You got still robbed, even if you did get a pay increase at the end of the year.
They measure the increase in prices over a year and sometimes increase pay to match it But you have already worked a year for the lower salary. It would be fair if the pay increase is slightly higher than the inflation.
Pay isn’t linked to inflation directly for a reason. Not everything I spend my pay on is affected by inflation, especially not in real time.
It’s possible to run your own business and link directly to pay and real time profits.
But the exchange for not getting weekly pay increases to match inflation is that we don’t get drops when companies lose money.
Pay isn’t linked directly to purchasing power and is really a market function. Companies pay as little as they can pay and workers work for as much as they can get. Obviously this is simplified and macro, but my point is that pay is based on need, but on availability.
I wouldn’t want a “fair” system that only paid me based on inflation and other factors.
Sure inflation would never subside, but people would still be more able to afford things if wage increases outpaced inflation. Wage increases and inflation are sort of inevitable right now because capital is overvalued. All these schemes to try and control inflation by suppressing wages are bound to fail.
The people who are extracting rents on the economy need to have their rents reduced and inflation naturally eats into those rents. The problem isn't that people at McDonalds are making too much money, they are still making a pittance after all the wage hikes, the problem is unproductive rent seekers.
Except that inflation this time was not really driven by wage increases (many had very small increases if any throughout covid), what grew massively is corporate profits.
With inflation though some one/group is making the extra money. Assume for a moment it’s the wealthy as they own assets, shares in companies etc.
The argument that “if regular people got pay rises it would fuel inflation” may be true but it’s no solution to our wealth inequality issues, and so presumably the cycle of the wealthy getting wealthier and the rest of us getting poorer should just continue?
Over the last 10(?) years pay increase was ahead of inflation. Mind you, that's just an observation – but I don't understand why pay keeping up with current inflation would even be the expectation? These things are not synchronised, in either direction.
This proposed explanation is a myth. Profits - often created through the use of investing cheap money (and therefore the creation of more money) - drive inflation. Wages do not. OECD have shown this to be the case thanks to the recent handy experiment in the form of a pandemic arriving after a period of quantitative easing and very low interest rates in the UK.
There are various things that go into inflation, and wages are only a small part of it. Wage price spirals are very unlikely and have not been demonstrated. Wages are not 100% of the cost of products, so even if companies directly increase product prices exactly by labor cost increases, the product prices would not increase by as much as wages did.
More likely causes for system wide inflation generally lie in limited substitution options for people. If they have to buy from limited options, either because of a lack or supply or because of monopolistic behavior, prices can be jacked up as undercutting is of no concern. This can happen both at the finished products level, or somewhere in the chain. E.g. the cost of gasoline goes up due to lack of alternatives and since it is used by companies making and transporting many types of products, prices go up everywhere.
In the UK I haven't had a pay increase anywhere near inflation since 2019. I've had to move company twice since then in order to maintain or increase my standard of living. I'm now making 65% above what I was making in 2019, whereas if I'd taken the pay increases offered I'd be making 13% more right now than in 2019.
Considering prices in the UK are 22% higher than they were in 2019 that's pretty bad, and IT is a well-paid industry, so you can imagine what it's like for people on lower wages.
Same here. Jumped ship in late 2021 for a 50% pay increase. Haven't had a pay rise with new employer since. They have one more chance this annual review cycle or I'm jumping again.
My monthly mandatory expenses (excluding mortgage, since it's fixed for now) have crept up 15-20% this year.
Just renewed my home insurance it's gone up 40% since Dec 22
In 4 years I'm expecting my mortgage payments (my biggest expense) to increase at least 30%.
We're pretty comfortable, and think we stay off the hedonic treadmill as much as possible, but looking to start a family and I have a lot of financial anxiety despite a decent 6 figure salary in London
Total (not marginal) tax burden on my salary is >40% and getting worse every year due to fiscal drag.
The UK is insane. I left in 2020 and came back to visit recently, things are over 50% more expensive. I used to buy 20 chicken nuggets for £4, it was £6.50 or something. Pints are £7+ instead of £4.
