[HN Gopher] Inflation is wiping out wage increases for many workers
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Inflation is wiping out wage increases for many workers
Author : xqcgrek2
Score : 37 points
Date : 2021-11-11 19:55 UTC (3 hours ago)
(HTM) web link (www.washingtonpost.com)
(TXT) w3m dump (www.washingtonpost.com)
| [deleted]
| jgalt212 wrote:
| price inflation for thee, asset inflation for me.
| wcoenen wrote:
| Until interest rates are raised, and then the higher discount
| rate used to value future cash flows results in a crash of
| asset prices.
| twirlock wrote:
| Microecon survey courses have possibly induced more dunning-
| kruger than any other institution in history.
| aeternum wrote:
| It's more likely that the wage increases are causing the
| inflation. The rich typically do not compete for everyday items
| like groceries and gasoline.
| 4903000 wrote:
| If wage increases cause inflation, then what causes wage
| increases?
| aeternum wrote:
| Also inflation. There's definitely a feedback loop and
| expectations of inflation can be enough to cause inflation.
| dominotw wrote:
| tight labor market?
| MontyCarloHall wrote:
| Let's assume this is the case. Anecdotally [0], I've
| observed (and seen many reports [1]) of the labor market
| being especially tight in low-margin, low paying industries
| (e.g. food service, agricultural work, trucking).
|
| Perhaps the costs of goods that are now experiencing
| inflation (dining out, groceries, shipping) were
| artificially deflated due to severe underpaying of workers.
| In order to pay people who work in those industries living
| wages, prices must rise, since margins are so thin that
| they can't absorb higher labor costs.
|
| Pessimistically, I wonder if this will mean many businesses
| in those industries will close, since demand will suffer.
| If wages in the restaurant industry rise significantly
| (without concordant pay raises across the board), many
| people will no longer be able to afford to eat out.
|
| [0] I recently went to a fast casual Mediterranean place.
| They recently increased starting pay for workers to
| $25/hour. A simple pita wrap now costs $15. I went
| somewhere else.
|
| [1] https://news.ycombinator.com/item?id=28834365
| [deleted]
| dumdumdumdum wrote:
| But the rich do control the supply for everyday items. People
| aren't eating more all of a sudden.
| aeternum wrote:
| Food spending does increase as income increases:
|
| https://www.ers.usda.gov/data-products/chart-
| gallery/gallery...
| 4903000 wrote:
| If food spending increases with income, doesn't that mean
| that rich people's competition over food is proportional to
| their wealth?
| thatguy0900 wrote:
| Isn't that just the way it goes. The common man finally finds
| himself in a position of power and business has to start paying
| more and then we get 5-6% inflation.
| thehappypm wrote:
| Inflation coupled with wage growth is great for homeowners.
| Mortgage payments are inflation-proof.
| nly wrote:
| In the US. In the UK it's normal to refinance every few years.
| Fixed rates of 2-5 years are common and 20% or so of people are
| fully variable.
| nugget wrote:
| Property taxes and maintenance costs are not, however.
| noduerme wrote:
| There's not much to like about the California tax code, but
| prop 13 is one good thing there. It caps the rate of property
| tax increase at 1% per year.
|
| Whereas my property tax in Oregon is up 10% this year. That's
| a tax on an unrealized gain. Worse, it's not even a real
| gain, it's a tax for just keeping pace with inflation.
| thehappypm wrote:
| Well yeah. I mean the tax base needs to keep up with
| inflation too. Can't build roads with $100 when everything
| costs $110 now.
| CogitoCogito wrote:
| Proposition 13 is good for those who have had a property
| for a long time, but it's certainly not good for new
| buyers. They are effectively subsidizing long-term
| residents. I understand why property owners might like it
| after they've been somewhere for a while, but I personally
| find it fundamentally unfair.
| [deleted]
| procinct wrote:
| Interesting, in NZ you have an interest rate you pay to the
| bank for your mortgage that has to be renewed every few years.
| This interest rate is definitely impacted by inflation. Does
| the US/where you are from not have a similar system?
| MontyCarloHall wrote:
| Nope. Most mortgage rates are fixed for the full term of the
| loan (typically 30 years).
|
| If you can afford the down payment, it's a great time to buy
| a house. (Even better would have been a few months ago,
| before inflation started to kick into high gear).
| WanderPanda wrote:
| How much interest do you pay on a 30 year fixed interest
| mortgage? Seems like a total no-brainer if it is below 2-3%
| dominotw wrote:
| 2 - 4% these days. Its only a no brainer only if property
| prices never go down, which does seems to be the case
| these days.
| throwawaymanbot wrote:
| I read, this "inflation" is taking 30-36+ % of lower waged'
| earners income in food shopping alone. But only 8% of wealthier
| earners, they are hardly feeling any pinch.
|
| One feels it deeply, the other does not. I read that some on Wall
| st are blaming the lower waged for inflation because of stimulus
| checks. (There wasnt a similar feeling of blame when Wall st got
| all the stimulus checks in the 2008 of course ;)
|
| Double Standards; whereby those who earn above 250K are blame
| free, and those below must remain with no living standards raise
| lest THEY get blamed for inflation and the general untouchable
| like gangsterism on Wall st.
|
| In a nutshell, If those on lower wages are not allowed to get
| ahead some, whats the point of capitalism??
| leobg wrote:
| Well, of course. Isn't that what inflation is for? Give 'em a
| raise on paper so they keep quiet. Then take it back through "the
| invisible tax".
| dragontamer wrote:
| Those in debt (which is the majority of people) benefit from
| inflation though. Be it mortgages, car loans, or even just
| credit-card debts. If inflation/wage growth is 6% and your
| mortgage is 3% and your car payment is 5%, you're getting
| ahead.
|
| The people who are hurt by inflation are people holding cash
| and/or bonds.
| nly wrote:
| Only if your debt is fixed for term and the term is long
|
| Most mortgages in most parts of the world aren't long term
| fixed rate. Same is true of student debt and credit card
| debt.
| dragontamer wrote:
| Luckily for those people, interest rates are at record lows
| as well. So even if you are in a variable-rate loan, you're
| still making it out ahead right now.
| xyzzy123 wrote:
| Also creates a steady state where _actual_ taxes are slowly
| increasing due to bracket creep.
| noduerme wrote:
| Timely.
|
| https://www.cbsnews.com/amp/news/tax-
| brackets-2022-inflation...
| eigengrau5150 wrote:
| If your wage didn't go up by ten percent, you got a pay cut.
| tcmart14 wrote:
| Hasn't this been the case for years? Where I work, yearly raises
| are usually 2-3% except for this year (they did 5%). During those
| years, inflation was somewhere in that same window.
| croutonwagon wrote:
| Meanwhile I haven't seen a wage change since 2018....when I
| accepted my current role.
|
| It's hard. It's a good job. And I can do it with my eyes
| closed. But I'm probably definitely leaving a good percentage
| on the table, in exchange for other ancillaries (lots of time
| off per year, cheap benefits etc)
| dominotw wrote:
| > It's hard. It's a good job. And I can do it with my eyes
| closed. But I'm probably definitely leaving a good percentage
| on the table, in exchange for other ancillaries (lots of time
| off per year, cheap benefits etc)
|
| you can find this at a higher wage too. You will be
| surprised.
| dominotw wrote:
| > except for this year (they did 5%).
|
| my employer said rsu price increase was inflation adjustment.
| There is no adjustment to base pay.
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