Why is this a surprise, Q4 of 2022 was the largest group of Boomers retiring and if you look at the demo graphics we're not going to have a labor surplus till 2040. The working world needs to kick back and enjoy because instead of the Boomers and their massive workforce driving down wages there's going to be a demand for workers and wages will have to go up, there aren't any other choices. Lastly, if you look at the open jobs 5MM of the are in food service and retail, two categories that were traditionally filled by the young and the uneducated and that demo is dwindling so don't be surprised if that number just gets bigger. Immigration could help us but Congress can govern so we can't count on it.
What happens if a wage/price spiral hits right as Boomers are moving their retirement savings into less volatile, more liquid investments to live off of?
Could they see the real value of their retirements evaporate en masse?
Ahh yes, we should really stop sending trucks and grabbing people with a big cartoon net and dragging them here against their will to do menial jobs they would never choose to take of their own volition.
I'm criticizing your use of the words "import" and "force", because economic migrants are people and not things to be imported. There are also so many people desperate to come here to do literally any job that it's laughable to talk about them being coerced to do so. Have you ever talked to an economic migrant?
It may not be so far from the truth. As an example Canada has a temporary foreign worker program that has been abused by employers to keep wages low, work conditions abysmal, and threaten the workers with sending them back home to ensure compliance under these conditions.
The US, I believe, similarly uses its ample illegal labor supply in similar ways.
A similar argument can be made about the H1-B program. I don’t know if this is still the case, but a few years ago the stats on all H1-B visa-holders showed they were paid on average around $80K despite mostly being in technical roles at F500 companies. The stats are openly available from the relevant US gov website.
I don’t doubt that companies have abused H1-B as a means of spending less on specifically SWE talent.
I would wage a hefty sum the vast majority (>90%) are beyond thrilled to be coming to the US. They are willing and WANT to come. You make it sounds like they are being captured and transported on slave ships.
Given the choice most would rather go to Canada than the US, better worker rights, better social safety net and better health care. Further we need certain demographic, we need young workers -post school, that will work and pay into the system for the next 30-40 years. We don't want people we'll have to support, bringing in workers for Walmart where the first thing they do is move into subsidized housing and sing up for Medicaid and SNAP is not the type of immigration that will help this country.
I took a quick look. Canada seems to accept around 430k legal immigrants and had another 30-40k illegal crossing in 2022.
The US seems to have admitted 1 million between July 2021 and July 2022 so lets say somewhere around 1 million legal immigrants were accepted in 2022. Illegal crossing were around 2.7 million for 2022.
I take a look at these numbers I scratch my head at your statement. The US has orders of magnitude more illegal crossings. In fact the US average for 1 month is 225k which is almost 6 times as high as the YEARLY average for Canada. The numbers are pretty clear about where they are going. Nothing is stopping those entering the US illegally from entering Canada illegally too. Yet I can't seem to find any numbers that support that idea that even a fraction of the ones entering the US want/try to go to Canada.
I agree with this, but I wonder if the stats aren’t biased a bit because it probably is harder for someone from Central America to get to Canada than the US. I mean you have to go through the US to get to Canada.
It sounds like, objectively, Canada is a better place to be if you’re an illegal immigrant (if you don’t mind the weather).
Ya I would agree the stats are probably biased based on the US border vs Canada's.
However at the same time it would not be difficult to travel from the southern US border to the US-Canada border. I would wager its easier than making the journey from south america to the Mexico-US border.
But being a better place does not always equate to more people wanting to immigrate there. If it did we would see more people coming to countries like Canada than the US. I think part of the major appeal of the US is the basically open southern boarder and very lax immigration law/policies. You have entire states that advertise they flout federal law and are a sanctuary state. That has to be a major major appeal for someone considering an illegal crossing. Basically you get to one of those states or cities and your likelihood of being deported drops significantly.
I am not super familiar with Canada's policy or system but based purely on numbers it seem like they keep a much tighter control on the number coming in.
True. Getting to CA once you are in the US is probably the easier part of the overall journey.
You probably can't consider yourself "safe" (in the baseball sense) by merely being in the US, you have to get out of Texas or Florida (if that's where you landed).
Exactly. A vast majority of the world would love to be able to choose to be in a shit job without healthcare in the US - does that mean we should remove all wage protections and deny healthcare to anyone making less than $250k a year?
I don’t think anyone is proposing forcing anyone to work a shit job. I do think that working in food service compares favorably to working in subsistence farming, shipbreaking, or being unemployed with no job prospects.
