Why Can’t Americans Get a Raise?(slate.com)
slate.com
Why Can’t Americans Get a Raise?
http://www.slate.com/articles/business/moneybox/2017/07/why_can_t_americans_get_a_raise.html
364 comments
Reminds me of an article in Aviation Week recently bemoaning the lack of new pilots coming into the profession and saying how this was completely baffling to the companies involved.
A few paragraphs down they mentioned the starting salary at regional airlines: $26000.
I think I can solve your mystery
When the wage of the person responsible for 40+ lives and millions of dollars worth of equipment isn't enough to feed a family (many pilots are on food stamps) you aren't paying them enough. Never mind that they also have to pay for their own education and that includes several thousand hours of Pilot in Command time. Renting a plane is typically > $100/h. Which is why flight instructors are often cheaper than tennis instructors: the main benefit for the instructor is that the student pays for the plane.
And that's one of the main reasons why Sully said he can't recommend the profession to anyone.
A few paragraphs down they mentioned the starting salary at regional airlines: $26000.
I think I can solve your mystery
When the wage of the person responsible for 40+ lives and millions of dollars worth of equipment isn't enough to feed a family (many pilots are on food stamps) you aren't paying them enough. Never mind that they also have to pay for their own education and that includes several thousand hours of Pilot in Command time. Renting a plane is typically > $100/h. Which is why flight instructors are often cheaper than tennis instructors: the main benefit for the instructor is that the student pays for the plane.
And that's one of the main reasons why Sully said he can't recommend the profession to anyone.
The most obvious answer seems to be that the workforce keeps growing relative to the demand for that work. Wage stagnation began at the same time the number of women in the workplace started to grow. While a corresponding increase in demand with the supply of workers would have kept incomes moving upward, women were actually already consumers. They had to eat, be sheltered and clothed, etc. even when men made up the vast majority of the workforce.
The rate of the growing female workforce itself started to stagnant around the 90s and 2000s, but a new worker had fully emerged on the scene by that point: The robot. It's a slight misconception that robots eliminate jobs. In reality, they compete for them just like people do. They are another worker in the supply of workers. And while robots bring new demand, as they didn't exist before, it is not proportional to what they can create like with humans.
And so, increasing supply over the rate of what increases to demand exist, and you get downward price pressure.
The rate of the growing female workforce itself started to stagnant around the 90s and 2000s, but a new worker had fully emerged on the scene by that point: The robot. It's a slight misconception that robots eliminate jobs. In reality, they compete for them just like people do. They are another worker in the supply of workers. And while robots bring new demand, as they didn't exist before, it is not proportional to what they can create like with humans.
And so, increasing supply over the rate of what increases to demand exist, and you get downward price pressure.
Another fundamental issue is that business has never been structured for high wage elasticity. When the market clearing price for wages becomes volatile, which seems to be increasingly the case, it is generally very difficult for business to track the market because their operating models are predicated on the relatively non-volatility of wages. Adjusting to that is generally not easy or quick as it often forces companies to change the way they do business at a pretty fundamental level.
I've seen this play out at companies big and small when changes in market wages force them to change the way they think about hiring. Ironically, the replacement strategy is often to eliminate positions from the bottom half of the wage pool and to add a much smaller number of positions in the top half, at least in my experience. (It is increasingly widely believed that this latter strategy is superior in any case and there is evidence to at least suggest this is true.)
I've seen this play out at companies big and small when changes in market wages force them to change the way they think about hiring. Ironically, the replacement strategy is often to eliminate positions from the bottom half of the wage pool and to add a much smaller number of positions in the top half, at least in my experience. (It is increasingly widely believed that this latter strategy is superior in any case and there is evidence to at least suggest this is true.)
It's really silly to think of labor prices as just being a matter of "people knowing what they're worth." The example given was painting jobs. If you're someone that maybe could offer such a job, there's a price at which it makes more sense for you to do it yourself. That price is a hard limit to the amount you can offer for such a job. If someone demands more, then you can't satisfy them because then you're losing out on the deal.
Only growing commercial concerns can afford to hire new employees. The world used to have a way of keeping people who would otherwise be economically impotent engaged, and that is cheap service work, but we've decided as a society that such things are not politically palatable.
So instead we just place more and more expectations on the people that participate usefully in society, and less and less on those who can't. The older I get, the less sympathetic I get to this viewpoint, but I suppose that's a quite common moral journey so I won't belabor the point too much.
Only growing commercial concerns can afford to hire new employees. The world used to have a way of keeping people who would otherwise be economically impotent engaged, and that is cheap service work, but we've decided as a society that such things are not politically palatable.
