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Re: On the fast track to doom

Unread postby Outcast_Searcher » Thu 26 Jul 2018, 13:25:01

Outcast_Searcher wrote:
Pops wrote:What part don't you get?
Real wages were catching up, now not so much.


The part I am objecting to is the first chart you had had a big negative number on the right scale, and no context to explain that. So it looked like it was showing wage loss, where wage gains have been the norm.

So it's not about real wage growth slowing (my numbers showed that to be the case and I agree with that), it's that the first chart shown, in the context of the numbers I could see, looks to be flat out very wrong.

By the way, since the trend in real wage gains was occurring for nearly 2 years before Trump got elected, that certainly doesn't look like a trend that can be completely blamed on Trump. I'm not claiming his policies are helping any, BTW -- just looking for a balanced analysis of the issue.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: On the fast track to doom

Unread postby Pops » Thu 26 Jul 2018, 14:01:13

yeah obviously unclear if you misunderstood, my motto is if you have to explain it it was a fail —luckily I stole it so only get part blame, LOL

Just to review, the title was "change in real wage since 06" the plot showed wages, though still negative compared to 06, creeping back up, then a drop back.

anyway...
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Re: On the fast track to doom

Unread postby dohboi » Sat 28 Jul 2018, 14:35:49

At the risk of drifting further off topic:


Image

https://www.epi.org/publication/chartin ... tagnation/
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Re: On the fast track to doom

Unread postby Outcast_Searcher » Sat 28 Jul 2018, 15:22:15

Pops wrote:yeah obviously unclear if you misunderstood, my motto is if you have to explain it it was a fail —luckily I stole it so only get part blame, LOL

Just to review, the title was "change in real wage since 06" the plot showed wages, though still negative compared to 06, creeping back up, then a drop back.

anyway...

Thanks for the explanation. i understand what it shows. But what it shows is BOGUS re the solidly negative cumulative wages vs. 2006 part.

When real wages are increasing faster than inflation almost every single year since 2006, then they are NOT strongly negative since 2006 -- ever, much less recently.

The other chart you showed and the chart I pointed to both show the real wages persistently rising except for part of 2008-2009, consistent with many aspects of the economy in the past dozen years.

I don't see how this is "misunderstanding" It is simple arithmetic.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: On the fast track to doom

Unread postby Outcast_Searcher » Sat 28 Jul 2018, 15:30:40

dohboi wrote:At the risk of drifting further off topic:


Image

https://www.epi.org/publication/chartin ... tagnation/

No doubt productivity has been outrunning wages for low skilled jobs in recent decades.

The labor market doesn't care about how much productivity has advanced (or not) in recent years or decades -- it cares, like most markets, about the economics of supply and demand.

Communication and computing and automation technology exploding has allowed much of the labor market to become global -- because now people can compete globally to a large extent for all but the highest skilled jobs.

Some other countries are trying to deal with that by better educating their workforce, and having regulations to promote getting their workers willing to make the effort the skills they need to compete. Countries like Germany and the Scandanavian countries come to mind (re decent documentaries I've seen on this, for example).

Good policy might help a lot. Complaining or pointing out that supply and demand for labor has shifted relative to productivity growth simply will not.

dobhoi, I'm NOT trying to give you a hard time for posting this. It's accurate (re the big picture). My concern is endless bleating about it by various groups to score political points isn't productive at ALL, except to try to gain more votes. This goes for all political viewpoints.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: On the fast track to doom

Unread postby kublikhan » Sat 28 Jul 2018, 16:12:19

Pops wrote:Without immigration we're in the same boat as Japan.
I think you need to check your data again. Japan's demographics are in a much more precarious state than the US even if the US halted immigration. Japan has a lower fertility rate than the US and an older population. Even including immigration into Japan, it's population is still projected to shrink considerably.

Japan has entered a vicious cycle of low fertility and low spending that has led to trillions in lost GDP and a population decline of 1 million people, all within just the past five years. If left unabated, experts forecast severe economic downturn and a breakdown in the fabric of social life.

The demographic time bomb in action
Economists have a name for countries that contract because of these swirling forces: "demographic time bombs." In these nations, falling spending shrinks the economy, which discourages families from having kids, which shrinks the economy further. Meanwhile, people are living longer than ever before. "An aging population will mean higher costs for the government, a shortage of pension and social security-type funds, a shortage of people to care for the very aged, slow economic growth, and a shortage of young workers." Demographic time bombs are hard to defuse because they form over years, sometimes decades.

