housing have inflated in price far faster than other goods, again, for longer than a decade. Unnecessary goods might be cheaper than ever, but you NEED things like shelter and there are NO alternatives. Despite good competition, the demand is inelastic, so limited excess supply translates to soaring prices, plus, other factors are at play.
It also isn't a good idea ignore subjective experiences in general. Not only are people almost always right to be unhappy on some level, invalidating their lived experiences isn't a good idea. Democrats will not be successful if they don't listen to people's displeasure. Basic economic measures are essential, but not sufficient to make voters happier.
There's not much I disagree with in your post. However, this all stems from a poster saying that (effectively) they don't want deflation, but for wages to out-pace inflation, and I pointed out that this is already happening. By their own metric they should be happy with the economy, even if they haven't personally benefitted from it, but instead they are unhappy with it but that's based on a false belief.
It also isn’t a good idea ignore subjective experiences in general. Not only are people almost always right to be unhappy on some level, invalidating their lived experiences isn’t a good idea. Democrats will not be successful if they don’t listen to people’s displeasure. Basic economic measures are essential, but not sufficient to make voters happier.
And this is basically what the article is all about, that the economy is actually going in the right direction, but everyone thinks it isn't. Spreading the false belief that we are still in situation where inflation is out-pacing wages is just further spreading the false belief that is making people upset. I get that people still have a ways to go before they make up for what was lost to inflation, but being constantly grim about the state of the economy for bad reasons isn't helping anyone. It's probably just making it worse.
It's the fine line of not saying people are correct in their specific criticisms, while still validating their lived experience. I don't expect most conservative liberals to do this, but Democratic politicians must to win elections.
Sure, but people should also try to be accurate when they are making claims as to why they are upset with the economy, especially if they are making a very general claim as to why people are upset.
And this is basically what the article is all about, that the economy is actually going in the right direction, but everyone thinks it isn’t. Spreading the false belief that we are still in situation where inflation is out-pacing wages is just further spreading the false belief that is making people upset. I get that people still have a ways to go before they make up for what was lost to inflation, but being constantly grim about the state of the economy for bad reasons isn’t helping anyone. It’s probably just making it worse.
Okay, so this actually misses how this "false belief" has spread.
The thing about inflation is it doesn't go away when it goes down. There hasn't been deflation, so when prices rose they just stayed high even as inflation cooled. It doesn't matter that prices aren't rising as fast as they were before because the prices are still high. Wages, on the other hand, lagged behind inflation for so long that they're still behind even if the rates are more even now. This has to keep up for several years to give wages have time to catch up; until then people are still going to be mad about inflation even if it is getting better.
Wages, on the other hand, lagged behind inflation for so long that they’re still behind even if the rates are more even now.
This is what I meant when I said:
I get that people still have a ways to go before they make up for what was lost to inflation
But, again, the claim is that they just want wages that won't be beaten by inflation (again, effectively) and that is the case now. So what they want is what is happening now, yet still unhappy. Your post is a movement of the goal-posts. I get it that it still sucks, but we're going in the right direction, especially on the point they made. This should result in a more cheery-outlook for people basing their opinion on wages out-pacing inflation.
They want the pain to stop now. That's my point. Only people with a financial cushion can sit around and wait for things to get better, everyone else is suffering. People are not going to be patient for relief.
I'm coming late to this rodeo. I see minimum wage as relevant if the recent statutory raises of the minimum wage are behind the "wages are rising faster than inflation" point. I need to see a distribution chart showing which raises are rising faster, because a lot of pay went from $10 to $15 in the last few years, and that's a 33% pay increase for those people. What if the people earning between $30 and $60 saw no raises, or worse, lost their jobs and got new ones for less?
I need to see a distribution chart showing which raises are rising faster
I'd be curious to see what your research finds on this too.
Most of the places around me pay way less than the actual cost of living
This is mathematically impossible, unless you live in a place that's a combination of heavy commuting and like, tourism.
And this is in suburban/rural Georgia
Yeah it's definitely mathematically impossible. Your standards of living are out of whack with local standards of living.
Even worse, most establishments are actually choosing to short-staff themselves to save money
You live in a dying town.
"Mathematically impossible" my ass, everyone commutes 2 hours to the nearest city because work outside of urban areas is unsustainable. And no, the county has had a steady high growth rate for around 3 decades by now because of the prestige from Atlanta rubbing off + low cost to buy a house make Georgia seem appealing to middle class people, and aggressive advertising by the county makes people move here, it's not "dying".
"Local standards of living" are what I gave you, that's what statistics say. If you don't like science you can just say so. Hell, it's not that hard to just Google "median income in Georgia" (spoiler alert: median personal income is $30,000, which is very clearly unsustainable).
In this day and age, it's near impossible to survive out of school if you don't have family willing to pay for you. Hell, if I didn't have family to fall back on I would probably have been in the streets starving rather than be getting my degree.
What does this have to do with what we're talking about?
Wages may be outpacing inflation, but so have prices for a long time, and wages haven't reflected increases in productivity since around the 70s or so. In about 2015, I remember looking up some statistics and finding out that wages for the average worker had decreased about 5% since the 70s while CEO compensation had more than doubled, when you account for inflation. The most absurd example I can think of off the top of my head is that, when adjusted for inflation, the cost of a taco from Taco Bell has doubled since the 90s. There's some great comparisons out there, but some stuff has increased at more than double the rate of inflation since the 80s, with the biggest offender being the cost of college, which has increased by something like 1,153% (if I remember right, it's been several years since I've looked at those statistics).
Plus, local conditions never reflect the national averages/medians, so there are probably areas and industries that are seeing massive booms in wages and work to life balance and such, but there's others that aren't and some areas where even booming industries are seeing a decline. The IRS report for 2021 says that 51% of Americans made $15,000 or less that year. During my 20s (around the 2010s), I made $20,000-$30,000 a year working at a local fish market. This would put me probably somewhere around the top 45% of Americans by annual wages comparatively, but due to the high CoL in my hometown, I couldn't afford to rent a studio apartment. The lowest rent I found in that time was a single room in somebody's house with "occasional kitchen access" for $1,000 a month. Studio apartments started at $2,000 a month. The average American has something like $20,000 in their bank account, while the median American has $600.
I'm reminded of all the articles I see about people spending their "pandemic savings" where I think to myself, "What savings? The $1,000 check we got that some idiot of a politician said that everybody would be using to go buy a brand new car? 2 years ago they were talking about how we had all gone through the majority of our savings just to keep up with CoL increases."
Those charts are federal data, and you are correct about the winners of productivity gains. I can tell you why "wages are going up" - many states raised minimum wages from as low as $10/hr to $15, over a period of 3 years. The working poor got raises and are still working poor. Also, these people can't save their raises. They spend them on basic necessities, so there is a good chunk of economic growth right there. That's an example of an economic multiplier effect >= 1.0.
Yeah, the "fight for $15" has been going on so long that if minimum wage had kept up with inflation, it would be more like $24-30 an hour now. Just another example of people twisting the numbers to show the conclusions that they want.