> your recent years of peak lifetime earning potential overlapped with an industry massively overpaying its workforce
Only if the following conditions are true:
1. You spent your entire career in the US, ideally on the West Coast
2. You entered the industry early, ideally right after (or in!) university
3. You did not spend significant time in low-paying segments of the industry, such as in academia, hardware, games, idealistic open source, or the public sector
4. You did not need a significant career break, such as for major medical issues, being a SAHP, or caring for sick family members
Even if all of the above applied, certain wealth-destroying events such as an expensive illness, legal trouble, or bad divorce, might have made FIRE infeasible.
As I understand it, tech employees are typically paid a small fraction of the revenue that they bring into the company.
Outside of tech, employees are underpaid, and wages haven't tracked productivity growth since the 1970s. Profit growth has greatly exceeded wage growth since the early 2000s, with the exception of the 2008 recession.
The labour theory of value that you allude to here makes no sense. People are paid at the market price based on supply and demand, just like other goods and services.
Tech employees don't "bring in" the company's revenue. That makes the mistake of attributing the products and services of a business to its workers.
>wages haven't tracked productivity growth since the 1970s.
Propaganda. Productivity growth literally is just wage growth, by definition. It is impossible for them not to track each other.
>>Productivity growth is literally just wage growth, by definition.
No, it is the opposite, whether you are measuring Units Per Worker Hour or especially Units Per Worker Dollar.
You have a dozen $25/hr workers in a factory producing 50 widgets/hour, and you now introduce new tools, techniques, and/or materials and they now produce 80 widgets per hour, productivity per hour and per dollar has risen, but worker pay is exactly the same.
If you instead cut their pay to $22/hr their productivity in Units/WorkerHour is unchanged but productivity in Units/Labor$ has risen.
It is ONLY in the limited case where you are paying 100% by piecework that productivity tracks wages, e.g., if those workers are paid $6/Widget produced and they manage to make 50%more widgets/hr, then their pay rises with productivity. But that is uncommon and labor cost is rarely the only input.
>No, it is the opposite, whether you are measuring Units Per Worker Hour or especially Units Per Worker Dollar.
That is precisely how it is measured: by measuring wages.
>You have a dozen $25/hr workers in a factory producing 50 widgets/hour, and you now introduce new tools, techniques, and/or materials and they now produce 80 widgets per hour, productivity per hour and per dollar has risen, but worker pay is exactly the same.
As is unlikely to surprise you, productivity as a macroeconomic indicator is not measured by lookikg at factories and the tools and techniques they use.
96% of the gap can be explained by the fact that these figures compare productivity growth of the whole economy with wage growth of some workers (the lowest 80% of them - leaving out... the most productive workers), count the productivity growth of the self employed but not their wages, dont take into account overtime, bonuses, or health insurance benefits, and intentionally use different means of measuring inflation across the two figures in an attempt to inflate the numbers.
At the end of the day they track very closely because they are both measures of wages. Productivity is just net output by hour worked and wages is just net output by hour worked. If you use different methods for calculating each you can make either look higher but it is pure methodology.
>>That is precisely how it is measured: by measuring wages.
Again, NO.
Just go to the Bureau Of Labor Statistics and their description of how productivity is measured [0]:
>>"For a single business producing only one good, output would simply be the number of units of that good produced in each time period, such as a month or a year."
Notice not a single mention of wages
It then goes on describing how they measure aggregate output in sectors of the economy. Wages is only mentioned ONCE, for charities and government organizations (since their output is not sold).
>>Government services and the output of nonprofits are not sold in the marketplace, so these types of output can be difficult to measure. For example, what is the output of a charity? Often these outputs are measured by the wages and benefits - compensation - paid to workers producing these outputs.
and then they point out:
>>
Since productivity compares output to input, if the output is measured by the input, any time the input grows, the output grows by the same amount.
>>Measuring output by labor input is similar to including the same amount in the numerator as in the denominator of the labor productivity ratio.
>>This implies no productivity growth for that group of workers, dampening productivity change for the industry and sector. For this reason, BLS productivity measures exclude government, nonprofits, and private household production.