Why not give people the chance to make that call for themselves? And what’s the alternative? If you automate it all away, they’re still going to be farming and breaking ships.
Sure. But you’re not going to make up the difference just by increasing wages. Unemployment is at 3.4%—there’s not some huge glut of unemployed people waiting in the wings to clean offices at $20 an hour.
I guess I would rather my kids use that extra time for, I dunno, learning extracurriculars or rest. But sure. Now what about all of the retail, foodservice, manufacturing etc. jobs that can’t be done during after school hours?
For most of my lifetime people have been talking about a shortage of labor as baby boomers retire and people having fewer children. It didn't match reality as wages kept staying low year after year.
Now finally it seems to be happening, it'll be less affordable to get people to do your tasks or cook your food but overall it should make society more equitable.
I’m extremely surprised the forecast didn’t take demographics into account? What is going on? Is this just some excel that extrapolates a random change from the last reported number ?
The boomers weren't really the generation that failed to have children. The main issue atm is that zoomers are generally the children of gen X and while gen X did produce children, gen X was also a small generation because their parents were born during Great Depression when birth rates were depressed. So even though gen X produced ~2 children on average, there simply weren't enough of them to produce the same echo boom the boomers did with the millennials.
Millennials are the real toss-up at the moment. That generation had a systemic problem with youth unemployment that disrupted family formation and now the oldest of them are reaching the point of being too old to have children. However, the middle millennials and young millennials are still young enough to produce children and we've seen the birth rate tick up slightly over the last year as they finally have secure enough incomes to start making babies. This is only a modest gain though and it'll take decades for the children of millennials to be old enough to influence the labor market.
tl;dr this stuff has roots so deep that the people who 'created' the problem are probably not even alive anymore.
Don't forget housing and inflation related issues getting in the way of people starting families. Hard to prioritize that when you lack stable income, enough space, or major quality of life changes as a result of the added expense.
Kids are nice but -$250-500k you need to create the tax generation machine for the other boomers is a lot of money and methinks that should be reflected in the retirement benefits no? Why should the boomer who created the labor force that funds the other boomers not be allocated retirement such that they come closer to break even with the others on the investment?
This seems like a huge free rider problem. Either spend $250k plus taxes and raise the kid, or just spend taxes charged for other kids. The latter is far cheaper and thus the incentive is to not have any kids yourself while relying on others to have them so you can get that sweet sweet retirement money when the IRS man extracts it from them.
> "Flash forward two decades later, and the comparisons look similar. In 2010, men with children earned a median income of $40,947, and those without earned $29,904. Mothers earned a median income of $24,350, and those who didn't have children earned $24,244."
Now of course there are a lot of confounding factors here, but for an averaging of the median to a two-income household this means households with children earn "$65,297", while those without earn "$54,148".
And those increased incomes means a larger social security check to spend in their old age.
Wouldn't the appropriate comparison here be equal income earners with and without kids? The former paid a greater tax into social security, in effect, as they made the larger investment once you include raising the tax generation machine.
Is it fair to compare equal income earners with and without kids though? How much of each earners income is because of, or despite, having children? I think it would be better to compare not based on income, but on other demographic factors such as work locale, job duties, career trajectories, education, partner, etcetera. That would show to what extent having kids is a net benefit or liability.
Sure, but part of that, for men at least, is a direct financial benefit (the fatherhood bonus). Of course there's also the motherhood penalty. These things have to be factored into the equation.
People with children already have gotten lots of benefits over the years: child tax credits, public education paid for by the rest of society (including people who never had children), etc. It’s pretty entitled to now ask for extra social security too because you had kids when you were younger.
Lol you cannot possibly think the taxes you pay for other peoples kids is anywhere close to the cost you pay to raise a kid yourself subtracting the tax differential. They wouldn't be asking for more, they'd be asking to just not get so much less! You are not getting "extra" social security because you start in the hole -$200k+ paying into social security in the form of raising the earner who pays the boomers.
It seems entitled to free ride off that cost difference while still getting an equal share of the social security payment from the child of the boomers.
It doesn't cost poor people anywhere near $250k - $500k to raise a child though. This may be a median price to raise a child, but this median includes money spent by the upper middle class on their children along with genuinely wealthy families.
Childless retirees are probably less likely to lobby for things like reduced immigration and tariffs than retirees with children. Reduced immigration and tariffs boost the paychecks of retirees' children while making things more expensive for all retirees (including those who never had children). Is this fair?
