Nominal wages are basically never lowered, but real wages can be easily lowered by giving out annual raises that are below inflation. Since 2020 the CPI is up more than 18%. [1] So if you're not earning more than 18% than you were then, you're receiving a lower real wage.
This is one of the many reasons inflation is such a horrible system. It makes it really easy to invisibly abuse labor. People are trained not to spit on "gifts", but if you received a 2% raise each of the past 4 years, your real wages would now be down by nearly 10%.
>but real wages can be easily lowered by giving out annual raises that are below inflation. Since 2020 the CPI is up more than 18%. [1] So if you're not earning more than 18% than you were then, you're receiving a lower real wage.
If you looked around on the same st louis fed site, you'll see that real (ie. inflation adjusted) wages has not gone down.
Yeah real wages are the same as they were 4 years ago. At the same time real returns from the stock market are up 10%. [1] And this isn't an isolated event. Since 1979 (not cherrypicking, that's the first date of the FRED table you linked) real wages are up 10%, and real returns from the stock market are up 3200%.
There's something just not quite right about these things. Imagine telling somebody in 1979 that, with the current system, in 50 years they'd be earning 10% more but the stock market would be up 3200% more! Nobody would accept this (well unless they had a ton of money to dump into the markets), but with inflation and everybody thinking "wow I'm earning thousands more than last year - think of where I'll be in 20 years!", all of this is made invisible.
>At the same time real returns from the stock market are up 10%. [1] And this isn't an isolated event. Since 1979 (not cherrypicking, that's the first date of the FRED table you linked) real wages are up 10%, and real returns from the stock market are up 3200%.
This comparison makes no sense. Wages describe a flow of money. Stock prices describe a lump sum amount of money. They're not comparable.
>Imagine telling somebody in 1979 that, with the current system, in 50 years they'd be earning 10% more but the stock market would be up 3200% more!
This would basically always be the case unless you have runaway inflation. Any sort of investment is subject to compound interest. Even if labor and capital both grew at 10%, capital would outpace labor because it has compound returns. It might be tempting to add compound returns to labor as well, but that'd just be hyperinflation.
The 3200% is not a compound return calculation - it's simple the value of the real growth in value of the market, which is roughly proportional to the growth in earnings of those companies - things like PE earnings have become stupid in modern funny money times, but it still a reasonable ballpark. A compounding investment from 1979, under any strategy, would be worth way more than 3200% today.
Inflation is a way to raise taxes without actually raising taxes. Gov't just creates more money. Gov't pays its bills, people's spending power declines, same as if they were taxed.
in order for inflation to be a tax, the tax brackets have to remain static so that your inflation wages grow without giving you any new purchasing power. Your taxes, however, gets bumped up to the new marginal rate, and thus the gov't raises more taxes silently.
Inflation by itself cannot help raise more taxes, because the spending by gov'ts will equivalently increase due to inflation.
Government spending itself drives inflation. When the government wants to raise money it sells treasuries that are largely purchased by organizations whose money was not in regular circulation. The most obvious example of this is the Federal Reserve who is (or was - they planned to reduce treasury holdings and I have not checked the latest numbers) the largest "private" holder of US treasuries.
The government then takes this money and sends it into circulation, which increases inflation leading to a reduction in spending power of people. It's the same outcome as a tax increase (government has more, people have less), without the negative PR typically associated with raising taxes, particularly this sort of tax which tends to hurt low earners the most as their discretionary income is a far smaller percent of their total income than for high earners, and they also tend to have far less invested in inflation resistant vessels.
Inflation is a tax because capital gains taxes aren't inflation adjusted. The higher inflation, the higher your nominal capital gains are, and you get taxed on nominal gains, not real gains.
That is a reason inflation sucks, but there are many reasons for why alternatives suck even more. Deflation strangles the economy, while basing your monetary supply off the amount of metal you dig out of the ground results in a tag-team of uncontrollable deflation and inflation taking turns.
Unless you're planning on doing away with money entirely, it's the best of all possible worlds.
The American economy was more stable and grew at a higher rate in the 100 years before persistent inflation policies were adopted than in the 100 years after.
It hasn't been 100 years since it left the gold standard, and in the hundred years prior, the country was industrializing and electrifying and experiencing exponential population growth, and picking all the other low-hanging fruit of easy economic gains.
But yes, if we focus on a single cherry-picked difference between two dramatically different time periods, we can spin any spherical-cow narrative we want.
Just have to read some history. A great example is the Gilded Age and what followed after the peak.
Why didn't the grand masters like Rockefeller, Carnegie, JP Morgan control where the story went? How did the system prop up an Ida Tarbell, Upton Sinclair or Teddy Roosevelt? Similarly when interesting characters like that don't emerge eg China or Russia the story goes in very different directions for the people who run Companies. Companies and what they are upto can look very mesmerizing but they really aren't. The British East India Company had more resources and land than the British Govt yet where are they today?
Firms (or any large grouping) and what ever they believe, are a part of much larger systems. They are not The System but part of the Ecosystem.
People inside and outside the firm forget that all the time. History is full of examples of what happens after that. Another great example is why did Central Banks emerge all around the world? What do you think was happening before when the power to issue Currency was in the hands of individual Banks or Kings?
If AI does replace jobs massively we will get UBI type systems just like we got Central Banks whose goal is Ecosystem Stability.
> If AI does replace jobs massively we will get UBI type systems
wishful thinking. A more viable and realistic alternative is to let those who are useless post-ai to die.
UBI only works if the production of resources is "free", and i do not foresee such a future until the entire globe is united under one gov't, and we become a type I civilization capable of harvesting all energy on the planet.