So the ONLY mention of wages is specifically EXCLUDED from measures of productivity.
Then the summary:
Output is measured primarily as an index of product revenues, adjusted for price changes. Adjustments are made to ensure that output that is sold to another business within the same measuring unit (industry or sector) is excluded to prevent counting it more than once.
Again, no mention of wages.
I have no idea where you get your misconceptions, but you really need to study some actual economics before posting pages of obviously wrong nonsense.
>Productivity growth literally is just wage growth, by definition. It is impossible for them not to track each other.
I don't understand what you mean by this. If i own a business, and employee productivity increases but i don't increase wages doesn't that disprove your statement?
The graph on this page disagrees, can you explain please? I haven't heard anyone say the two concepts are the same before.
As I have heard it "productivity" is roughly gdp/hour, which can be different from wages/hour (but you generally expect the two to be related / correlated).
> Tech employees don't "bring in" the company's revenue.
Sure they do. Every employee contributes to the revenue a company brings in. If they don't, then they should be fired.
> Productivity growth literally is just wage growth, by definition.
Completely false. You accuse a commenter in a sibling thread of not having a good grasp of economics, but that feels like the pot calling the kettle black, here.
You don't "bring revenue in". You are paid for providing a service to your employer. Your employer brings revenue in by providing quite different goods and services to its customers.
By your logic, "cost centres" (like IT, HR, and office management) within a business are bad because they don't bring in any revenue. Except of course in reality they are the same: they provide a service to the business that the business makes use of in providing goods and services to its customers.
I am being pedantic but for good reason: there is no a priori reason why your pay should go up just because your employer has become more profitable, except that it is in the interests of employers to make use of resources efficiently. If they are profitable then hiring more people so they can make more money is good. But it isn't a matter of "deserving" to be paid more or something. Pay isn't based on what you deserve for many reasons, including that you can't attribute the business's profits to its workers and ignore, for example, the investment in capital resources (including IP) required to enable the workers to work effectively. Mainly though because of supply and demand.
If an improvement in productivity makes you more efficient then there should be higher demand for you and you should be paid more. And indeed that is exactly what happens: people in industries that have productivity improvements are paid more afterwards than before.
Minimum wage, fairly, should have been around $32 in 2019 or so. I haven't run numbers lately because it's depressing, but I bet it's worse now.
You can't go off mcdonalds sandwiches, and you can't use the economic indicators that ignore food and fuel.
I've heard wild numbers from "the dollar is worth 50¢ compared to 20 years ago" to "the dollar has lost 98% of its value in the last N years."
I'm not an economist, but I do know my electric bill has been thr exact same dollar amount for 12 years, and I've halved my usage twice in those years. That puts the dollar purchasing power for power at 25% of 2013.
Gasoline changes prices so much I can't really say, it's about twice as expensive for 87 here as 12 years ago, but 93 is 2.5+ times higher.
Food? Don't get me started.
I live in the rural south. I don't really care about price fixing in Los Angeles or silicon Valley.
There is no such thing as what minimum wage should be "fairly". What is the minimum amount you should be able to pay someone an hour? Surely it is the amount where if you didn't, someone else would pay them more.
There are many people who do jobs worth much less than $32/hour. That min wage would just make them illegal to employ.
>You can't go off mcdonalds sandwiches, and you can't use the economic indicators that ignore food and fuel.
You can't use economic indicators that track volatile commodities either. We use baskets of consumer goods and the inflation tracking is very accurate in short time frames but it becomes harder to compare the further out you get. A TV today is much better than a TV even 10 years ago but it is hardly even the same product as one from 1970.
>I've heard wild numbers from "the dollar is worth 50¢ compared to 20 years ago" to "the dollar has lost 98% of its value in the last N years."
What is wild about that? If you had 50c then and you had invested it in even relatively poorly performing investments it would be worth much more than $1 now.
>I'm not an economist, but I do know my electric bill has been thr exact same dollar amount for 12 years, and I've halved my usage twice in those years. That puts the dollar purchasing power for power at 25% of 2013.
That you are not an economist is obvious.
You are aware that dollars buy more things than energy from your energy provider according to your energy plan, yeah?