Social security income is contingent on how much you paid into the system. Not how much your children pay into the system. What more workers add to the system is a decrease in supply-side inflation.
I think you may have some misconceptions about social security. It's funded by your kids. It's almost like a pyramid scheme, but not quite. It's a common misconception that the money you get is actually like some sort of direct investment that is stored or whatever from what you pay in. Actually what you pay in is going, amongst other places, straight to your retired parents and their kin.
When nobody has kids social security just dies. You get, in value, basically nothing for your retirement. Maybe some money is left but even then all you can buy with it is whatever is still being produced (very little if everybody is old) or already stored. Raising children is the single biggest investment/contribution in social security, and compared to someone who doesn't do that you basically start in the hole a six figure sum in the social security piggybank.
>Not how much your children pay into the system
I'm sorry but this is 100% incorrect. If our children don't pay into the system we get nothing. Social security is almost ENTIRELY dependent on how much our children pay into the system.
>It doesn't cost poor people anywhere near $250k - $500k to raise a child though. This may be a median price to raise a child, but this median includes money spent by the upper middle class on their children along with genuinely wealthy families.
Not to be snarky but I don't think you understand what median means. Upper crust wealthy, by definition, are not included in the median. Median would be the 50th percentile spender in effect.
If you want to argue that those who vote for or against immigration should be suitably adjusted, I think that is a seperate question than adjustment for raising the tax engines.
I know how the SS scheme works. But the money does not come from those who pay in afterward. It comes printed from the government. The money paid in by those who pay in afterward merely keeps the books somewhat balanced and inflation in check. As long as people and corporations are producing sufficient quantities of services and products for the general economy the SS tax could be abandoned without causing a problem for inflation or the ability of the already retired to afford those goods and services.
The argument in favor of seeing children as a net benefit to current retirees is that more children = more people to keep the economy running and to function as caregivers for those retirees.
Yeah, generally speaking the US does not incentivize its citizens to have kids. Any other first-world country will at least give you free healthcare and maternity leave. Some give paternity leave and let you work fewer hours (for proportionally-less pay) if you are a parent.
So if I have a child in the Netherlands, it costs me nothing (doctor checkups, delivery in the hospital, vaccinations, etc.), I get free PTO, and I get to go to a 4 or 3-day workweek.
If I have a child in the US, I have to pay my deductible/coinsurance on medical costs, probably still ends up being several grand at least, get no paid time off and will be lucky to get unpaid time off for more than a week or two, still have to choose between 40 hours/week working or unemployment/self-employment, and I get to wonder if my child will come home from school every day. Oh, and I get to make a 401k withdrawal to put them through college unless they are top of their class or really good at sports…
This is such a contentious topic in the US that my post was flagged for merely pointing out this kind of problem. The attitude is basically once you have the kid, get fucked and pay and then we'll tax the hell out of the kid thank you very much for your investment. It's incredibly easy to be "selfless" when the other guy is making the lions share of the investment and you still get your full share of social security receipts.
I haven't been here for very long, but it seems like a place that tries to be "better than reddit", and I do think in general the quality of the comments and discussions are higher, it's not just low-effort "you're wrong and you suck" stuff, but actual rhetoric. I like it, but as you've seen, some people will still be petty and do things like report comments they don't agree with. It's easier to ignore the comment and move on than to downvote it or report it. This is a website. Who the hell cares.
It's not entirely true, but "only poors have kids" and so I wouldn't be surprised if the majority of the SS budget comes from income earners with few or no kids.
This isn't a complete or healthy perspective. To address the former - childless people support a lot of things that benefit the next generation (schools, WIC, etc.) in their taxes. They do this because we as a society are better off for it. Additionally, while SS is funded by "children of boomers", the childless people also paid into it while working and are entitled to their share. There are also countless ways in which our society incentivizes couples w/ children; people without either pay more for their share of housing, fewer economies of scale in food, and a number of other expenses reduced for families.
Honestly, we need to stop thinking about "did I get mine" and think about the best solution for our civilization.
> "Does a boomer get any better retirement benefits if they raised a child?"
This is the sentiment you seem to want to express. Plenty of people have children without raising them. And vice versa for foster and adoptive parents.
Also, everyone who rents or owns housing pays taxes to support schools, WIC, and the like.
Plus the dependent tax breaks and tax refunds. Which happen early on, not later, and so have a greater value than retirement benefits which come later in life.
No one says "I'm gonna have a kid because it's cheaper than paying the taxes." It's cheaper to pay the taxes for WIC, etc. Than pay for a kid and slightly lower taxes for WIC etc.
