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by sokoloff 1630 days ago
> From a straight economic perspective REAL compensation of lower skill workers has been sliding for decades

Has it? I’ve seen that claim a lot, but every time I look at the data, it shows growth across all quintiles.

https://www.advisorperspectives.com/dshort/updates/2021/10/2...

4 comments

Note that this is showing household incomes, not individual incomes. Household used to mean 1 working family member, now it's closer to 2 due in large part by more women joining the workforce. If you had a traditional family with one working spouse, they would definitely be falling behind.

If you look at the source below for men's wages (for example), the real wage has fallen by 3% for the median male since 1979 (and by 10% real decline for the bottom 10%). That's not even accounting for the fact that housing should make up a higher % of the consumption basket for the lowest-paid workers (as compared to CPI).

https://sgp.fas.org/crs/misc/R45090.pdf

That link appears to be great data (based on reading the summary). Bookmarked to read in more detail later, but saying "thanks!" now.

It appears that the 10th percentile male income has decreased by 7.7% [rather than 10%] in the 40 year period from 1979-2019, if I'm reading the page 4 content correctly.

Figure 1 is facsinating - it shows the 80s were awful for everyone, especially the bottom 10%. Male workers dropped 16.3% from 1979-1990, and Hispanic dropped 20.9%!

2010-2019 was the best real income growth for all groups apart from top 10% hispanics, and the growth is fairly evenly spread across demographics.

The data you link to shows 3 out of 5 quintiles of incomes have been flat. Meanwhile, the cost of healthcare and child care have increased faster than inflation[1]. It's nice that TVs are cheaper for better quality, but if the essentials are more expensive the people with lower (and middle!) incomes have tighter budgets than ever.

[1] https://fred.stlouisfed.org/graph/?g=Kxcc

That article contains a "real income growth since 1967" table (about halfway down, on the right).

All quintiles show growth, with the 4th quintile (20-40th percentile) showing the lowest growth at +31.1% and the 5th quintile (lowest 20%) showing a similar +34.2% across that period of multiple decades.

That's indeed "essentially flat, but still slight growth".

"real income growth" does not account for health care and housing costs (except for people who own their home)
Their incomes are growing slower than essential expenses like childcare and healthcare...
This graph has a weird starting position. If this graph started, maybe 30-40 years before that, you'd see it telling a very different story.

The reason it's sliding for decades is that the purchasing power of that same money has gone down. Why? Housing. Housing is not calculated in inflation rates, annnnd everyone needs a house.

So yeah, the REAL compensation has been sliding down due to no real growth there while housing has skyrocketed. AND that before 1965, we actually did have significant wage growth.

So, this is one of those cases where the data is misleading.

> Housing is not calculated in inflation rates

False. https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...

Shelter (the service that a house provides) is included as a consumption item in the CPI figures (and, as any adult would expect, has the largest weight of any of the 211 items that constitute the CPI basket).

You can see the significant changes to the calculation methods detailed here: https://www.bls.gov/cpi/research-series/r-cpi-u-rs-changes.h... The rent equivalent method for owned property has been in use since 1983. (Prior to that, housing was included in CPI, just with a different method.)

I mean, this is assuming the living standards (how many people to one house) has remained the same. That also has changed.
I just looked at this and while there is no sliding, the bottom 3 have been really quite flat