> There is no such thing as what minimum wage should be "fairly".
Sure there is. It's the amount you have to pay someone such that they can work a reasonable amount of hours (40/week), such that they can afford all of life's essentials while having a little extra to save for a rainy day, as well as have a little fun.
But certainly some people's poilitics ignore the human aspects of the world we live in, and think that the "free market" (something that doesn't actually exist) will sort it out.
What are life's essentials? Do you have the right to a car? To one bedroom per child or should they share? Do you have the right to central heating so you can wear a tshirt indoors or should you be expected to wear a jersey in winter?
The minimum wage doesn't make anyone be paid more. It only causes anyone paid less than it to instead be paid $0, and instead be paid an unemployment benefit. How is that reasonable?
A higher minimum wage puts upward pressure on wages at the lower end of the scale, which helps the working class so that they aren't working and on medicare, section 8, food stamps etc. - as many Wal-mart workers currently are. That saves us money in the long run.
When Seattle raised the minimum wage to $15/hour, everyone screamed it would lead to mass unemployment. That never happen. Suddenly the lower class had more money to spend, which boosted the economy as much or more than higher wages hurt bottom lines.
Higher minimum wage doesn't put upward pressure on other low wages, and even if it did, pushing up the wages of people making $30/hr by taking away jobs from people making $20/hr to put them on benefits earning $15/hr is obscene.
>which helps the working class so that they aren't working and on medicare, section 8, food stamps etc. - as many Wal-mart workers currently are. That saves us money in the long run.
A higher minimum wage leads to lower employment not higher employment.
>When Seattle raised the minimum wage to $15/hour, everyone screamed it would lead to mass unemployment. That never happen.
It has been shown many times that a higher minimum wage causes less employment. It is also obvious from first principles and basic logic. Price controls are a very bad idea, and wages are no exception.
> A livable wage in the geographic jurisdiction they are in.
This is called the Iron Law of Wages. As its name implies, it's neither prescriptive nor pleasant - but it is guaranteed to be liveable.
> Including stuff like transportation, healthcare, food, heat, housing, and insurance.
The thing that trips people up is that the word "liveable" is a synonym for "subsistence," not "fullfilling." A wage that's only liveable would feel quite exploitative to most people.
The intention of "minimum wage" in the US is not merely subsistence level. FDR said, "by living wages, I mean more than a bare subsistence level-I mean the wages of decent living." [0]
The "iron law of wages" is instead an economic principle that wages tend to trend downwards until people are paid the minimum possible for subsistence. It's not meant to be a goal.
There are ten million stated reasons for the minimum wage! Pretty much the only one that economists can agree on is that it's helpful to prevent abuses of monopsony power in small towns.
Regardless of what FDR said, a living wage is guaranteed because people will not accept anything lower.
The problem with a "decent" living is that reasonable people can disagree about what that looks like. Roommates? Children? An unemployed spouse? Vacations and retirement?
It's not the government's job to guarantee all of that stuff and I would rather we focus on stopping wage and tip theft and protecting the rights of workers (banning noncompetes, decoupling health insurance, etc.) instead of increasing the minimum wage towards some poorly-defined goal.
There's also the other side of the minimum wage debate, which is that most of the specific numbers people list as "liveable" do actually result in some folks losing their jobs and becoming unemployable. There was even a recent BERKELEY study that showed this!
>>There is no such thing as what minimum wage should be "fairly"
Nonsense.
There most definitely IS a definition of a fair minimum wage -- it is the definition used when it was originally introduced into law:
The wage necessary for a full-time (40hr/week) worker head-of-household to support a family of four above the poverty line -- spouse & kids in a house/apartment, food, medical, education, etc..
We have Walmart workers collecting $6 Billion in benefits per year to stay above the poverty line while the Waltons sit on a $250Billion fortune, it is clear we are subsidizing the rich by failing to set an above-poverty minimum wage.
>The wage necessary for a full-time (40hr/week) worker head-of-household to support a family of four above the poverty line -- spouse & kids in a house/apartment, food, medical, education, etc..
Food of what quality? That available in the 1930s?
Medical of what quality? 1930s medical care?