The only persuasive argument I see here is the living longer bit, it's an interesting consideration I hadn't thought of.
A.I isn't good enough to do most jobs without oversight yet. There's also the question of legal responsibility.
In production replacing humans with robots only make sense in certain situations, either because of cost or due to lack of flexibility and abilities. I know a guy who works in a factory making juices boxes, not the content, the actual box. They have humans to quality control using their fingers, because the robots can't actually do it.
For white collar jobs, A.I will do the repetitive jobs, those that are easily automated using the current technologies. There is just much more work that there are people, and A.I still can't do most of it.
I do wonder what happens the day that A.I. becomes smarter than HR. What happens if you want to layoff 10% and the A.I. says: Sure, but those will all have to be from the management layer, or the business will suffer. Or if you in a regulated business won't be able to fill shifts legally.
Self-driving cars excites me for the same reason, what happens when the algorithms controlling the cars decides that the infrastructure in an areas is insufficient and you can't go where you want to because that would add to many cars to a given section of the road. Or it generates huge traffic jams because it's forced to keep a safe distance and there isn't actually an room on the road.
I do wonder what happens the day that A.I. becomes smarter than HR.
I don't think HR is dumb, per se, but that large, publicly traded corporations tend to focus on short term gains rather than what an AI might consider more reasonable long term gains. Such companies are also not above doing questionably legal things for this purpose - there's a lawsuit against Twitter for violating the US WARN act.
> Such companies are also not above doing questionably legal things for this purpose
True, but things have a tendency to become, shall we say: Extra illegal, if you've already been warned.
In many cases you can claim that you didn't know, or that you thought that your situation was somehow special. An A.I, with knowledge of labor laws will make such a claim problematic.
Fed interest rate policy is stimulating rather than slowing down the economy. They don't seem to realize this. We are at risk of getting into an recursive loop here.
1) Fed increases rates in an effort to reduce demand and slow economy.
2) Holders of federal debt instruments -the public- receive a raise every month
a) They spend more into the economy.
3) Economic indicators remain positive or increase ( see GDP, employment, prices, etc)
4) Fed thinks economy is still to strong
5) Goto 1
> 2) Holders of federal debt instruments -the public- receive a raise every month
That is not how raising the Federal Funds Rate works. Existing treasuries actually decrease in face value and only newly issued treasuries have the higher interest rate. If you own 10, 20, or 30 treasuries right now you're deeply in the red.
Point is that more cash is flowing from the Government to the private sector with every increase in interest rates by the fed. This is an indisputable fact. Since federal debt is at an all time high, this policy is pumping allot of money into the economy and stimulating it which is the opposite of what is intended.
Not really, since the Treasury still honors the interest of the bond. Just because someone values the purchase value lower doesn't invalid the interest rate. You just lose money if you sell it.
Exactly. You're mark-to-market red on your bonds, since if you tried to sell your 2%-yielding bonds in a market where new bonds yield 4% obviously your bond will be worth less than what you bought it for; but you'll still continue to receive those coupons at 2% for the lifetime of the bond.
This is a crazy take lol. The public is not receiving a rase from holding federal debt. Raising interest rates will not lead to more spending. Erdogan would be proud of this post
I think a huge point you are missing here is the whole supply and demand aspect. The whole point of raising interest rates is to reduce the demand of borrowed money. What made sense to borrow for at 1% interest may not make sense at 4.75%.
I myself was taking out margin loans in the 2010s at 1% and investing in dividend yielding stocks in the 4-5% range for a long time. I was never excessively leveraged, but it absolutely made sense to do so at that time. Nowadays, that's a really dumb bet. In fact, I have a lot of stuff in cash right now as I kind of wait and see where I feel the market is going, and as of this week its getting over 4% interest at IB, which is great.
Also, I think you are misunderstanding magnitudes here. Do you have stats on what percentage of federal debt is actually being held by US citizens? Joe Schmo is not sitting on piles of bonds.
For every borrower there is a "saver" on the other side. Any yes they are more wealthy generally. Raising interest rates is welfare for the rich. Nonetheless its allot of deficit spending into the economy which is stimulative especially considering the very high amounts of government debt instruments out there relative to GDP. You can find stats on line. Whatever stats you find will show a 4X increase. Thats allot of risk free money.
yeah. this policy is regressive . no doubt. but people who do have cash are getting more "free money" every month and allot of it. they seem to be spending it into the economy right now. luxury items are created by everyday people.
