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Thread: Payroll employment increases by 321,000 in November; unemployment rate unchanged

  1. #141
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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by iguanaman View Post
    That corporations are sharing less and less of their profits with employees. Supply side economics is destroying the middle class. Workers need more wage leverage.
    You can accept that ridiculous narrative (because it shows Wages/GDP was declining since 1970) or we can go with a different explanation: The way employees are being compensated is different than the 1970s.

    Compensation of employees makes up 62% of Gross Domestic Income. Wages and salaries makes up only half of the personal income component. Comparing it as a percentage of GDP ignores other ways employees are compensated, such as employee pensions and insurance and employee contributions to government social insurance. If you're missing this, you're missing 12% of Gross Domestic Income.



    Remember it is the middle class that buys all the goods.
    No, everybody buys goods and services.

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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by WallStreetVixen View Post
    Stagnant wages are a problem; however, we don't have stagnant wages.
    Most of us do. It's only the top 20% of earners whose wages have increased. Wage growth has been anemic for everyone else.




    We have very slow rising wages. Stagnant wages implies that there is no real wage growth or no growth at all, which is false. Wages have surpassed inflation, but in very small terms.
    Wages for everyone except the top earners have NOT been beating inflation in any meaningful fashion. Hence the problem.



    Productivity (for all workers) has been increasingly steadily. However, the benefits of this change are disproportionately going to the top earners. Many of those top earners are essentially rent-seekers and speculators (e.g. in finance, or have inherited wealth). Many pay lower tax rates, as their earnings are capital gains and/or carried interest.

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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by Visbek View Post
    Most of us do. It's only the top 20% of earners whose wages have increased. Wage growth has been anemic for everyone else.

    Snapshot data isn't going to capture income growth for anyone. All it tells us is that some people are poor and others are rich, during that period in time. Income growth can only be captured by following flesh and blood individuals overtime, usually through tax filing statistics. We have already complied plenty of data on this and we find that poor people gradually become richer, while people entering the labour force become the new poor (teens, immigrants, etc). That is generally how it works. That is how it always works.

    Wages for everyone except the top earners have NOT been beating inflation in any meaningful fashion. Hence the problem.

    When we look at labour market health, we look at average hourly earnings, in particularly, Production and Nonsupervisory Employees. Top income earnings are not part of this statistic, so anything focusing on their earnings is irrelevant for the most part.

    Productivity (for all workers) has been increasingly steadily. However, the benefits of this change are disproportionately going to the top earners. Many of those top earners are essentially rent-seekers and speculators (e.g. in finance, or have inherited wealth). Many pay lower tax rates, as their earnings are capital gains and/or carried interest.
    Wages have outpaced productivity, for the most part. It makes no sense to compare investment income to wages and salaries, for obvious reasons.

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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by WallStreetVixen View Post
    You can accept that ridiculous narrative (because it shows Wages/GDP was declining since 1970) or we can go with a different explanation: The way employees are being compensated is different than the 1970s.
    I for one concur that showing wages as a percentage of GDP is not very revealing. That said:

    The composition of compensation is a little different since the 70s, but it's not necessarily better. E.g. the switch from pensions to 401(k)s are almost certainly better for companies, but not for employees. Health care costs have gone up, but employees are paying more for them.

    We should also keep in mind that the ratio of CEO wages, to that of other employees, has skyrocketed since the 1970s. The ratio used to be around 50:1, and now it is over 300:1. That doesn't include wages paid to employees of overseas subcontractors. (I.e. again, we see how the top earners are reaping the benefits, and everyone else does not.)


    No, everybody buys goods and services.
    True. Generally speaking though: As you move up the income ladder, you spend less of a percentage of your income on goods and services, and thus have a higher savings rate.




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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by Visbek View Post
    I for one concur that showing wages as a percentage of GDP is not very revealing. That said:

    The composition of compensation is a little different since the 70s, but it's not necessarily better. E.g. the switch from pensions to 401(k)s are almost certainly better for companies, but not for employees. Health care costs have gone up, but employees are paying more for them.
    401(k) plans are given to you by your employer, so what you are saying doesn't make sense. Also, less than 20% of Health Care expenditures are out of pocket. Majority of expenditures are through insurance, and most health care coverage is provided through insurance, whether its private or public, so what you are saying doesn't make sense either.