Compared to other countries Japan's case is extreme, particularly as it pertains to aging. Adult diapers have outsold baby diapers in Japan for the last six years, and many jails are turning into de facto nursing homes , as Japanese elders account for 20% of all crime in the country. With no one else to care for them, many reoffend just to come back. Stealing a sandwich can mean two years of jail time, but it also means two years of free housing and meals.

Tokyo University's Yoshida says the most critical fact is death rates now fall well below birth rates. People just don't seem to be dying. The elderly now make up 27% of Japan's population. In the US, the rate is only 15% . Experts predict the ratio in Japan could rise to 40% by 2050. With that comes rising social-security costs, which the shrinking younger generations are expected to bear.
Japan's fertility crisis is creating economic and social woes never seen before

According to the 2015 Population Census the total population of Japan in that year was 127 million. Based on the results of the medium-fertility projection, Japan is expected to enter a long period of population decline. The population is expected to decrease to around 111 million by 2040, fall below 100 million to 99 million in 2053, and drop to 88 million by 2065. Based on the low-fertility projection, the total population is expected to fall below 100 million in 2049 and to decline to 82 million by 2065.

Population Age Composition
Looking at the proportion of elderly out of the entire population, the share will increase from the current level of 27% as of 2015, meaning that more than one in four people in Japan will be elderly. Later on, by 2036, 33% of the total population, corresponding to one in three people, will be elderly, and 50 years after the start of projection period, in 2065, the elderly will account for no less than 38%, i.e., one in 2.6 people, according to the medium-fertility projection.

The total fertility rate of the same definition as the Vital Statistics, whose statistic value was 1.45 in 2015, will be expected to gradually drop until it reaches 1.42 in 2024, whereupon it will increase slightly to 1.43 in 2035 and 1.44 in 2065.
Population Projections for Japan (2017): 2016 to 2065

Code: Select all
Country  Total Fertility Rate
Japan    1.41
EU       1.61
US       1.81
Total Fertility Rate

Code: Select all
Country  % of population over 65 years old
Japan    27%
EU       20%
US       15%
Population ages 65 and above (% of total)
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Re: On the fast track to doom

Unread postby Pops » Sat 28 Jul 2018, 20:48:53

Outcast_Searcher wrote:
Pops wrote:Just to review, the title was "change in real wage since 06" the plot showed wages, though still negative compared to 06, creeping back up, then a drop back.

anyway...

Thanks for the explanation. i understand what it shows. But what it shows is BOGUS re the solidly negative cumulative wages vs. 2006 part.


I'm not going to dig up another source, here is a different view including methodology.

Since 2006, wages have risen 12.9 percent overall in the US. But when you factor in inflation, "real wages" have actually fallen 9.3 percent. In other words, the income for a typical worker today buys them less than it did in 2006. The PayScale Real Wage Index incorporates the Consumer Price Index (CPI) into The PayScale Index (which tracks nominal wages) and looks at the buying power of wages for full-time private industry workers in the U.S.

https://www.payscale.com/payscale-index/
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Re: On the fast track to doom

Unread postby Pops » Sat 28 Jul 2018, 20:58:03

kublikhan wrote:
Pops wrote:Without immigration we're in the same boat as Japan.
I think you need to check your data again. Japan's demographics are in a much more precarious state than the US even if the US halted immigration. Japan has a lower fertility rate than the US and an older population. Even including immigration into Japan, it's population is still projected to shrink considerably.

Thanks for the effort Kub, good stuff. I was a perhaps overly zealous. But my point remains,

The standard economic case for immigration is based on population aging. U.S. fertility rates are below replacement level, and the native-born population is aging steadily. That means that if native-born Americans are going to retire comfortably, the country needs immigrants, especially those with skills. Taxes paid by immigrants help support health care and social services for native-born Americans. Immigrants increase the pool of buyers for houses and stocks owned by old people. This saves many of the native-born from struggling in their golden years.

...This isn’t just an academic issue, though. In order to maintain its position as the world’s leading economy, the U.S. must avoid the ills of a shrinking market that now plagues countries in Europe and East Asia.

https://www.bloomberg.com/view/articles ... immigrants
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Re: On the fast track to doom

Unread postby kiwichick » Sun 29 Jul 2018, 01:43:56

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Re: On the fast track to doom

Unread postby Outcast_Searcher » Sun 29 Jul 2018, 02:17:46

Pops wrote:
Outcast_Searcher wrote:
Pops wrote:Just to review, the title was "change in real wage since 06" the plot showed wages, though still negative compared to 06, creeping back up, then a drop back.

anyway...

Thanks for the explanation. i understand what it shows. But what it shows is BOGUS re the solidly negative cumulative wages vs. 2006 part.


I'm not going to dig up another source, here is a different view including methodology.