It’s been my experience that economics is a very hard subject to grasp, so what I typically see on forums where someone posts something like this is a lot of disagreeing and back and forth (as is the case here).
The issue I think is that… economics is a very hard subject to grasp. Lots of moving parts. I think your comment oversimplifies the point it’s trying to make, but it kind of has to in order to be understood by laymen. Bit of a damned if you do, damned if you don’t situation.
I think what you’re saying though is that higher interest rates = more money in companies’ pockets = higher wages paid to workers = the price increase of goods and services being absorbed, and the interest rate increase having a net-zero effect.
I don’t know enough to agree or disagree, I’m just trying to reword what you’re saying.
simply stating that increasing federal interest rates will put more money into the private sector from the public sector (deficit spending). This is an income channel which increases aggregate demand which can in of itself increase growth and inflation all things being equal. It is the opposite of the intended policy.
Sustained labor shortages putting upwards pressure on wages. It's more of an external factor, but it really can't be ignored that the pandemic, despite people burying their heads in sand and pretending it's over, is continuing to sideline millions of workers.
And on the spending side, people who can't afford to buy a thing just don't count in the inflation metrics. For example, when nvidia saw that fewer people were going to buy GPUs this generation, they raised unit prices. That makes the inflation number go up even though economic activity is down.
The Federal government is a net payer of interest to the private sector on a monthly basis. When interest rates are increased by the fed, this amount increases. Since the amount of outstanding treasuries is at all time highs vs GDP, its significant. Unlike before.
Turkey's president, Recep Tayyip Erdogan, famously agrees with your unorthodox assessment, that high interest rates cause inflation, and the cure is lower rates. [1]
Ok. Thank you . He is right about that technically if there is allot of government debt in the economy and the government is net payer of interest, then raising interest rates can cause inflation via more money in pockets leading to more demand. Just because Erdogan may be a disliked or reprehensible politician does not mean he is not logical when it comes to government finance or he probably was told that by someone who recognizes this.
HN users have predicted 9 out of the last 5 recessions.
More seriously, this does suggest that inflation will be more persistent than we had hoped. I'd like to remind people, however, that higher wages don't have to result in high inflation. As formerly low-income households earn more, there are two things they can do with their extra income: they can spend it, or they can save it. One leads, of course, to price growth. The other will actually be very good for the economy. So please don't listen to the fearmongerers who will suggest that higher wages will destroy the economy; it isn't true.
According to surveys most Americans live paycheck to paycheck, including most making over $100k/year [1][2]
So...yeah saving is a nice idea when rents don't increase in 40% in the past couple of year. Low income households also have a much harder time buying their own housing.
People won't work if it won't pay their rent or food, thats the only reason wages have gone up. It's just impossible to pay minimum wage anymore because itll get your employees evicted
All of these reports are based on a single junk survey by Lending Club which is sort of a cut rate online lender. It just doesn't pass the smell test, the median savings account balance is around $6k and the average is around 7x that. Since there's no good reason to have super large balances in a savings account, this is telling. The median 401k balance across all age groups is $33K, which also shows us that a lot of workers are putting some money into their 401k. Both of these things point to most Americans not living pay check to pay check, which generally means one is not saving any money but it's a really squishy term.
> According to surveys most Americans live paycheck to paycheck, including most making over $100k/year [1][2]
You can safely ignore those surveys. They all produce wildly different results for the number of people living "paycheck to paycheck" because they use intentionally vague definitions of "paycheck to paycheck".
But even if we ignore that and assume that most people are living paycheck to paycheck whether they make $50K or $100+K per year, how would you explain that? If you survey people making $50K and people make over $100K and they're both spending the same percentage of their paycheck, what is causing the expenses to grow so rapidly between the two vastly different income levels?
If you want further proof that these numbers are basically made up, check the "Related" column for the Fortune article. They recommend a second article that says 41% of Americans are living paycheck to paycheck, right underneath the big headline that over half of Americans earning >$100K are living Paycheck to Paycheck.
If >50% of Americans earning >$100K are living paycheck-to-paycheck, while only 41% of all Americans of any income level are living paycheck-to-paycheck, that would imply that people earning >$100K are more likely to be living paycheck to paycheck.
Or it would imply that these surveys are useless. They're designed to generate clickbait headlines.
I would attempt to explain the "living paycheck to paycheck" issue for higher earners by saying that many of them are putting most of their excess monthly pay into retirement savings. If they had instead put that excess monthly pay into a regular savings account that they could easily withdraw from without penalty, they'd have a lot less paper wealth, but would also technically no longer be "living paycheck to paycheck".