I stayed with a friend and he kept his flat at 15c because heating beyond that was too expensive. I used to keep it at 18 and didn't even consider the costs (once I stopped being a student).
I appreciate that the 22% more expensive is on average, but the things that I care about have gotten significantly more expensive. It really killed any desire I have of ever moving back there.
I visited the UK last in 2022, I stayed in Bristol. I visited the nearest pub to my hotel many times, it was a Wetherspoons. I know that spoons doesn't have the best reputation but it was clean, lively but not packed.
'Abbot' ale was on special at £1.50 a pint and when the special price ran out, other beers were starting at £2.50
I'd like to know where specifically you were drinking. A Central London hotel bar? Because £7 a pint is ludicrous and not at all representative of normality.
> 'Abbot' ale was on special at £1.50 a pint and when the special price ran out, other beers were starting at £2.50
I would consider that to be very cheap, even when I lived in Bristol (before cost-of-living crisis). I don't recall pints being that cheap at Wetherspoons either. Even most beers at Tesco are more expensive than that. £1.50 is roughly the same price as Tesco[1] (£1.375 for a 500ml can).
It was a 'last barrel' price, I think a deal before the keg expires etc. When that finished we could still get Abbott only it was £3. I did say it was a special deal.
Wetherspoons have an app where you can order online (never used it before and had the pleasure of discovering how dreadful it is for the first time), but they don't publish any prices online other than that.
Turns out you can still get Abbott for even less than that. Looks like there's quite a lot of variation in Bristol but the Robert Fitzharding seems to be cheapest, selling a pint of Abbott for £2.34, the city centre pubs seem to be selling for £3.42ish, and the less central pubs seem to be around £2.77.
It's not at all beyond the realms of possibility that you might still see a special offer of around £1.50 for a pint. Nice!
This is Edinburgh where I used to live at the same pub we used to go to after work for years. Same owners and everything, it's not a fancy pub by any means, but it does have good craft beer and whats on tap is constantly changing.
I mean, even back in 2020 4-5 quid for a pint wasn't cheap, but the beer was good and always changing. I'm sure you can still find a £2-3 pin _somewhere_ in Edinburgh, but that's not where we used to drink.
And yet, food in the UK is still markedly cheaper than in most countries -- and especially so when compared to the USA. My wife and I make about as much here as we did in the US, and despite higher taxes, we're actually doing very similarly, financially, because of much lower cost of goods on average.
Contracting is still alive, posing as a contractor while being an employee is dead. Tech pay is low compared to the US, but still very high compared to average salaries.
> Contracting is still alive, posing as a contractor while being an employee is dead.
In some odd niches where the pool of talent is very small and client's can take the risk of getting status determination wrong - yes, but this is also shrinking and people retire early.
You have also wrong understanding of IR35. The legislation has been created to protect interests of big consultancies so that their developers don't quit and start working with their clients directly taking profit for themselves.
If the legislation was about "working as employee" then the big consultancies that supply workers who do just that wouldn't be exempt from it.
> big consultancies so that their developers don't quit and start working with their clients directly taking profit for themselves.
That and also to make it look like the government has increased the financing of the NHS and other government agencies that rely on contractors.
Here is how it works: increase daily rates by classifying workers inside ir35, allocate more funding, claim half the finding back through taxes, use money for something else.
But indeed the main reason is to help consultancies - notably those such as Infosys, owned by the prime minister’s family.
The result is a steady brain drain, outsourcing of work, and a drop in quality.
I do agree that some folks have been disguised employees, but the majority were not. Contracting has been the main driver of innovation - the best in tech were motivated to spread the knowledge and prop up the industry. Some of the best engineers I knew, hired or worked with, were contractors. Now a significant portion have left the country, are serving us clients or are moving on to something else. Being a permanent worker is simply not attractive given the low pay.
> I do agree that some folks have been disguised employees, but the majority were not.