Education to primary level as most had in the 1930s or more than that?
You don't have a natural right to receive the fruits of the labour of others.
>We have Walmart workers collecting $6 Billion in benefits per year to stay above the poverty line while the Waltons sit on a $250Billion fortune, it is clear we are subsidizing the rich by failing to set an above-poverty minimum wage.
Then stop giving benefits to people that have jobs.
There are standards for virtually everything. Meet the current basic standards. For food, a basket of FDA/USDA-approved for distribution food to make a basic but nutritious diet for the family of 4. For housing, you could go with minimums for HUD housing. For education, through public high school. These are not hard to figure out (but may be a bit tedious). These are also minimums required to maintain a functional workforce in a modern society.
>>You don't have a natural right to receive the fruits of the labour of others.
>>Then stop giving benefits to people that have jobs.
Right. So what you want is a Dickensian crabs-in-a-bucket labor market where the wage level is set by the most desperate person, who will work for hours to get a crust of bread for his/her next meal. A market where employers can abuse workers at will because there really are 500 others outside the gate who will take his job if he isn't willing to take the beating?
We are no longer living in a frontier society where 97%+ of the workers are producing food.
That insanely over-simplistic model has been tried, and it is a resounding failure, both for every society, every country, and every individual living in it. Those societies inevitably collapse or grow out of it with minimum standards for everyone. And while it is obviously awful for the workers, it is no day at the beach for the oligarchs either, who must live in secured closed-off areas, always frightened of everyone in the public as well as their rivals in power. Unproductive misery for everyone is what you want?
So, NO, the solution is not to just make the people at the bottom more poor, more hungry, and more desperate.
The solution is to stop giving benefits by ensuring that their employer pays the workers sufficiently that they do NOT NEED benefits to survive.
If an employer cannot pay their workers a living wage they do NOT have a business model.
They have an exploitation model.
The exploitation model specifically violates your above principle saying that the employers have a natural right to the fruits of the workers' labor to whatever degree they can exploit the worker by their desperation.
You aren't saying the no one has a right to the fruits of anyone else's labor, you are only saying that no other worker has such a right, but the employers do.
You are saying that if someone has power or deception, whatever they can take is their right.
I say, NO, that is the most dishonorable and amoral of societies.
Despite agreeing with the rest, should the kid who graduated high school 2 months ago (1) earn as a grocery cashier to support a family of four, including medical and education, (2) should they not work / not be employable, or (3) is there room for a minimum lower than this definition?
If a high school graduate comes in and offers the same value as the other cashiers making the same amount of money, then, yes, they should get paid the same. If the other cashiers are more valuable, then they should be paid more.
this isn't really as difficult as everyone makes it. "Minimum wage is a company's way of telling you that if it was legal to pay you less, they would."
If a company can't afford to pay cashiers at different rates based on their tenure and skill, then i guess the company will have to deploy self-checkout, and some people don't like that, so they'll take their business elsewhere. If that means that all grocery stores go "self checkout" then i suppose farmer's markets will become a lot bigger.
This is all about grocery cashiers, please do not try to extrapolate my words to anything else, i am speaking to this very narrow thing.
Sure, we can approach from that angle, instead of the just-graduated-high-school angle.
I did not talk about paying cashiers at different rates. I addressed the single minimum rate from the earlier comment, where a household's single income can "support a family of four above the poverty line -- spouse & kids in a house/apartment, food, medical, education, etc [without relying on assistance programs]". According to the back of this envelope, that would be $70,000/yr = $33/hr. In some areas or with other decisions, maybe only $50,000/yr = $24/hr.
A grocery store would be rare indeed that could afford to pay their lowest-skilled, lowest-tenured cashier at $24/hr. Surely society can come up with a better answer than telling so many grocery stores that self-checkout is the only practical way to stay in business.
if you search HN for genewitch, you will find many times have said that exact dollar amount should be minimum wage, so this isn't a gotcha.
for years^, i've been saying this, since 2018 or 2019. $33 an hour. So if you re-read what i actually said, i explain that i don't really care if a supermarket can't afford to pay cashiers at a livable wage. they can suffer from lack of staff, or go full self checkout and robots, or go out of business. I don't care, like, at all. "But genewitch, what about the families of the shareholders and CEO and board?" uh huh, luckily they can go get a job and make a livable wage somewhere else.