To avoid this distortion voluntary retirement savings should be treated as regular savings in the "paycheck to paycheck" calculation.
As an aside: $100k+ has been used as a benchmark for higher earners for years now. It's probably time to bump it to $150k or so.
You're talking about one of the 5 highest cost of living cities in the WORLD, that goes out of it's way to make housing more scarce and more expensive. This doesn't generalize to the rest of the country.
That most Americans can live paycheck to paycheck makes me feel better about the post AGI full UBI era. I’ve been thinking about this a lot.
Does it really matter if everyone is living paycheck to paycheck? They aren’t starving to death. They have access to bread and circuses. If we all go on a $1000/month UBI, we’ll still have a decent standard of living. We’re in for a phase transition in the global economy and the relation of the poor to the rich, but it won’t be as bad as the doomsayers on HN are claiming.
You would do well to browse the threads discussing advanced forms of artificial intelligence.
Artificial General Intelligence, AGI, is artificial intelligence that can perform any cognitive task that humans can perform at a human level or higher.
It’s commonly predicted by people like Robin Hanson and Elon Musk that such intelligences would dominate the workforce. Most people will eventually become unemployable as it is always possible for a machine to perform their job cheaper.
I’ve predicted that the State and private entities will build welfare programs or UBI.
This will be done for political reasons, as the most probable alternative would be civilization scale chaos on par with any Communist revolution of the last century.
Such programs will also allow those with power to cement their power further, as the recipients of welfare could not afford to bite the hand that feeds them.
> always possible for a machine to perform their job cheaper.
> the State and private entities will build welfare programs or UBI.
These two things don't seem to add up. If you're paying the person anyway why not have them do a job? It's not as if the labor of the AGI is free. The only way this would make any kind of economic sense is if the labor of the AGI is so superior to the human that it effectively creates additional value that compensates for the friction of having both the working AGI and the compensated, but non-working human. And in that case you need to start factoring in all of the externalities (including psychological welfare of the jobless human).
Edit to add: If an AGI is so good, can't it come up with productive jobs that are better done by humans than by it? Or is this kind of like the "can god make a mountain that he can't lift?" question?
To beat an old drum: the highest good of human life isn't to work like a slave until you die.
Fiction used to write about how robots would lift the yoke of labor from our shoulders, so we could all live our better lives.
Now that it's happening, all folks can think of is how to make sure everybody is still slaving away somehow. Because the alternative - most of us don't have to do that - is unthinkable to the older generation.
Ennui has been a historical problem for the wealthy (and the retired). If we make it so no one has to work to earn a living we still need to address the problem of ennui.
What I prefer, and what I think most people prefer, is a meaningful job that we enjoy doing. Sure, there will be times when the job sucks, but dealing with suckitude and adversity, if it isn't the majority of what you're doing, adds some positive feelings to life when after you've successfully dealt with it.
If we can all do this with hobbies that don't add to the common good, then okay, UBI FTW. I don't know that I could do this with the low income of a UBI though (biology is expensive, and needs others to implement parts of it).
Used to be you did three things: your vocation (made a living). Your avocation (what you'd rather be doing). And hobbies (not very good but dabble).
There's a long, long western tradition of doing things. Today we've forgotten there's more to life, than work and slacking. It'll be good if we could change that, to something more satisfying.
I don’t think that’s the highest good in life. I think it’s important that humans have access to well paying jobs because that gives them more agency. Money gives you options.
I spent 10 minutes typing a response and then my browser lost it. The gist was that some industries could still employ humans where humans have a decisive comparative advantage, as the customer wants the job the done by a human. This includes social work and production of luxury goods. In industries in which there is no human comparative advantage, humans could still be given jobs for philanthropic reasons.
Charitable housing projects might also require tenants to work. A billionaire might buy an apartment complex, let you live there for free, pay you a few hundred dollars per month, but make you work because the billionaire thinks work is good for you.
I don’t think it’s good news myself. I’m in sufficiently wealthy circles to just ask old friends for money. Most other people aren’t, and I’m sure all kinds of abusive cult dynamics will spring up.
On net it might be worse than the power dynamics between employee and employer, as employees have more freedom to just walk away.
The power dynamics may more closely resemble those between child and parent. Parents also provide their children with housing and money, and impose personal social norms on them.
Extracting money violently from people to give it free to others creates a whole subculture of people who will do the very minimum and be totally dependent on the state. we saw it during the pandemic how many people refused to work. A bare bones safety net so people don't starve makes sense, but full lifestyle subcidies do not. It rots society and its theft from those who are productive.