Even that is a red herring. This angle has been created to gain public support for the legislation. If you run a business, you have to charge more than you would get paid as an employee, simply because of your overheads, things like insurance, accounting and whatever else that is part of running a business and to cover for periods of downtime or to be able to hire someone else. It is easy to create envy in that situation, because the worker sitting next to you seems just like you, does the same job, so why they are paid more and pay "less" tax? Most employees don't understand how business works so they of course support these rules thinking contractors are gaming the system. But they don't understand that if the contractor gets replaced by a "disguised employee" from a big consultancy, exactly the same thing is happening, except the big consultancy is taking all the profit. But workers got gaslighted - big consultancy = real business, someone like you trying to run exactly the same business = disguised employee
That's what it is about.
IR35 basically targets service based business where the owner of the business is providing service. This is probably how most of businesses start and this legislation blocks that to fill the pockets of big corporations. That's insane.
IT in the UK is poorly paid. Sure people get more than average salaries, but they no longer afford you a comfortable living.
It's not poverty yet, but it is heading that way.
Governments make sure that skilled work doesn't pay.
Many people in the IT that I know, don't work for UK companies anymore, because they hit the ceiling (it's difficult to get paid more than £150k for a developer) and only way to get above it is to work with US companies.
The argument often used by governments is that pay rises drive inflation, so must be supressed in order to pull inflation back down.
Problem is, that's not entirely true. The OECD[1] looked at whether workers, business or governments had contributed most to inflation, and the data revealed that in the UK at least, business profits were most to blame.
If wages don't drive inflation, and profits do, you can lower inflation, increase quality of life and create a more equitable society by putting pressure on business to pay their staff more, and have smaller profits.
Of course that won't happen, because we're now living in a dystopian Ayn Rand/Margaret Thatcher-inspired wet dream, so y'know, be safe out there and godspeed.
The problem with raising pay across the board is that it reduces the value of money. Everyone is making $15 more? Great! Now everything is $15 more expensive to make up for the loss in currency value; more money in circulation means each dollar and cent is worth less.
This is then compounded because most business have no reason to not just offload the cost of increased pay onto the customers, who also got increased pay from their work.
So by increasing pay, money and manhours both lose value while the value of goods stay the same.
To be clear: Increasing pay is one of many levers that can be pulled to address inflation, but just increasing pay is not going to address inflation (and will likely make inflation worse).
"you can lower inflation, increase quality of life and create a more equitable society by putting pressure on business to pay their staff more, and have smaller profits"
If profits are high, then it means that prices are too high. To reduce inflation you need to lower prices, not to redistribute profits from (too) high prices.
Wage increases don't drive inflation. The data now clearly show this to be a myth.
I think we can agree that profits being too high is a root cause of driving inflation, but disagree on how to address that. You want to redistribute profits into lower prices, I want to redistribute it to salaries and allow people to save more rather than borrow, because ultimately its borrowing money (which is in essence creating new money), that drives inflation.
And headline inflation is just one part of the story. Broad money growth has averaged around 7% for decades for USD, similar for other ‘stable’ currencies, and much worse for the ‘not so stable’ currencies.
If you’re rich enough, you won’t keep your value in cash, but rather will buy some assets using it (equity, property, whatever). If you’re rich enough and smart enough you’ll have realized that you can take loans to finance asset purchases in effect shorting the currency.
However, if you’re not rich enough, depend on your wage, and can’t short the currency by buying up assets, you get the short end of the stick. Some say this is by design.
I recently read an article in the Economist arguing how income inequality has actually gotten better in the rich world. They argued that the wage gap between blue collar and white collar workers has been shrinking. I expect that to accelerate with the advent of AI.
But the wage gap says less and less about income inequality when the society gets divided into owner and wage bound classes.
The wage gap was always nonsense meant to get people angry at the working class over inequality not caused by the working class. Notice how governments never spread propaganda about the WEALTH gap or insist wealthy people redistribute their assets to various minority groups. When governments focus on the evils of wages and ignore wealth, just understand they're trying to stoke hatred and prejudice between poor members of various identity groups to distract people from the fact that the wealthy are fucking everybody.
Bingo. I'm not sure where you're from but it's especially bad somewhere like the UK where income tax rapidly approaches 50% once you get above median income. There is simply no way for people who start with nothing to leave the rental class. When you look at rich people, they inherited it. Doesn't matter how well they did in school or how hard they work.
