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

When has the power not been in the hands of employers? For the most part, employers have most of the power; however, business is not a one way street. The power can absolutely be in the hands of employers if employees find themselves without any leverage. In the early industrialised economy, employers could have taken advantage of low wage work because the industry (for the most part) was very low skilled, as sophisticated machines performed most of the work. This dynamic isn't much different today, as most of the jobs being filled in this economy is low wage work that requires very little skill.

This is probably one of the reasons why union participation rates are at all time lows, not just in the United States, but all over the world (except in Scandinavia). Today's workplace is increasingly individualised. When you're in a union, your productivity and performance is judged as a whole group. As an individual, you are judged on your own merits.

The jobs that favor unions are going overseas and the government between laws and agencies are chieving more worker benefits and protections than unions.
 
The jobs that favor unions are going overseas and the government between laws and agencies are chieving more worker benefits and protections than unions.

There is also a reason why the economy creates plenty of low wage, low skill jobs: they are better for retaining cost than the jobs being exported overseas.
 
There is also a reason why the economy creates plenty of low wage, low skill jobs: they are better for retaining cost than the jobs being exported overseas.

The economy will always create low skill jobs. Wheher or not those jobs are also low wage just depends on supply and demand of available workers for them.
 
The economy will always create low skill jobs. Wheher or not those jobs are also low wage just depends on supply and demand of available workers for them.

Roughly 40% of the job gains within the last 6 years originated from Leisure & Hospitality, Retail Trade and Temporary Services. The average hourly wages of these industries range anywhere from $14.10 - $16.31, which is below the average of $24.66 in the total private economy.

While it may seem like it's no big deal, it should be a brow raiser that a good portion of these low wage jobs came from only three industries alone.
 
Roughly 40% of the job gains within the last 6 years originated from Leisure & Hospitality, Retail Trade and Temporary Services. The average hourly wages of these industries range anywhere from $14.10 - $16.31, which is below the average of $24.66 in the total private economy.

While it may seem like it's no big deal, it should be a brow raiser that a good portion of these low wage jobs came from only three industries alone.

2 of those three would indicate people have more discretionary income than is captured by median household income numbers.
 
2 of those three would indicate people have more discretionary income than is captured by median household income numbers.

Most Americans are generally living paycheck to paycheck. Median household income is merely just a statistic that shows half of the population makes more than your income, while the other half makes less. That is more or less a metric of the standard of living, not the health of the labour market, which is captured particular by average hourly income.

When average hourly wages rise, this indicates that workers are leaving lower paying jobs to take advantage of higher paying jobs that are being created. When hourly wages have fallen, or are stagnant, that gives an indicator of two things: 1) people are losing their jobs or 2) people are taking employment at the highest possible wage they find. In this case, low wage work.
 
Most Americans are generally living paycheck to paycheck. Median household income is merely just a statistic that shows half of the population makes more than your income, while the other half makes less. That is more or less a metric of the standard of living, not the health of the labour market, which is captured particular by average hourly income.

When average hourly wages rise, this indicates that workers are leaving lower paying jobs to take advantage of higher paying jobs that are being created. When hourly wages have fallen, or are stagnant, that gives an indicator of two things: 1) people are losing their jobs or 2) people are taking employment at the highest possible wage they find.

Only when demographics aren't changing.
 
Most Americans are generally living paycheck to paycheck. Median household income is merely just a statistic that shows half of the population makes more than your income, while the other half makes less. That is more or less a metric of the standard of living, not the health of the labour market, which is captured particular by average hourly income.

When average hourly wages rise, this indicates that workers are leaving lower paying jobs to take advantage of higher paying jobs that are being created. When hourly wages have fallen, or are stagnant, that gives an indicator of two things: 1) people are losing their jobs or 2) people are taking employment at the highest possible wage they find. In this case, low wage work.

Wages have been stagnant since 1980 and the reason is "reaganomics" has weakened the bargaining position of labor through various means. Union busting is but one of those means. I wonder if the people would have been so attracted by the supply side if they were told they would not be receiving any more raises for 35 years?

productivity_family_income.png
 
Wages have been stagnant since 1980 and the reason is "reaganomics" has weakened the bargaining position of labor through various means. Union busting is but one of those means.

productivity_family_income.png

This is false for the most part.

Your chart indexes productivity and wages to 1980 inflation, which doesn't make sense really... For the most part, it's misleading.

I wonder if the people would have been so attracted by the supply side if they were told they would not be receiving any more raises for 35 years?

Measuring inflation is just as much as an art as it is a science. For the most, wages have outpaced productivity for the past 35 years (or as long as the BLS has been measuring productivity data), and year wages have increased since 1980, depending upon which inflation metric you trust.
 
This is false for the most part.

Your chart indexes productivity and wages to 1980 inflation, which doesn't make sense really... For the most part, it's misleading.



Measuring inflation is just as much as an art as it is a science. For the most, wages have outpaced productivity for the past 35 years (or as long as the BLS has been measuring productivity data), and year wages have increased since 1980, depending upon which inflation metric you trust.

LOL Everybody knows that stagnant wages are a critical problem but you. I suppose this chart is false too. It's wages/GDP

wages-to-gdp.png
 
LOL Everybody knows that stagnant wages are a critical problem but you. I suppose this chart is false too.

0405-biz-webCHARTS-artboard_1.png

I don't understand what I'm supposed to see in that chart...

Stagnant wages are a problem; however, we don't have stagnant wages. 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.
 
When has the power not been in the hands of employers? For the most part, employers have most of the power; however, business is not a one way street. The power can absolutely be in the hands of employers if employees find themselves without any leverage. In the early industrialised economy, employers could have taken advantage of low wage work because the industry (for the most part) was very low skilled, as sophisticated machines performed most of the work. This dynamic isn't much different today, as most of the jobs being filled in this economy is low wage work that requires very little skill.

This is probably one of the reasons why union participation rates are at all time lows, not just in the United States, but all over the world (except in Scandinavia). Today's workplace is increasingly individualised. When you're in a union, your productivity and performance is judged as a whole group. As an individual, you are judged on your own merits.

i'd say globalization and mechanization have changed the dynamic significantly. to a lesser degree, many states have also enacted measures which make unions less effective.
 
Okay? What exactly are Wages and Salaries as a percentage of GDP is supposed to show?

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. Remember it is the middle class that buys all the goods.
 
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.

fredgraph.png


Remember it is the middle class that buys all the goods.

No, everybody buys goods and services.
 
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.

indexed_stagnation.jpg



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.

change-since-1979-300.gif


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.
 
Most of us do. It's only the top 20% of earners whose wages have increased. Wage growth has been anemic for everyone else.

indexed_stagnation.jpg

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.

change-since-1979-300.gif

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.
 
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.

netsavingsbyincome2012.jpg


BN-FL365_Saving_G_20141107165619.jpg
 
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.
 
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%:

fredgraph.png


But even when we account for supplemental income:

fredgraph.png


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?
 
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.

piinternationalmobilitychart1825.ashx


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.

Screenshot-from-2013-12-23-205156.png


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

fredgraph.png
 
More like 10.1%:

fredgraph.png
[/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:

fredgraph.png


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.

fredgraph.png


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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