So instead we just place more and more expectations on the people that participate usefully in society, and less and less on those who can't. The older I get, the less sympathetic I get to this viewpoint, but I suppose that's a quite common moral journey so I won't belabor the point too much.
They hit the nail on the head right here: "Companies are psychologically and emotionally geared not to raise wages as a matter of course." Our current business culture is basically to maximize profits and minimize expenditures.
Those employers don't want employees, they want CHEAP employees. If you pay $100/hour, you will get employees. So, the only question is "where is that wage number?"
Employers aren't stupid. If they could make more money by hiring employees, they would. What this tells me is that demand isn't high enough for an employer to calculate an increased return from hiring someone.
So, what this tells us is that demand is dead. That's what happens when you hollow out the middle class.
Employers aren't stupid. If they could make more money by hiring employees, they would. What this tells me is that demand isn't high enough for an employer to calculate an increased return from hiring someone.
So, what this tells us is that demand is dead. That's what happens when you hollow out the middle class.
I think this is part of the equation about illegal immigrants which nobody in the US seem to talk about. They dont talk about all the companies exploiting illegal workers. We had a situation in Norway with exploited Polish workers. It was when Norwegian unions started targetting polish workers when things turned around. With polish info about workers rights, salaries and conditions improved. If you get unions more actively involved in the US you might not need big walls. Businesses are not going to hire mexicans if they cant pay them shitty salaries. If salaries and conditions are better americans are going to take those jobs instead.
Getting a raise and bargaining for a starting pay, and offering a default pay for a job, these are three different things, I think.
Most people don't ask for raises, or draw no consequences from being mad about not getting a raise. So after a few generations companies adapted and simply don't offer raises anymore as default.
People who really want to make more money, still get more money. Just not in the same job. While working less in their current job they start to look for other jobs with better pay, and since they have a current job they can proactively bargain for the pay they want. If they don't get it they just don't switch.
And last but not least, but I hope at least here people have noticed that now we have a method called Start-up. That is a way to get a lot of raises in a very short time frame as well. The only requirement is the cruel real life fairness of having a growing marketshare.
So we have everything, non-increasing incomes for lazy people, regular raises by job switching from dedicated people, and fast-lane high-risers for people who can really take a risk.
And of course we also have a problem. But that problem has nothing to do with any of the three things (raises, job offer bargaining, default pay): We have more and more jobs that are automated and replaced by machines. If you have autopilots in airplanes that do a well enough job, you simply don't really need the pilots any more, for instance. I honestly don't know if we can find a solution for that, or if we are heading for another period like feudalism where only a small percentage of people actually have a good life.
But, well, as long as we don't talk about that problem we certainly won't resolve it.
Most people don't ask for raises, or draw no consequences from being mad about not getting a raise. So after a few generations companies adapted and simply don't offer raises anymore as default.
People who really want to make more money, still get more money. Just not in the same job. While working less in their current job they start to look for other jobs with better pay, and since they have a current job they can proactively bargain for the pay they want. If they don't get it they just don't switch.
And last but not least, but I hope at least here people have noticed that now we have a method called Start-up. That is a way to get a lot of raises in a very short time frame as well. The only requirement is the cruel real life fairness of having a growing marketshare.
So we have everything, non-increasing incomes for lazy people, regular raises by job switching from dedicated people, and fast-lane high-risers for people who can really take a risk.
And of course we also have a problem. But that problem has nothing to do with any of the three things (raises, job offer bargaining, default pay): We have more and more jobs that are automated and replaced by machines. If you have autopilots in airplanes that do a well enough job, you simply don't really need the pilots any more, for instance. I honestly don't know if we can find a solution for that, or if we are heading for another period like feudalism where only a small percentage of people actually have a good life.
But, well, as long as we don't talk about that problem we certainly won't resolve it.
When healthcare premiums are rising double digits annually, there is no money to increase salary.
We have to decide a basic level of healthcare every Citizen is entitled too and if you want more, the individual pays for it.
Cutting taxes on the already wealthy isn't a stimulus, but putting $18k ( avg annual HC premium ) back into pockets the middles classes will stimulate the economy because they will spend it all.
Cutting taxes on the wealthy just slows the Velocity of Money.
We have to decide a basic level of healthcare every Citizen is entitled too and if you want more, the individual pays for it.
Cutting taxes on the already wealthy isn't a stimulus, but putting $18k ( avg annual HC premium ) back into pockets the middles classes will stimulate the economy because they will spend it all.
Cutting taxes on the wealthy just slows the Velocity of Money.
My observation in the US is that there is a pretty big gap in perception of how professionals or managers should be paid versus ordinary workers. You'll find people who would never consider paying workers more than minimum wage, and yet consider the bills from lawyers and consultants perfectly reasonable.