Another major pain point is how much more tax effective it is for everyone to work as opposed to families having a single income. Basically you only get to take advantage of both partners' tax allowance if both work, meaning people who have to work (renters) have to work even more and probably live off copious shite food like microwave meals or eating out which costs even more and have to pay for someone to look after any children and even walk their dog!
The 99% movement had it right. What they didn't have was any actionable solutions to this problem, unfortunately. Now that's all been forgotten and people are more interested in issues like men vs women which tell us all men are screwing all women as opposed to the truth which is a few wealthy (mostly men) are screwing everybody.
Solving this problem with law wouldn't be easy, though. The taxation laws would need to be made extremely complex. They would have to take into consideration the situation of the whole family, for example. Would that be fair? Also, would it make sense to consider potential inheritance? The potential for abuse is enormous. Probably higher property tax for high-value properties could help a bit, bit it's just a drop in the ocean.
The point is, this would basically concern parents with children. What about their grandparents who own a large property? They are treated separately when they are alive because they are a different household. But once they die, they pass their real estate to their offspring. Should those expecting inheritance be treated differently?
If you want to truly even out the playing field, just ban inheritance. You would think this would be a primary goal of pro-equality types but, oddly, even the poorer people in society are against this for various reasons.
We can't ban genetic inheritance, but we compound its effects by allowing wealth inheritance too.
I get that there's sentimentality and people would be against the family home being taken by the state upon death of a parent, but we could give family first dibs on buying the house. The difference being they actually have to buy it, they don't just get it.
But I also think it's important to focus on the thing that really matters which is happiness, not wealth. It seems to me that above a certain level of wealth people can be happy, and that level is way lower than even the median level of wealth in many Western countries. Unhappiness at high levels of wealth comes from the Hedonic treadmill which is driven by inequality. Basically people see others with "more" than them and it makes them unhappy. If they never saw that, they could be happy. So I would study what goods have this effect and massively tax them. Luxury/big cars are a good example.
Any action should not be just to even out wealth for the sake of it, it should be about achieving a happier society (and note I didn't say more productive society etc. that is also something that should only be pursued if it leads to more happiness).
Wealthy people can afford to set their children up financially before they die whereas normal people might have to, yanno, keep living in that house till the end.
I suppose you are thinking of a philosophy like Stoicism? I have read a fair bit but wonder how it deals with cases where other people are incentivised to make you unhappy. That's basically what marketing/advertising is. They thrive on making you want something by whatever means e.g. lying, addiction etc.
It’s easier for a stoic to lie to everybody about how they control their own happiness, than it is for a stoic to actually force themselves to be happy. Feigned happiness is useful enough that it doesn’t matter if stoic belief of emotional control is a fantasy, when everybody believes you can control your emotions you tend to be socially rewarded.
Yes if I understand your point, I agree with it, it feels like regular folks are all getting closer in pay gap. But the gap to the wealthy is accelerating.
It certainly feels like it is by design. However with more wealth you have more flexibility, more time, more resources (e.g. smart accountants). I can’t help but feel that it’s just inevitable.. when the economy is bad the wealthy win, and when the economy is good the wealthy also win. Over time the gap gets large. Surely this has been the case as long as civilised societies have existed, I wonder if there’s much research on this.
Yes, a very interesting one that analysed house sizes over time in ancient civilisations to show the smallest houses got slightly bigger as civilisation develops but the big houses become mansions and then palaces.
It has always existed only in part. As in, wealth begets wealth. So, like you say once you’re wealthy you have more opportunities for more wealth. However, it’s even worse than that now. The system where continuous debasement of currencies has been normalized is less than a century old.
In the old days a King would debase the currency and hope nobody notices. Today it’s common knowledge, yet people keep acting as if a dollar/euro today is the same thing as one tomorrow.
In general, it’s not that things are getting more expensive, or one’s investments are paying off. It’s mostly just that the currencies we use as units of account are continuously losing value.
> I recently read an article in the Economist arguing how income inequality has actually gotten better in the rich world. They argued that the wage gap between blue collar and white collar workers has been shrinking.
This is misleading. It's just the white collar workers are taxed even more and they earn less money than they used to. This has several negative effects. For instance why would you invest in your education and become an engineer or something if you won't make substantially more money than say warehouse worker who does not need to spend years on specialist education?