    We should also keep in mind that the ratio of CEO wages, to that of other employees, has skyrocketed since the 1970s. The ratio used to be around 50:1, and now it is over 300:1. That doesn't include wages paid to employees of overseas subcontractors. (I.e. again, we see how the top earners are reaping the benefits, and everyone else does not.)
    It also makes zero sense to compare CEO compensation to wages of employees. They're not measured or achieved in the same regard.

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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by WallStreetVixen View Post
    The way employees are being compensated is different than the 1970s.

    Compensation of employees makes up 62% of Gross Domestic Income. Wages and salaries makes up only half of the personal income component. Comparing it as a percentage of GDP ignores other ways employees are compensated, such as employee pensions and insurance and employee contributions to government social insurance. If you're missing this, you're missing 12% of Gross Domestic Income.
    More like 10.1%:



    But even when we account for supplemental income:



    We can clearly observe that compensation is on a downward trend.

    No, everybody buys goods and services.
    True. The poor and middle class tend to spend a higher percentage of their income on goods and services. Or do you deny that higher income earners have, on average, higher savings rates?
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by WallStreetVixen View Post
    Snapshot data isn't going to capture income growth for everyone. That can only be done if you follow income gains of individuals, not quintiles.
    ...or, we can gather statistical information about groups of individuals, in order to find meaningful data about those groups.

    We should also note that there actually isn't a lot of economic mobility in the US. The top and bottom in particular are sticky. So while breakdowns by quintile aren't perfect, they certainly do give us meaningful information about what's happening in the labor force and the economy as a whole.


    Poor people gradually become richer, while people entering the labour force become the new poor. That is generally how it works.
    Yeah... not so much. Again, perceptions of economic mobility are out of whack with reality.



    Yes, income and wages do change over time; in particular, retirees often lose lots of income. But in general, there isn't nearly as much mobility as people assume.

    Keep in mind that the upper limit for the 1st (lowest) quintile is around $20k/yr, and the 2nd quintile is $40k. And that's per household, not per capita. So yeah... The poor tend to stay poor, the rich tend to stay rich, and the middle occasionally gets shuffled around.


    When we look at labour market health, we look at average hourly earnings, in particularly, Production and Nonsupervisory Employees. Top income earnings are not part of this statistic, so anything focusing on their earnings is irrelevant for the most part.
    So instead of providing alternative measures, we should just... throw up our hands, and ignore how wages have basically flatlined for the past 40 years? Fascinating.


    Wages have outpaced productivity, for the most part. It makes no sense to compare investment income to wages and salaries, for obvious reasons.
    OK then. Let's look at wages.



    H'm... It doesn't look like compensation have outpaced productivity. Am I missing something?

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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by Visbek View Post

    H'm... It doesn't look like compensation have outpaced productivity. Am I missing something?
    She is focusing on unit labor costs, without taking inflation into consideration.

    When we subtract inflation from ULC, it shows a totally different picture:

    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by Kushinator View Post
    More like 10.1%:

    [/quote]

    That graph is outdated by a year. Sometimes its just better to get the information from the horse's mouth.

    $1,780.2 W&S Supplements / $14,801.2 GDI = 12% of GDI

    But even when we account for supplemental income:



    We can clearly observe that compensation is on a downward trend.
    As a percentage of GDP, sure. As a percentage of GDI, sure. On its own merit, false. Employees have received more income overtime. It makes sense to compare the growth of wages as a percentage of personal income, relative to other forms of income.



    Why do you think it makes sense to compare wages and salaries to GDP? What exactly would that show? They are virtually the same, in a textbook sense, anyway.

    True. The poor and middle class tend to spend a higher percentage of their income on goods and services. Or do you deny that higher income earners have, on average, higher savings rates?
    They save more of their income and have higher expenditures than lower income earners do. They spend money all the same.

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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by Kushinator View Post
    She is focusing on unit labor costs, without taking inflation into consideration.

    When we subtract inflation from ULC, it shows a totally different picture:

    Unit Labour Cost are already indexed for inflation, so your graph is inaccurate.

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