Part of it seems to be a general belief that some sorts of expensive professionals are better, much like how people assume pricey wine tastes better, but I suspect most of it's just class issues.
Part of it seems to be a general belief that some sorts of expensive professionals are better, much like how people assume pricey wine tastes better, but I suspect most of it's just class issues.
Remember, if you do end up quitting your job, be sure to tell your employer that they weren't paying enough. Then when they hire to fill your position, they may be more likely to offer a better wage.
Most employers have been giving their workers steady pay increases for years - those pay increases just happen to go to health insurance companies.
Perhaps the phrase "six-figure salary" has caused wage stagnation.
Once a manager, for example, hits their personal goal of "six-figures", they feel they have hit an important milestone. So they are content year after year to privately make $100,001 but publicly/subconsciously use the misleading phrase of "six-figures". A manager's salary is implicitly the upper bound of their subordinates' pay so the whole work-force suffers.
If the goal is inspire a higher paid workforce, let's stop with the "six-figures" vagueness and use concrete income milestones (e.g., $250k a year, $10k a week, etc.) instead.
Once a manager, for example, hits their personal goal of "six-figures", they feel they have hit an important milestone. So they are content year after year to privately make $100,001 but publicly/subconsciously use the misleading phrase of "six-figures". A manager's salary is implicitly the upper bound of their subordinates' pay so the whole work-force suffers.
If the goal is inspire a higher paid workforce, let's stop with the "six-figures" vagueness and use concrete income milestones (e.g., $250k a year, $10k a week, etc.) instead.
Part of the problem is that people are much more reluctant to move for a new job, because job security is now so low. Also, moving to a town with one major non-union employer is like signing up for indentured servitude.
In the industry I work in it's a skills gap. I work for an Industrial Electrical Contractor. We cannot find enough skilled electricians out there. The good ones have jobs and don't seem to look to change. We've had to start our own 5 year apprentice program because of lack of qualified candidates. A real problem is too many school counselors and society in general tell people you can't make a living doing skilled blue collar work.
I'm just glad I have a way out potentially as a developer. Starting to build up client base still far from being able to be self employed but I'm grateful to be aware/know where to look to learn.
I'm not a fan of my day job with regard to, regardless of their customer input (say they did a lot of business) I don't get a bump or tip or anything. No incentive to try harder also my day job any kid off the street can do so what can I say.
I'm not a fan of my day job with regard to, regardless of their customer input (say they did a lot of business) I don't get a bump or tip or anything. No incentive to try harder also my day job any kid off the street can do so what can I say.
A lot of employers try to offer so little for unskilled jobs that it costs more to commute to the job than you could make. Those jobs will go unfilled because no rational human is going to pay someone to be their employee even if they dropped out of high school most people can do enough basic math to know whether a job will cost more to commute to than they can make.
No new markets where to expand. Since Russia got re-grouped with Putin, the Russian (and former USSR) markets started to close for US exports. Chinese had their own dynamics. The labor participation rate is at the 70-ties rate again. Go for the maiximal time period here to see the dynamics. https://tradingeconomics.com/united-states/labor-force-parti...
Also check who's getting all the gold recently
https://tradingeconomics.com/russia/gold-reserves
Labor has no pricing power in the USA and it's partially responsible for the candidacy of Donald Trump & Bernie Sanders - for what it's worth.
All the spigots for cheap labor in the USA are turned on full blast and have been increasingly so since the late 1970's when labor power was at its zenith. Those spigots are: free-trade agreements with other countries, automation, anti-union actions, flow of illegal labor, flow of legal immigrant labor, globalization.
It's the cause of social turmoil, but that's not much of a concern (in fact it's something to be harnessed and consumed) for the ruling (and chattering) classes.
All the spigots for cheap labor in the USA are turned on full blast and have been increasingly so since the late 1970's when labor power was at its zenith. Those spigots are: free-trade agreements with other countries, automation, anti-union actions, flow of illegal labor, flow of legal immigrant labor, globalization.
It's the cause of social turmoil, but that's not much of a concern (in fact it's something to be harnessed and consumed) for the ruling (and chattering) classes.
You have to also consider the money supply and creation of commercial credit in the system. If the currency was a true stable store of value, the savers would be rewarded. Over time, the value of their money would purchase more due to innovation and reductions in price.
Historically, before the Gold Reserve Act of 1933, the one ounce double eagle gold coins were valued at $20. You could buy a good suit with just one of those coins. Fast forward to the present, if you take a current double eagle one ounce gold coin that is produced today, you can still buy a good suit with it.