The wealth gap is widening, but between the rich and everyone else. Some call it asset stripping. People dip into their savings to make ends meet, sell their assets. Until they run out of money completely. Then they will own nothing.
Wow, this is grim. Especially in conjunction with the article highlighting an aging population. I'm guessing a lot of young Italian professionals move abroad as it offers better salaries?
Since like forever, 1600 EUR net monthly is a good salary in Italy. Hahaha, I'm joking - you'll never get indefinite employment contract in Italy. This can explain the invasion of Italian guys to post-Communist countries. In addition to earning slightly more, they're fucking their brains out there. In exchange we can visit Italy in summer, see their old people, be robbed in cafes, restaurants, hotels, or literally be robbed... quite miserable exchange.
Or not at all. If the 45% are exactly on the mark with inflation, then the average would be significantly below inflation. The 45% would have to significantly exceed inflation for it to be spot on. And of course even then it's little solace for the 55% that someone else is keeping up
In Australia the ACS (Australian Computer Society), "the professional association and largest community for Australia's technology professionals" is telling the world that the median hourly rate of $57.08 is too high and that professionals should expect "rebalancing" after the pandemic.
For context, inflation adjusted, in 1998 (25 years ago!) when I was a generic IT help-desk operator at a local University I was earning that rate. So, apparently in ICT we're earning too much and we should be happy about it.
The main reason for wage suppression is more tied to the country wanting to intentionally devalue its own currency through inflation because of recessions (or fear of recession).
Devaluing the currency and wage suppression are done in order to make exports more profitable for companies so they can start growing again (or prevent them from going bankrupt during a recession) and to later reinvest to trigger economic growth again. At the same time also to reduce the number of imports due to them being more expensive due to inflation. It is all about rebalancing the trade deficit.
Wage suppression is a well known way to get economies out of a recession, it is not necessarily a way to fight inflation (the inflation, to some extent, is desired in order to devalue your own currency). After the recession is over there is usually a period of market imbalance where new hires get inflation-adjusted salaries and tenured employees either eat the loss or are forced to move jobs to get competitive salaries again.
But yeah, it is the peons (wage-earners) who get screwed at the end, asset-owners (people who own stocks, property or companies) mostly get to ride it out unscathed.
Anectdotal: I got a raise after two years working for my current company. It's nice, to be sure, but it doesn't cover inflation according to the BLS inflation calculator.
Haven’t gotten a raise in three years (so probably 25% down in purchasing power). If I made less and had more expenses, I would be pissed. Can’t blame others that are.
Inflation is a government policy. It is a method to deflate the real value of government debt.
Like many government policies, unintended consequences generate headlines about how one policy negatively affects part of a society that another policy is working to protect.
At a macro level, government debt can only be resolved two ways: increase taxes to meet maturing obligations; reduce the real value of the obligations via inflation (and/or a combination of the two).
Future economist will have two national debt policies to analyze: Germany (with its constitutional low-debt mandate) and US which discovered over time that it could issue debt at far greater amounts than previous economist ever thought possible.
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[ 2.7 ms ] story [ 147 ms ] threadI guess this is US only (but doesn't say so...)
Pay isn’t linked to inflation directly for a reason. Not everything I spend my pay on is affected by inflation, especially not in real time.
It’s possible to run your own business and link directly to pay and real time profits.
But the exchange for not getting weekly pay increases to match inflation is that we don’t get drops when companies lose money.
Pay isn’t linked directly to purchasing power and is really a market function. Companies pay as little as they can pay and workers work for as much as they can get. Obviously this is simplified and macro, but my point is that pay is based on need, but on availability.
I wouldn’t want a “fair” system that only paid me based on inflation and other factors.
Sometimes real wages are grow, and sometimes they shrink.
The people who are extracting rents on the economy need to have their rents reduced and inflation naturally eats into those rents. The problem isn't that people at McDonalds are making too much money, they are still making a pittance after all the wage hikes, the problem is unproductive rent seekers.