There's no supporting evidence things like Superdole contributed to the COVID labor shortage. What actually happened was a ton of low-wage workers were laid-off, found jobs elsewhere, and their employers struggled to find people willing to work low-wage jobs when everyone else was paying more.
That would be correct if we lived in a twentieth century communist society in which the local spectrum of Mittelstand, to Petite Bourgeoisie to Bourgeoisie consisted of humans with moral rights. I would not advocate for this in a society with twentieth century conditions.
I am advocating for this in a twenty-first century economy in which most wealth will be controlled by corporations and artificial intelligences.
In another comment in another thread I’ve also stated that private entities like Jeff Bezos would operate their own welfare programs. Black celebrities in particular are known to reinvest in the neighborhoods they grew up in.
I predict that the State will provide the basic necessities and that private entities will provide comparatively more luxurious goods to those willing to their loyal patrons. Should the investment portfolio which me and my girlfriend have been building from our salaries as elite embedded systems engineers grow as I think it will, I would provide such a welfare system to those close to my heart. As a good citizen I consider that a civic duty.
I believe that your libertarianism should be compatible with either of these forms of welfare.
In a high cost-of-living place like greater Boston, that's just not true. For example, consider a family of 4 (2 adults and 2 young children), living in a 2-bedroom apartment in eastern Massachusetts:
- 100,000 household income, about 1/3 of that is going directly to income tax. Net is going to be maybe $70-78,000.
- average 2-bedroom apartment rent is around $2800-3200/month: call it $34,000/year. (Because they rent, they can't benefit from mortgage interest tax deduction.) This doesn't include utilities, which have gone bonkers in MA the past few years.
- Childcare/preschool for young kids in Massachusetts is between 15-20,000 PER CHILD PER YEAR. Our example family could be paying $30,000 a year for childcare so both parents can work.
- It's possible that one or both parents are still repaying student loans at 7% interest. Let's say only one parent has a student loan payment, $300/mo which is a little under the average for MA. $3,600/year.
- This example assumes that nobody in the family owns a car! While I know families with young children who get by on public transit only, it can be difficult even in the heart of a city.
> This example assumes that nobody in the family owns a car! While I know families with young children who get by on public transit only, it can be difficult even in the heart of a city.
Even public transport has a cost per use. $2 per trip, twice a day, around 260 days per year = $1040 for each of those parents.
And that theoretical family is gonna starve, you mentioned leaving out utilities but also forgot food and we're already down to like $300 per year left.
Living in an expensive city you cannot afford = lifestyle creep.
I recognize this isn't a popular view but we are living in a white-hot employment market with tons of employers offering remote work. You could move to Chicago, which has better public transit, pay nearly half that in rent and get free Pre-K.
Your estimate is off by half because you're conflating household income with individual income. The figures look way better if you assume that both adults are working, bringing the household income to $200k.
[strikeout]Powell said yesterday that the current issue is in services, and he named housing in particular. Interest rates must increase until they meaningfully lower housing prices. Otherwise, rent and housing will just keep sucking up the wage growth.[/strikeout]
> We are seeing the effects of our policy actions on demand in the most interest-sensitive sectors of the economy, particularly housing.
Main speech, page 3.
> and he named housing in particular.
He named "X-housing", which means "ignoring housing". Housing is doing well. Its everything _EXCEPT_ housing that's doing poorly right now.
Press Conference section, page 8.
> The inflation in the core services X
housing is still running at 4 percent on a 6- and 12-month basis.
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So housing inflation has stopped (and anybody shopping for a house would realize that prices are no longer going up, but have begun to drop).
Meanwhile, everything else in our economy seems to still be going up in price. That's bad, but Powell notes that these other sections of the economy take "longer" for the Fed Rate hikes to kick in. So they're going to slow down the rate hikes and see where the current trajectory takes us.
IE: ~5%ish terminal rate in the near term. More data needed to evaluate the long term.
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> Powell said yesterday
While I'm being pedantic... Powell said it on Wednesday... which was two days ago :-)
In reality it's the high incomes that are continuing to make money and spend it, i.e. the landlords and property companies making serious bank as rents jack up higher and higher. We need to tax these people and corporations--that will quickly stop inflation.
Household saving just slows down the inflation if you’re lucky; it gets spent eventually and reduces the immediate effectiveness at the fed in moderating things. But that assumes people will save, and that isn’t as likely in a situation where people have the opportunity to spend (e.g. restaurants and gyms and theaters are an option)
I think 2020-era inflation is largely a story of stimulus going directly to households, which used that to either spend (chasing too few goods because people were out of work, constraining supply) or save, allowing them to stop working for longer.