Historically, before the Gold Reserve Act of 1933, the one ounce double eagle gold coins were valued at $20. You could buy a good suit with just one of those coins. Fast forward to the present, if you take a current double eagle one ounce gold coin that is produced today, you can still buy a good suit with it.
They track "average hourly earnings" which leaves out a number of non-monetary benefits, such as
* health + dental + vision insurance
* 401(k) matching
* ESPP
* other stock-based compensation, such as options
* number and flexibility of vacation days (i.e. if someone didn't get a raise, but got 5 extra vacation days, it certainly has value for them)
* free food, massage, yoga on premises, etc.
Tracking average hourly earnings also means that $1 annual salary CEOs such as Mark Zuckerberg or Larry Page are dragging down averages quite a bit. Every startup that pays sub-market salary in exchange for a generous options package is also dragging such average down.
* health + dental + vision insurance
* 401(k) matching
* ESPP
* other stock-based compensation, such as options
* number and flexibility of vacation days (i.e. if someone didn't get a raise, but got 5 extra vacation days, it certainly has value for them)
* free food, massage, yoga on premises, etc.
Tracking average hourly earnings also means that $1 annual salary CEOs such as Mark Zuckerberg or Larry Page are dragging down averages quite a bit. Every startup that pays sub-market salary in exchange for a generous options package is also dragging such average down.
Not just America. In Canada too salaries have been flat forever. I work at one of our big three telcos and we were told last year that nobody is getting a raise for at least the next 3 years. Like, none of my costs of living are going to go up in the next three years either?
http://globalnews.ca/news/3531614/average-hourly-wage-canada...
http://globalnews.ca/news/3531614/average-hourly-wage-canada...
Sales is a science. The writer is doing a great job of categorizing "objections" to the sale. That's terminology that any trained salesperson should understand.
This categorization helps the salesperson do two things: - De-prioritize leads whose objections they're unlikely to overcome - Craft responses to objections they are likely to overcome and prioritize these leads
In this particular case they're unlikely to convince a soon-to-retire or luddite vet -- they should de-prioritize these, maybe put them in the CRM to ping in six months to see if anything has changed. They should also be aware that their target market doesn't include these vets, so if the proportion is high enough they might want to find a different market.
For the others, it seems they're already crafting responses to the objections - presumably they'll get a sale fairly soon if the market is big enough.
This categorization helps the salesperson do two things: - De-prioritize leads whose objections they're unlikely to overcome - Craft responses to objections they are likely to overcome and prioritize these leads
In this particular case they're unlikely to convince a soon-to-retire or luddite vet -- they should de-prioritize these, maybe put them in the CRM to ping in six months to see if anything has changed. They should also be aware that their target market doesn't include these vets, so if the proportion is high enough they might want to find a different market.
For the others, it seems they're already crafting responses to the objections - presumably they'll get a sale fairly soon if the market is big enough.
so what are the chances that a significant portion of the population was being paid more than they are worth? Whether because of skill set or simply the industries are adversely affected by more competition?
there are certainly people getting raises, so is this limited to specific industries, regions, or other category? Is there a break out where raises are occurring versus where they are lacking?
anecdotally, personally I have no friends in my circle who made mention of no raises. poor raises sure, but that is always relative to expectations
there are certainly people getting raises, so is this limited to specific industries, regions, or other category? Is there a break out where raises are occurring versus where they are lacking?
anecdotally, personally I have no friends in my circle who made mention of no raises. poor raises sure, but that is always relative to expectations
This is all temporary - as the fed raises rates, we'll finally get back to 'normal'. This is exactly the fed playbook.
Because Republican state legislatures are keeping minimum wages down.[1]
[1] http://www.foxnews.com/us/2017/07/12/minimum-wage-hikes-by-c...
[1] http://www.foxnews.com/us/2017/07/12/minimum-wage-hikes-by-c...
Profits ?
Any ideas for a tax system that makes raising wages attractive?
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"This state of things has left analysts stumped. For nearly a decade, the Federal Reserve has kept interest rates at extraordinarily low levels in order to initiate growth and rising demand, inflation, and ultimately higher wages. But the higher wages have been stubbornly slow to materialize."
Interest rates have been dropped into the ground, and it hasn't increased investment(growth). We have the highest savings in the history of capitalism and the lowest level of investment.
This is the wheel of capitalism literally coming to a halt because the oligarchs are staring each other down waiting for someone to go first.
And I think there is a lot to be said about Wall Street leaching most of the investors' money because it promises better returns than actual investment into actual things with utility.
Wall Street is 'supposed' to be the mechanism for recycling profits into investments so that this wheel keeps spinning. Does anyone honestly still believe it's functional?