The argument that “if regular people got pay rises it would fuel inflation” may be true but it’s no solution to our wealth inequality issues, and so presumably the cycle of the wealthy getting wealthier and the rest of us getting poorer should just continue?
More likely causes for system wide inflation generally lie in limited substitution options for people. If they have to buy from limited options, either because of a lack or supply or because of monopolistic behavior, prices can be jacked up as undercutting is of no concern. This can happen both at the finished products level, or somewhere in the chain. E.g. the cost of gasoline goes up due to lack of alternatives and since it is used by companies making and transporting many types of products, prices go up everywhere.
Considering prices in the UK are 22% higher than they were in 2019 that's pretty bad, and IT is a well-paid industry, so you can imagine what it's like for people on lower wages.
My monthly mandatory expenses (excluding mortgage, since it's fixed for now) have crept up 15-20% this year.
Just renewed my home insurance it's gone up 40% since Dec 22
In 4 years I'm expecting my mortgage payments (my biggest expense) to increase at least 30%.
We're pretty comfortable, and think we stay off the hedonic treadmill as much as possible, but looking to start a family and I have a lot of financial anxiety despite a decent 6 figure salary in London
Total (not marginal) tax burden on my salary is >40% and getting worse every year due to fiscal drag.
I stayed with a friend and he kept his flat at 15c because heating beyond that was too expensive. I used to keep it at 18 and didn't even consider the costs (once I stopped being a student).
I appreciate that the 22% more expensive is on average, but the things that I care about have gotten significantly more expensive. It really killed any desire I have of ever moving back there.
'Abbot' ale was on special at £1.50 a pint and when the special price ran out, other beers were starting at £2.50
I'd like to know where specifically you were drinking. A Central London hotel bar? Because £7 a pint is ludicrous and not at all representative of normality.
I would consider that to be very cheap, even when I lived in Bristol (before cost-of-living crisis). I don't recall pints being that cheap at Wetherspoons either. Even most beers at Tesco are more expensive than that. £1.50 is roughly the same price as Tesco[1] (£1.375 for a 500ml can).
[1]: https://www.tesco.com/groceries/en-GB/search?query=abbot%20a...
After multiple attempts to get the app to work, I gave up, and found this: https://pantryandlarder.com/spoons-map/
Turns out you can still get Abbott for even less than that. Looks like there's quite a lot of variation in Bristol but the Robert Fitzharding seems to be cheapest, selling a pint of Abbott for £2.34, the city centre pubs seem to be selling for £3.42ish, and the less central pubs seem to be around £2.77.
It's not at all beyond the realms of possibility that you might still see a special offer of around £1.50 for a pint. Nice!
I mean, even back in 2020 4-5 quid for a pint wasn't cheap, but the beer was good and always changing. I'm sure you can still find a £2-3 pin _somewhere_ in Edinburgh, but that's not where we used to drink.
Used to be until the government decided to kill contracting. Now tech pay in the uk is pretty low.
In some odd niches where the pool of talent is very small and client's can take the risk of getting status determination wrong - yes, but this is also shrinking and people retire early.
You have also wrong understanding of IR35. The legislation has been created to protect interests of big consultancies so that their developers don't quit and start working with their clients directly taking profit for themselves.
If the legislation was about "working as employee" then the big consultancies that supply workers who do just that wouldn't be exempt from it.
That and also to make it look like the government has increased the financing of the NHS and other government agencies that rely on contractors.
Here is how it works: increase daily rates by classifying workers inside ir35, allocate more funding, claim half the finding back through taxes, use money for something else.
But indeed the main reason is to help consultancies - notably those such as Infosys, owned by the prime minister’s family.
The result is a steady brain drain, outsourcing of work, and a drop in quality.
I do agree that some folks have been disguised employees, but the majority were not. Contracting has been the main driver of innovation - the best in tech were motivated to spread the knowledge and prop up the industry. Some of the best engineers I knew, hired or worked with, were contractors. Now a significant portion have left the country, are serving us clients or are moving on to something else. Being a permanent worker is simply not attractive given the low pay.