^i've only been posting on HN since 2020, but my point stands
You having said so previously has no impact on this belief:
> A grocery store would be rare indeed that could afford to pay their lowest-skilled, lowest-tenured cashier at $24/hr. Surely society can come up with a better answer than telling so many grocery stores that self-checkout is the only practical way to stay in business.
I'll take you at your word that you don't care to come up with a better answer, and that means I'll gain nothing further from discussing this with you. I'll bow out. Take care!
I would say yes, it is reasonable to have an exception for lower wages for teenage part-time entry-level workers, and maybe some partially-disabled workers.
Of course there would need to be provisions that it not be abused and just used for all positions. E.g., it cannot be used for workers 21 years old or older, etc. And the rules against abuse need to be solid, as we can guarantee that whatever rules are made, employers will work hard to abuse and game the system to their advantage and at the employee's cost.
"Doctor, I need you to declare me disabled or else I'll lose my job when I turn 21. I need this job, and I don't know if I can find another one at the 21yo minimum wage."
I really want to like what you're saying, but I see too many problems. I don't have answers.
>>Of course there would need to be provisions that it not be abused ... And the rules against abuse need to be solid, ...
Exactly that sort of scenario is why I included those phrases.
ANY large system will have imperfections, inadvertent waste, and openings for abuse. Of course these should be minimized, but that shouldn't stop us from making a system. Better a few people benefit undeservedly than many who deserve and need the benefits go hungry.
The need for a system doesn't imply that your proposal is better than the status quo.
> Better a few people benefit undeservedly than many who deserve and need the benefits go hungry.
Agreed. Now consider that regulations exclude people, not include them, overall, by far. (I say this with a job that sees that daily, and where a frequent criticism is that implementing those regulations is government waste.)
What I'm taking away from this is, contrasting with an option I generally dislike, that option actually looks much better than I have previously thought, and it looks definitely better than raising the minimum wage. That is raising the corporate tax rate, which is at historic lows from what I understand, and increasing public benefits. You mentioned Walmart's profits being subsidized by benefit programs, but that valid and important complaint seems to be taken care of this way. This also starts to sound a lot like UBI, which I may have never really understood and have never supported. Maybe I should support it.
That could be a good solution to increase the corp tax rate and provide more benefits and more broadly. The problem is corporations, especially large corps, have historically bought favors from congress, with the result that the tax burden falls on the middle class.
UBI is an astoundingly good concept, especially when people get automated out of their jobs — tax every producing entity at a level required to distribute funds and services (e.g., healthcare) to everyone just above poverty level.
The cool thing is that with UBI, there is basically no need for a minimum wage. First, potential workers are already being supported above poverty, and second, corporations will need to offer a wage and working conditions that together are worth it for workers to bother getting up and going to work. UBI would essentially give everybody "F.U. money", i.e., the option to get up and walk out anytime without endangering their family's ability to live. Studies testing UBI also repeatedly show people consistently spend the money well and do not squander it. The principle once advocated by some conservatives that the people themselves know best how to spend their money is really true (not absolutely, but at a very high level).
When I get to 50, I will still need some sort of job. Maybe I can get a lower paying or low stress job. That's me being in the industry for my entire career, good credentials, etc. I will have been making somewhat less than the national developer median (about $130k is median). I live in a moderately high cost area. Even the people that live in high cost areas making 2x my salary have significant tax and real estate burdens. Not everyone can FIRE, especially if you're below the median.
Having FIRE doesn't mean you're ready to retire and build ships in a bottle or whatever. I like programming, it puts me in flow state and keeps my brain young. I want to go out on my own terms. Also good luck with FIRE if you're putting kids through college. And thirdly, for those of us at normal companies the pay has been nice, but not FAANG mid-six-figures nice.
You don't have to "put kids through college". If you're in the US, they can borrow to go somewhere decent and affordable. Harvard has never been for you, it has always been for the children of very rich New Englanders.
You shouldn't need a job. You should have FIREd.