Companies will pay as much as the market requires them to, and they will even illegally collude to manipulate that market (eg Steve Jobs) and strive to atomize workers against coordinating for better pay and conditions (while themselves coordinating via C-level social groups, investors and wage & benefits consultancies for market research data and guidance)
I don't think that's an accurate framing. Businesses and employees are inherently in a relationship where they want pay to go in different directions, because they don't have the same shared interest. Exploitative labor practices are real, but it's not reasonable to argue that all lowering of labor costs is unfair, any more than it would be reasonable to argue that any employee getting his salary increased is unfair.
At this point in time in most US employment sectors, I believe employers have the upper hand over employees and are squeezing them. Under a different set of laws and courts, the balance could shift the other way. But we have seen a massive wealth transfer from the poor to the wealthy and from the young to the old over the last 40 years and the labor market in part reflects the inequality that wealth transfer creatwd.
And the US just voted back in the political party whose goals include increasing inequality, helping employers keep the upper hand, squeezing workers, and accelerating that transfer from the poor to the wealthy. It’s going to get much worse before it even has a chance to get better.
> High-Tech Employee Antitrust Litigation is a 2010 United States Department of Justice (DOJ) antitrust action and a 2013 civil class action against several Silicon Valley companies for alleged "no cold call" agreements which restrained the recruitment of high-tech employees.
> The defendants were high-technology companies Adobe, Apple Inc., Google, Intel, Intuit, Pixar, Lucasfilm and eBay, each of which was headquartered in Silicon Valley, in the southern San Francisco Bay Area of California.
> The civil suit was filed by five plaintiffs. It accused the tech companies of collusion between 2005 and 2009 to refrain from recruiting each other's employees.
oldgradstudent on Dec 26, 2023 | parent | next [–]
But why a civil suit?
This is a criminal matter. It should not be too hard to prove criminal intent :
> A few months later, Schmidt instructed a fellow exec not to discuss the no-call list other than “verbally,” he wrote in an email, “since I don’t want to create a paper trail over which we can be sued later?”
bryanrasmussen on Dec 26, 2023 | root | parent | next [–]
ok well obviously "why not both" would be the rejoinder, but I'm not actually sure I follow the reasoning that this is a criminal law matter?
greenyoda on Dec 26, 2023 | root | parent | next [–]
There was both a civil suit (brought by five employees) and a criminal complaint brought by the DOJ. The criminal complaint was about a violation of antitrust law:
> On September 24, 2010, the United States Department of Justice Antitrust Division filed a complaint in the US District Court for the District of Columbia alleging violations of Section 1 of the Sherman Act. In US v. Adobe Systems Inc., et al., the Department of Justice alleged that Adobe, Apple, Google, Intel, Intuit, and Pixar had violated Section 1 of the Sherman Act by entering into a series of bilateral "No Cold Call" Agreements to prevent the recruitment of their employees...
oldgradstudent on Dec 26, 2023 | root | parent | next [–]
Complaint against companies, not against individual actors for some reason. The final judgements in both resulted in meager compensation and achieved zero deterrence.
Why haven't Eric Schmidt or Steve Jobs spent a single day in jail or become felons? The DOJ didn't even try.
Without looking at the actual report, it is a pretty meaningless statistic. Maybe it's more significant by job category, but if hiring can either go up or down, and you say about half think it's going down, you haven't suggested a non-trivial conclusion.
Everyone in the world knows that with current AI, you need probably a quarter of content writers to deliver the same output.
To pretend that there is a possibility that there would be no effects on hiring is foolish. Not saying it would increase unemployment, just shift the work.
AI is death for people whose primary skillset was being proficient in modern western hemisphere English grammar, because now you can input a few messy sentences and have it output grammatically perfect, if not stylistically perfect, English.
It’s irrelevant whether they were writing filler or not, they had jobs, and someone was paying them, which means their produce had some value, both to the publisher and the consumer.
Otherwise, they’d simply be cut at some point, not replaced.
By this reasoning mob enforcers produce value to the society too. They have jobs, get paid and so on. So no, it's not true. Just because someone was paid it does not mean they produced some value.
The filler might have been a way to trick consumers into paying attention to ads. This is valuable for the company with the ad, but not the consumer.
> By this reasoning mob enforcers produce value to the society too.
I didn't write that they were producing value to society. Nice way to misrepresent an argument.
Also, mob enforcers produce value to their employers, which is who pays them. Who pays the writers making filler? They're the ones who see the value in it, what does society have to do with their arrangement?
As a small business (5 person) owner AI increased our productivity and our margin so I look forward to hiring more people. There is something strange with big companies only looking to reduce staff, are we unofficially in a recession?
Also no one knows what the main events/news drivers will be in 5 years: climate, water, energy, war, peace? AI and economics, employment are way too little of concern at this point.
I've had "AI" regurgitate reddit and 4chan threads verbatim to me. What happens when this mine of free data runs out? (Basically it already has, in no small part due to the effects of "AI" itself.) Will we need to actually pay creators for content? Seems economically unfeasible, the cost of content creator + AI is more than just hiring the content creator directly.
The more compute you have to train your models the better the models become.
I've been working on a family of (new) deep learning models which outperform everything else that's been published, at between x1e3 to 1e9 the compute on the same data. If I had the GPT4 training cluster I'd be able to run it on cifar10 without having to make sacrifices, yes 32x32 color images solved with a trillion parameters.
They also predicted that the personal computer on everyone's desk, and every major software category, etc. would reduce employment. It just made more work
To pretend otherwise is foolish.