Even that is a red herring. This angle has been created to gain public support for the legislation. If you run a business, you have to charge more than you would get paid as an employee, simply because of your overheads, things like insurance, accounting and whatever else that is part of running a business and to cover for periods of downtime or to be able to hire someone else. It is easy to create envy in that situation, because the worker sitting next to you seems just like you, does the same job, so why they are paid more and pay "less" tax? Most employees don't understand how business works so they of course support these rules thinking contractors are gaming the system. But they don't understand that if the contractor gets replaced by a "disguised employee" from a big consultancy, exactly the same thing is happening, except the big consultancy is taking all the profit. But workers got gaslighted - big consultancy = real business, someone like you trying to run exactly the same business = disguised employee That's what it is about.
IR35 basically targets service based business where the owner of the business is providing service. This is probably how most of businesses start and this legislation blocks that to fill the pockets of big corporations. That's insane.
IT in the UK is poorly paid. Sure people get more than average salaries, but they no longer afford you a comfortable living.
It's not poverty yet, but it is heading that way.
Governments make sure that skilled work doesn't pay.
Many people in the IT that I know, don't work for UK companies anymore, because they hit the ceiling (it's difficult to get paid more than £150k for a developer) and only way to get above it is to work with US companies.
It's difficult to get paid more than £80-90k as a developer.
I see some that go over £100k but they are uncommon. I had to go the contractor route to make more than £100k.
If I went FTE at my current company they wouldn't pay me more than 90k, unless I moved to the US office and they would pay me $200k.
The UK has become cheaper offshoring.
Problem is, that's not entirely true. The OECD[1] looked at whether workers, business or governments had contributed most to inflation, and the data revealed that in the UK at least, business profits were most to blame.
If wages don't drive inflation, and profits do, you can lower inflation, increase quality of life and create a more equitable society by putting pressure on business to pay their staff more, and have smaller profits.
Of course that won't happen, because we're now living in a dystopian Ayn Rand/Margaret Thatcher-inspired wet dream, so y'know, be safe out there and godspeed.
[1] https://www.oecd-ilibrary.org/sites/ce188438-en/1/3/1/index....
This is then compounded because most business have no reason to not just offload the cost of increased pay onto the customers, who also got increased pay from their work.
So by increasing pay, money and manhours both lose value while the value of goods stay the same.
To be clear: Increasing pay is one of many levers that can be pulled to address inflation, but just increasing pay is not going to address inflation (and will likely make inflation worse).
No, printing more money to make more loans and bail out the crony financiers causes a reduction in money value.
They do.
"you can lower inflation, increase quality of life and create a more equitable society by putting pressure on business to pay their staff more, and have smaller profits"
If profits are high, then it means that prices are too high. To reduce inflation you need to lower prices, not to redistribute profits from (too) high prices.
I think we can agree that profits being too high is a root cause of driving inflation, but disagree on how to address that. You want to redistribute profits into lower prices, I want to redistribute it to salaries and allow people to save more rather than borrow, because ultimately its borrowing money (which is in essence creating new money), that drives inflation.
If you’re rich enough, you won’t keep your value in cash, but rather will buy some assets using it (equity, property, whatever). If you’re rich enough and smart enough you’ll have realized that you can take loans to finance asset purchases in effect shorting the currency.
However, if you’re not rich enough, depend on your wage, and can’t short the currency by buying up assets, you get the short end of the stick. Some say this is by design.
I recently read an article in the Economist arguing how income inequality has actually gotten better in the rich world. They argued that the wage gap between blue collar and white collar workers has been shrinking. I expect that to accelerate with the advent of AI.
But the wage gap says less and less about income inequality when the society gets divided into owner and wage bound classes.
Another major pain point is how much more tax effective it is for everyone to work as opposed to families having a single income. Basically you only get to take advantage of both partners' tax allowance if both work, meaning people who have to work (renters) have to work even more and probably live off copious shite food like microwave meals or eating out which costs even more and have to pay for someone to look after any children and even walk their dog!
The 99% movement had it right. What they didn't have was any actionable solutions to this problem, unfortunately. Now that's all been forgotten and people are more interested in issues like men vs women which tell us all men are screwing all women as opposed to the truth which is a few wealthy (mostly men) are screwing everybody.
We can't ban genetic inheritance, but we compound its effects by allowing wealth inheritance too.
