[dpina]

This appears to be correct based on everyone of my age sharing the same problems, but the article doesn't give any reasons on why it happens. Would be good to get some more information on causes as this is a rather very interesting topic. Any HN readers have good sources?

[fucking_tragedy]

Profits from labor's vastly increased productivity over the 40 years have been captured almost entirely by employers/owners/shareholders.

Nothing ever trickled down. What power we had to recapture the gains you and your parents worked hard for has been whittled away by years of anti-labor legislation and rhetoric.

Negotiating for increased wage for the average laborer in a non-unicorn market is difficult. Without union representation, it is a solitary worker with little funds versus firms and industries made up thousands of well-moneyed and well-lawyered people who share the same interest in wanting to make sure you never see more money than they absolutely have to give you. Without solidarity, you can be fired and replaced without repercussions for your employer from your fellow workers, all of whom share the interest in seeing you get paid fairly so that one day they might, too.

Globalization has made it easy to avoid pesky things like fair compensation, hours, working conditions, benefits and taxes that we've come to take for granted in the US.

[lkrubner]

The world economy slowed in 1973. No one really knows why. Some books focus on the effects in the USA, some focus elsewhere. In the West this has been "The Great Stagnation" whereas in several countries in Asia this has been "The Great Bounce Back" as formerly wealthy civilizations, such as China, recovered some of the ground they lost in the 1800s.

Sad to say, I'm not aware of any books that tell the whole international story.

For the USA, there have been an abundance of books and articles showing the decline of the middle class:

http://billmoyers.com/2015/01/26/middle-class/

Tyler Cowen came up with the phrase Great Stagnation:

http://www.amazon.com/Great-Stagnation-America-Low-Hanging-E...

Some writers treat this as a political issue:

http://www.amazon.com/Boiling-Point-Republicans-Middle-Class...

Some writers focus on long-term factors that have little to do with politics. Robert Gordon got good reviews for his historical analysis of the specialness of the 2nd Industrial Revolution 1860-1940, and why the current era is not as robust:

http://www.amazon.com/The-Rise-Fall-American-Growth/dp/06911...

[TheOtherHobbes]

1973 was the first oil crisis. Oil prices went up by 400% and there was a huge spike in inflation.(There's a book waiting to be written about the curiously close relationships between the Saudi and the US oil establishments, and the Saudi influence on US foreign policy since the 70s.)

The oil crisis gave the Right a convenient pretext to blame wage increases for inflation.

This became a standard element of economic orthodoxy, and ever since then increases in wages and salaries - which were a driver of post-war prosperity - have been labelled "inflationary', even though inflation is primarily caused by other factors.[1]

By a remarkable and unexpected coincidence, this was the moment when labour share of GDP and middle class prosperity both started to decline. See e.g.

https://en.wikipedia.org/wiki/Wage_share#/media/File:Adjuste...

[1] The Bank of England always plays on this. About a year ago there was talk of increasing interest rates to "head off inflationary pressure" just in case wages might have started rising in the future. Meanwhile asset inflation in the form of rising property prices is ignored, and more obvious drivers of increasing costs, like consumer energy prices, are downplayed.

[lkrubner]

No one knows why 1973 was the beginning of a long era of economic sluggishness. Oil prices crashed in the 1980s and again in 1990s and again after 2008, but none of these crashes restarted the post-war boom. Adjusting for inflation, oil achieved new lows in the 1990s, and again in recent years, but the very low prices that we see are not enough to bring back the years when the economy grew at 4% on a regular basis. Nothing has revived productivity growth to the 3% a year seen for most of the era 1945-1973. If the spike in oil prices in 1973 was enough to start an era of sluggish growth, then why didn't growth restart once the oil prices collapsed? There are many theories about this, and many brilliant people have written long books trying to explain the events of the last 40 years, but no one knows for sure, and there is nothing like a consensus on the issue, which is why I wrote "No one really knows why."

[steve-benjamins]

Thanks. Just bought the Great Stagnation off of your comment.

[roymurdock]

Consider reading this literature review from an MIT professor of 21 different texts that tackle the Great Recession and its causes if you're looking for more info on the subject:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1949908

Lo thinks that the Reinhart/Rogoff This Time is Different is among the best-researched texts with the most quantitative support and analysis while still maintaining its readability.

[Pxtl]

Seems obvious - economic turmoil and globalization has ravaged the job market, educational requirements have crept upwards, educational costs have climbed too, and housing prices went skyward.

Where a highschool-educated man once could get s factory job and buy a house on that salary, a modern young person gets a part-time job with an expensive degree and uses it to pay off a pile of student debt and while a house is completely out of reach.

[cmdkeen]

Different countries have different problems which the article barely touches though the graph hints at.