Since 2006, wages have risen 12.9 percent overall in the US. But when you factor in inflation, "real wages" have actually fallen 9.3 percent. In other words, the income for a typical worker today buys them less than it did in 2006. The PayScale Real Wage Index incorporates the Consumer Price Index (CPI) into The PayScale Index (which tracks nominal wages) and looks at the buying power of wages for full-time private industry workers in the U.S.

https://www.payscale.com/payscale-index/

OK, so they're using their own methodology, which to me doesn't mean "real wages" like the standard sources mean real wages. If you torture data enough, it will "confess". Lies, damn likes, and statistics, etc.

That's probably why their numbers look so different than sources like the FRED you used, my Trading Economics source, etc.

We could also look at something like shadowstats and claim that inflation is absolutely monstrous over time in the US -- until we look at actual prices of things and see that the claim is ludicrous, overall.

...

I tried Googling "real wage growth us" and got some decent looking hits.

First one from the brooking institution:

https://www.brookings.edu/research/thir ... ge-growth/

Fact 9: Inflation-adjusted wage growth was higher from 2007 to 2017 than it was during previous business cycles.
By comparison with the previous three business cycles, inflation-adjusted wage growth since 2007 has been relatively strong. It is slightly ahead of the growth seen during the 1990s or 2000s business cycles and is notably higher than growth in the 1980s. Figure 9a plots year-over-year growth in real average hourly earnings for production and non-supervisory workers, showing trend growth separately for 1981–90 (-0.37 percent), 1990–2001 (0.71 percent), 2001–7 (0.31 percent), and 2007–17 (0.83 percent). It is important to note that this recent real wage growth followed years of stagnation and has been accompanied by rising inequality, likely making it feel insufficient to many workers.


The second source is my Trading Economics source. I like that source because they seem to consistently provide good data, and use comprehensible methodologies.

https://tradingeconomics.com/united-states/wage-growth

The third source is a BLS, only showing 2017 and 2018 data, which looks fairly flat overall. No help to assess growth from 2006 though.

The fourth source is FRED data. So looking at the first graph, quarterly, seasonally adjusted we see full time inflation adjusted (Real) earnings for wage and salary workers age 16 and up increase from an index of 332 in Q1 2006 to 351 in Q2 3018.

That's only a 5.7% real increase, but it's a real increase, not a big decrease over that period.

https://fred.stlouisfed.org/series/LES1252881600Q

...

At least now I understand why people so commonly claim that wages have drastically dropped over time, etc. Sources matter a lot.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: On the fast track to doom

Unread postby Newfie » Sun 29 Jul 2018, 04:59:00

One can view Japan as “in trouble” or as beginning the long road to recovery. I think they are an interesting model to watch. I’m glad the topic was brought up.
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Re: On the fast track to doom

Unread postby Pops » Sun 29 Jul 2018, 10:53:23

You're right OS, that payscale chart is proprietary. I didn't realize that, my bad.

Here's Brookings that you mentioned

Image

Some other interesting ones from there:
This surprised me, looking at most of the "The 1% is raping the proles" productivity charts it looked like labor's share was finally rising, this looks like it was falling moderately but then plunged during the oughts

Image


And this one showing that education premium growth has slowed affecting upward mobility. I was ranting about this somewhere...

Image

Sorry, it won't let me link to tinypic
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Re: On the fast track to doom

Unread postby onlooker » Sun 29 Jul 2018, 16:56:40

https://www.theguardian.com/commentisfr ... bert-reich

Not even the current low rate of unemployment is forcing employers to raise wages. Contrast this with the late 1990s, the last time unemployment dipped close to where it is today, when the portion of national income going into wages was 3% points higher than it is today.

What’s going on? Simply put, the vast majority of American workers have lost just about all their bargaining power. The erosion of that bargaining power is one of the biggest economic stories of the past four decades, yet it’s less about supply and demand than about institutions and politics.

Starting in the 1980s and with increasing ferocity since then, private-sector employers have fought against unions
Two fundamental forces have changed the structure of the US economy, directly altering the balance of power between business and labor. The first is the increasing difficulty for workers of joining together in trade unions. The second is the growing ease by which corporations can join together in oligopolies or to form monopolies.
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Re: On the fast track to doom

Unread postby kublikhan » Sun 29 Jul 2018, 17:41:12

Newfie wrote:One can view Japan as “in trouble” or as beginning the long road to recovery. I think they are an interesting model to watch. I’m glad the topic was brought up.
If that is your view then you should classify nearly all developed nations as on the long road to recovery. After all, most of the OECD nations have fertility rates below replacement values, and had below replacement fertility for decades:

Across almost all of the OECD, current fertility rates are well below those needed for population replacement (Chart SF2.1.A). In most OECD countries TFRs sit somewhere between 1.4 and 1.9 children per woman, with rates falling as low as 1.3 in Italy and Spain, and 1.2 in Korea. Only three OECD countries (Israel, Mexico and Turkey) have a current TFR at or above the 2.1 children per woman needed for population replacement. Below-replacement-rate levels of fertility are not new. Chart SF2.1.A shows that while in 1970 many OECD countries had TFRs around or above 2.1, by 1995 most had rates well below replacement level.
Fertility rates
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Re: On the fast track to doom

Unread postby Newfie » Sun 29 Jul 2018, 18:33:59

Yes and no. If they stuck to the replacement population then that would be correct. But to a greater or lessor extent they are brining in immigrants to fill the baby gap.
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Re: On the fast track to doom

Unread postby Newfie » Sun 29 Jul 2018, 19:16:56

The “problem” isn’t made better by AI. The “problem” is not enough young workers contributing to the social system to pay for seniors benefits. It’s also not enough young uns to consume and keep the economy going. AI just puts even more folks out of work and on the government dole.
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Re: On the fast track to doom

Unread postby kublikhan » Sun 29 Jul 2018, 19:27:27

Newfie wrote:Yes and no. If they stuck to the replacement population then that would be correct. But to a greater or lessor extent they are brining in immigrants to fill the baby gap.
Immigration is not the main reason their populations continued to grow despite lowering their fertility to below replacement levels. The main reason is population momentum. IE, it takes a few generations for fertility rate changes to translate into population growth changes.

Population momentum is a typical consequence of the demographic transition. Even if a high-fertility, high-growth population experiences an immediate drop in fertility to replacement rate, that population will continue to grow for several decades.

Example:
Assume that a population has three generations: First (oldest), Second (child bearing), and Third (children). Further assume that this population has a fertility rate equal to four (4). That is, each generation is twice the size of the previous. If the population of the first generation is arbitrarily set at 100, the second is then 200, and the third is 400. The spreadsheet below shows the initial population in the first row.

Population momentum example
Code: Select all
Time    Gen 1         Gen 2            Gen 3                Gen 4                Gen 5           Notes
0       100 (old)     200 (fertile)    400 (children)                                            Population: 700
                                                                                                 Fertility Rate: 4
1       dead          200 (old)        400 (fertile)        400 (children)                       Population: 1000
                                                                                                 Fertility Rate: 2
2       dead          dead             400 (old)            400 (fertile)        400 (children)  Population: 1200
                                                                                                 Fertility Rate: 2

First note that the second and third generation of the initial population are each twice the size of the previous. The total of the initial population is 700 = 100 + 200 + 400.

Then assume that at the end of the third generation, fertility falls to replacement (for simplicity assume that to be two). Now take the population forward in time to the next generation, line two of the spreadsheet. The first generation dies, and the new generation, the fourth, is equal to the third (because now fertility is replacement). Repeat the process again to reach the fifth generation (line 3 in the spreadsheet). The fifth generation is again equal to the fourth and now the population’s three generations are equal, and the population has reached equilibrium.

The initial population has grown from 700 to 1,200 even though fertility dropped from four to replacement (two) at the end of the third generation. Population momentum carried the population to higher levels over the next two generations.

Implications of Population Momentum
Population momentum has implications for population policy for a number of reasons.

1. With respect to high-fertility countries (for example in the developing world), a positive population momentum, meaning that the population is increasing, states that these countries will continue to grow despite large and rapid declines in fertility.

2. With respect to lowest-low fertility countries (for example in Europe), a negative population momentum implies that these countries may experience population decline even if they try to increase their rate of fertility to the replacement rate of 2.1. For example, some Eastern European countries show a population shrinkage even if their birth rates recovered to replacement level. Population momentum can become negative if the fertility rate is under replacement level for a long period of time.

3. Population momentum shows that replacement level fertility is a long-term concept rather than an indication of current population growth rates
Population momentum
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Re: On the fast track to doom

Unread postby ralfy » Sun 29 Jul 2018, 21:33:36

pstarr wrote:AI creates more wealth (not less) by replacing inefficient human foibles. Robots don't take breaks,call in sick or demand union-scale wages. Robots don't require that oil/coal/NG be converted to food. Robots work 24/7/365 and only gobble electricity.

"Young workers" aren't necessary when automation substitutes for human labor and intellect. Why are we complaining about leisure? Makes no sense.


Human workers are expected to buy what is produced by robots, and businesses expect that because that's the only way they get returns on investing in automation in the first place. But the money used by human workers to buy goods and services comes from income received from work.
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