I get that there's sentimentality and people would be against the family home being taken by the state upon death of a parent, but we could give family first dibs on buying the house. The difference being they actually have to buy it, they don't just get it.
But I also think it's important to focus on the thing that really matters which is happiness, not wealth. It seems to me that above a certain level of wealth people can be happy, and that level is way lower than even the median level of wealth in many Western countries. Unhappiness at high levels of wealth comes from the Hedonic treadmill which is driven by inequality. Basically people see others with "more" than them and it makes them unhappy. If they never saw that, they could be happy. So I would study what goods have this effect and massively tax them. Luxury/big cars are a good example.
Any action should not be just to even out wealth for the sake of it, it should be about achieving a happier society (and note I didn't say more productive society etc. that is also something that should only be pursued if it leads to more happiness).
Maybe. Or they’d be unhappy about something else (genetics or physicality). Being happy is a choice.
I suppose you are thinking of a philosophy like Stoicism? I have read a fair bit but wonder how it deals with cases where other people are incentivised to make you unhappy. That's basically what marketing/advertising is. They thrive on making you want something by whatever means e.g. lying, addiction etc.
It certainly feels like it is by design. However with more wealth you have more flexibility, more time, more resources (e.g. smart accountants). I can’t help but feel that it’s just inevitable.. when the economy is bad the wealthy win, and when the economy is good the wealthy also win. Over time the gap gets large. Surely this has been the case as long as civilised societies have existed, I wonder if there’s much research on this.
This isn't the study I was thinking of but is a similar idea and explanation of the method: https://phys.org/news/2021-03-ancient-maya-houses-wealth-ine...
In the old days a King would debase the currency and hope nobody notices. Today it’s common knowledge, yet people keep acting as if a dollar/euro today is the same thing as one tomorrow.
In general, it’s not that things are getting more expensive, or one’s investments are paying off. It’s mostly just that the currencies we use as units of account are continuously losing value.
This is misleading. It's just the white collar workers are taxed even more and they earn less money than they used to. This has several negative effects. For instance why would you invest in your education and become an engineer or something if you won't make substantially more money than say warehouse worker who does not need to spend years on specialist education?
The wealth gap is widening, but between the rich and everyone else. Some call it asset stripping. People dip into their savings to make ends meet, sell their assets. Until they run out of money completely. Then they will own nothing.
https://www.reuters.com/markets/europe/why-us-italy-seeks-wa...
If you apply strict mathematical interpretation to that sentence I guess that means that salaries are pretty spot on with keeping up with inflation.
I.e the rest 45% implicitly says it keeps up with inflation.
For context, inflation adjusted, in 1998 (25 years ago!) when I was a generic IT help-desk operator at a local University I was earning that rate. So, apparently in ICT we're earning too much and we should be happy about it.
Source: https://ia.acs.org.au/article/2023/it-teams--salaries--rebal...
Devaluing the currency and wage suppression are done in order to make exports more profitable for companies so they can start growing again (or prevent them from going bankrupt during a recession) and to later reinvest to trigger economic growth again. At the same time also to reduce the number of imports due to them being more expensive due to inflation. It is all about rebalancing the trade deficit.
Wage suppression is a well known way to get economies out of a recession, it is not necessarily a way to fight inflation (the inflation, to some extent, is desired in order to devalue your own currency). After the recession is over there is usually a period of market imbalance where new hires get inflation-adjusted salaries and tenured employees either eat the loss or are forced to move jobs to get competitive salaries again.
But yeah, it is the peons (wage-earners) who get screwed at the end, asset-owners (people who own stocks, property or companies) mostly get to ride it out unscathed.
Spoiler: because it's a puff piece.
Like many government policies, unintended consequences generate headlines about how one policy negatively affects part of a society that another policy is working to protect.
At a macro level, government debt can only be resolved two ways: increase taxes to meet maturing obligations; reduce the real value of the obligations via inflation (and/or a combination of the two).
Future economist will have two national debt policies to analyze: Germany (with its constitutional low-debt mandate) and US which discovered over time that it could issue debt at far greater amounts than previous economist ever thought possible.