You will see lots of stories about people _choosing_ not to work because of COVID or health or whatever - that is a story of savings allowing people to stay out of the labor market. In an economy where supply-demand imbalance is driving up prices, savings may not be all that helpful.
But realistically so much of this inflation happened because the money went to people who didn’t save - they turned around and spent it. This is the argument people used for student loan relief as economic stimulus: these people are poor, so they will turn around and spend what they would have used on their student loans. This is consistent with my personal experience, except now it is happening in an overheated economy.
Giving more money to people living paycheck to paycheck and expecting saving to be the result is an example of missing all the major lessons of the last three years.
The trouble is they haven't been saving it. Savings rates is near the lowest it's been in years [0], debt is rapidly increasing [1] and we're seeing quickly increasing dipping into 401k savings [2].
I do agree with your general argument though, that this isn't about workers being paid to much. All evidence suggest that despite the increases in worker pay, more and more American's are stretching themselves to continue consuming and we've seen in plenty of places that consumption is dropping.
In the last quarter I’ve seen high yield savings accounts go from 3% to 5% at doctorofcredit. This is just anecdotal but it’s the reality I see that isn’t reflected in the links you provided (and it’s more recent).
Higher wages will definitely cause some inflation, I agree. My point is simply that household saving also has the potential to increase, which is a very good thing and often overlooked in this scenario. One problem is that real interest rates have been negative for some time, which is bad for inflation and for saving, but that is beyond the control of wage earners.
You’re both missing a key point. The labor market likely priced labor below the market clearing rate. If people aren’t filling positions at a specific wage level then up the wage level. Laborers have a willingness to work for each level of wage and it’s going to increase with wage.
Nah, don't think so. With such low unemployment you basically have full employment, that is how economist would describe the situation since it can't got to 0%. Now the wages go up, since you have more competition for labor force and of course people want higher wages based on inflation.
PS:
Sure, more people retired and the labor participation rate is lower then before covid. BUT you will not get them back to work with an increase of 10% or let's say 20% in salary. They retired, that's it.
But raising pay does still increase the number of people willing to work across the market. It’s also basically the only direct way to increase the labor pool without exogenous or distant factors to the labor market. Raising interest rates would affect the labor market by diminishing financing to the point demand for labor falls. It’s a blunt/economy wide instrument.
Labor did enjoy increased market demand and increased wages after the 1918 pandemic. Historically, not wanting to raise wages just reads as sour grapes.
You’ve given me an idea. If widespread automation drives down wages, it should also lead to deflation. That should make welfare programs cheaper as the State needs to pay out less money to welfare recipients.
> When your ideology calls fiscal responsibility "hoarding wealth," you should rethink your worldview
The US stock market and the under-the-pillow gold or in-the-bank life savings of the Japanese grannies are not the same. All of what is happening is happening for the sake of the former. None of those countries that you listed is waging a war on their working class to lower their wages to prop up the former. Leaving aside by openly declaring it. The 'fiscally responsible' country is.
Even more, as its central bank moves to kill everyone's wages in general, its higher financial institutions and hedge funds are pushing the companies to go along with it to kill highly paid white collar wages too. And the tech giants who were supposedly going to 'change the world' are complying with it. Even as they post obscene profits.
All of those is to prop up the stock prices. Nothing more. Nothing related to 'savings'. You may have some retirement funds in the stock market that skews your perception. But people like you don't make up the majority in the stock market. Less hold the power and call the shots. Those who make up the majority are people who dont have any relevance to any kind of 'saving', even less, the need to 'save'.
And all of this without touching the fact that how that fiscally responsible country kills its people if they cant pay for healthcare or pushes them out of the cities in the winter if they cant pay rent even while working two jobs. Gotta have them plebs anxious about their livelihood, or they wont consent to working harder for less pay...
Don't rationalize and justify delirious sociopathy that seeks obsessive-compulsive hoarding. There is nothing rational in the hoards of wealth that is sitting only to amass even more hoards of wealth.
Its 20+ years into 21st century and instead of flying cars we have a system that thrives on making people overwork for ever less pay and even kills them if they cant pay for the hospital. Way past time for you to reconsider your ideology. Not others.
I know we’re talking about the macro level, but as an individual stowing your earnings away is certainly a much better idea than blowing a 6 figure income.