The UK has a skills shortage, it's vacancy to applicants ratio is back to pre-recession levels despite huge levels of immigration from the EU. London is the 6th largest French city in terms of population, tens of thousands of millennials from Southern and Eastern Europe have migrated to the UK. This is brilliant because they are often well educated (by someone else) and motivated - we have several recently arrived European devs in our office.

However at the same time it takes people longer to get into jobs. Since the 90s the concept of a degree being a pre-requisite for professional jobs has been pushed and pushed. I remember at my grammar school it being assumed you were going to university. Combine this with the rise of the "gap year" and people are emerging into the job market years later than they used to, with different expectations about the kind of work they will do. The article (it is the Guardian after all) highlighted a charity sector employee - not a sector you traditionally associate with pay rises keeping up with the commercial sector. I know far too many acquaintances who emerged from university unwilling to work for a profit making enterprise.

Many European countries, especially in the south, have completely different issues - huge problems with youth unemployment which is driving emigration. A labour market which has two tiers of employees due to the difficulty of laying off permanent employees causing young people to disproportionately end up on casual contracts.

Someone much better placed will no doubt be able to explain the issues in the US and Canada, indeed I'd be unsurprised if there weren't different issues within the US.

[stuaxo]

Hm, not fully convinced about the skills shortage in the UK ?

There is a shortage of jobs, which things like workfare don't help with (if there is a job, just employ these people).

[cmdkeen]

The FT tweeted this chart recently - https://twitter.com/ftdata/status/705059490765348864

It's clearly for the job market overall, there will be variation within sectors. Given over 2 million private sector jobs have been created over the past few years while the public sector has shed jobs I doubt workfare is involved.

[crdoconnor]

There's always a 'skills shortage' for employers who see an opportunity to undercut their current workforce somehow.

[Pxtl]

Exactly. I'll believe in a "skills shortage" when competition for employees drives wages up.

[tomp]

I don't believe there's a skill shortage in the UK. Maybe for industries like banking and programming, but in general, it's really hard for a skilled (STEM, except programmer) graduates to get jobs paying more than 30k (in London).

[TheOtherHobbes]

Not even programming. CS has one of the worst employment rates of all degrees.

Admittedly a lot of arts grads don't get jobs as artists, where most CS grads are only really interested in a programming job.

But even so - the skills shortage is somewhat mythical.

As you say - the remuneration shortage is more obvious than the skill shortage.

Housing costs in London are in the same ballpark as SF, but £40k is considered a generous salary for permanent developers. £60k might be possible for seniors.

It isn't unusual to find web dev jobs offering <£20k.

Work in the City offers much better pay, but the culture can be pretty horrific for anyone who isn't suited to it.

[tostitos1979]

CS is a crazy field. We pay insane salaries to people in their 20s (150K in the Bay area sees normal) but people in their 40s have a hard time finding any paid work. I'm trying to understand why this happens have a hypothesis:

Tech is a winner-take-all industry. You get nothing for being second place. This requires long-working hours (it needed to ship yesterday!) and people you can exploit (younger folks who don't know any better). Moreover, the ever changing nature of languages and tools makes it that on the surface, a young person in their mid to late 20s seems as much experience as an older person. When you combine this, you get shitty software that has shipped fast.

Can we do anything about it? Unionizing software or having some kind of guild membership is not going to happen in my lifetime. (we're all too libertarian). We can slow down the churn of tools (this is also hard and requires discipline ... if we all understood the damage caused by the new new thing, maybe we can do it but I doubt it - can you make a promise to NOT learn any new languages this year? I don't know if I can). We can do our own startups (this requires access to funds that not everyone has, and perhaps a particular lifestyle situation; also ... odds of me getting into something like YC are near 0 I feel). Or, we can change fields. As someone who loves tech and not much else, I have severe doubts I'll be able to find something I have as much passion for as tech. But hey ... who knows. Life is a new adventure everyday :)

[9912871]

The baby boomers and the hippie generation have sold out technology and thus jobs to overseas countries while holding and controlling real estate themselves.

[Disclaimer: somewhat of a hippie myself, but there's a lot of hypocrisy in that area.]

[dnautics]

Deficit spending by governments creates a generational obligation wherein the future generations must pay for profligate spending in the past (which they cannot go back in time and vote against). The primary means of paying down this debt is through currency devaluation; note how the person in the article claims her pay raises have at best tracked her cost of living increases. This transfer of wealth across generations also hurts the poor the hardest; if inflation weren't so bad for the poor we wouldn't have to raise the minimum wage periodically.

I suggest reading "the great wave: price revolutions and the rhythm of history". I found it to be a surprisingly easy read.