Weak Pay Growth Puzzles Fed Chief, Just Like Everyone Else

[timd354]

I'm just saying that I think we are early in a period that will be similar to 50's and early 60's and late 80's and 90's. That's all.

Who knows what the future holds, but things probably will not play out exactly the same way as they did in the past. Things won't replay like they did in the 1950's and 1960's because they great economic fortune of that era in the US was largely a result of practically all the industry in most of the other industrialized nations in the world having been largely destroyed during WWII. Growth in the 1980's and 1990's was fueled first by better tax policy, then by rapid technological advancement. While we are in another period of technological advancement, much of that advancement has to do with automation, which will cause a lot of job loss. While I think that well educated people will do very , very well in the near and long term future, I am afraid that there will be a massive underclass of people who are relatively unskilled and uneducated who are going to very poorly in the modern economy. In the 1950's or 1960's, these same people could have turned a wrench for 8 hours a day in a unionized auto plant or in a steel mill and made good money, but the ability of people who are relatively unskilled and uneducated to make a good living in a blue collar job is pretty much gone. This will cause (and is already causing) a severe fracture in the social order

 

[Joe Flacco]

Who knows what the future holds, but things probably will not play out exactly the same way as they did in the past. Things won't replay like they did in the 1950's and 1960's because they great economic fortune of that era in the US was largely a result of practically all the industry in most of the other industrialized nations in the world having been largely destroyed during WWII. Growth in the 1980's and 1990's was fueled first by better tax policy, then by rapid technological advancement. While we are in another period of technological advancement, much of that advancement has to do with automation, which will cause a lot of job loss. While I think that well educated people will do very , very well in the near and long term future, I am afraid that there will be a massive underclass of people who are relatively unskilled and uneducated who are going to very poorly in the modern economy. In the 1950's or 1960's, these same people could have turned a wrench for 8 hours a day in a unionized auto plant or in a steel mill and made good money, but the ability of people who are relatively unskilled and uneducated to make a good living in a blue collar job is pretty much gone. This will cause (and is already causing) a severe fracture in the social order

We'll see what happens. I am optimistic about the future of our country and the world.

 

[Randolph Kinney]

Job openings, at 6.7 million, exceeded the most recent broad read on the level of U.S. unemployment for the first time since the JOLTS series started in late 2000.

Is this cross of the two measures really the signal that, at last it’s laying the ground for higher wages to draw people from the sidelines? That remains a very open question.

First, there is the age factor. According to the Census Bureau, the median age in the U.S. was 35.6 years in 2001 and in 2016 hit 37.9—it’s projected to rise to 39.3 in 10 years and 42 in 20 years. It’s possible that people can be drawn off the sidelines with higher wages, but the age factor works against that. Further, there’s the skill set question. I’ve read about a shortage of truck drivers (though no wage incentives to accompany that), but I don’t see a 50-year-old former bond trader coming off the sidelines to haul things across the country.

Even with training and skill-building, is it realistic for someone in their 40s and beyond to come off the sidelines and move from a rusting location where they’ve been out of the workforce for a while to, say, the pricey Silicon Valley or Brooklyn start-ups? Is it realistic to expect this age bracket to trade up in home value, take out a larger mortgage or, perhaps, compel one spouse in a household to give up a job for somewhat better wages?

But, getting back to the initial point, that the aging workforce has ramifications. We’re still dealing with the consequences of the net worth hits of the last 18 years, meaning that older workers are still rebuilding their retirement funds. Evidence suggests they’re staying in the workforce but have achieved a level of income which isn’t likely to go up once they’re 50 plus. So, wages stagnate for this large cohort.

Consider compensation more broadly. Wages and salaries as a percentage of overall compensation has been coming down as insurance, retirement and Social Security contributions have increased; wage gains have underperformed.

The subtext to the JOLTS data is about the nature of those openings. Of the 6.698 million openings, 735,000 were in retail trade, 1.145 million in healthcare/social assistance, and 939,000 in leisure and hospitality. So, 42 percent of the openings were in jobs that typically don’t pay well.

http://www.wealthmanagement.com/retirement-planning/jobs-abound-wages-remain-stagnant

Aging population along with low wage jobs tells it all.

 

[George Hatch]

IMO my generation was born lucky, and by extension our kids had it easy growing up. Just as with the Greatest Generation, us Boomers won't live forever, though; and by the time we leave the workforce there will be lots of opportunities for our successors - that is, those who are still in the game. You can't win if you don't play.

I also think that happiness and well being are - to a certain extent - based on perceptions and choices. Someone who thinks they need $100k to be happy is going to have a tougher time of it than someone who thinks they need $40k. Particularly when considering the choices being made to attain those results. If a worker is seeking the work-life balance and the money isn't the thing they're going to see that $40k a lot differently than someone who thinks they need the new Tesla Model X and is working 80 hrs a week and still can't get there.

So us oldsters should probably stop judging the kids by the benchmarks we chose and let them determine their own goals. And the kids should probably refrain from thinking they have no control over their own outcomes. Our outcomes are mostly user-driven. We can't change our external environments but we can change how we interact with those environments.

 

[Randolph Kinney]

53% of millennials think they’ll become millionaires in their lifetimes, even though they’re $1 trillion in debt, according to a new survey.

https://moneyish.com/splurge/delusi...come-millionaires-despite-their-massive-debt/

Student debt is one thing, national debt is another. Furthermore, taxation to support social, welfare and health programs will take more of their incomes in the future. It is already baked into the cake.

 

[George Hatch]

53% of millennials think they’ll become millionaires in their lifetimes, ...

Hmmm, those expectations might be a problem.

 

[gregb]

53% of millennials think they’ll become millionaires in their lifetimes

If they live long enough, a million dollars in 2050 won't be the same as a million dollars in 2018.

 

[Gobears81]

53% of millennials think they’ll become millionaires in their lifetimes, even though they’re $1 trillion in debt, according to a new survey.

https://moneyish.com/splurge/delusi...come-millionaires-despite-their-massive-debt/

Student debt is one thing, national debt is another. Furthermore, taxation to support social, welfare and health programs will take more of their incomes in the future. It is already baked into the cake.

I couldn't find the specific definition of a millionaire for this purpose, but guessing it is net worth. If so, assume they have a median priced home now at a national average of what, $220,000? They would presumably pay off their mortgage in 30-years and at a growth rate of 3%, their house value would be $546,000 at that point. That would require them to have $454,000 in other net assets to qualify for millionaire status, which sounds like a lot now, but again like GregB said, inflation could whittle that down quite a bit. Using the same 3% growth rate suggests a present value of $187,000 for these remaining net assets. Since some financial advisors tell people to have a nest egg of $1,000,000 for retirement (a long shot for some, but this is still today's money that we are referring to), $454,000 in 30-years doesn't seem so outrageous. But this is coming from a millenial

 

[Randolph Kinney]

Most millennials expect to retire at age 56

A new study published by TD Ameritrade found that on average, millennials expect to retire by age 56.

And of the 1,500 millennials surveyed for the study, 53% expect to become millionaires at some point in their lives. However, that percentage is unevenly divided between men and women: Of those surveyed who expect to become millionaires, 70% are men, compared to 38% of women.

https://www.foxbusiness.com/features/most-millennials-expect-to-retire-at-age-56

Nearly 55 percent of young adults, aged 18 to 24, still live at home in the United States, according to the U.S. Census Bureau.

The proportion of millennials who will be overweight between 35 and 44 would also be significantly higher than the 63 per cent of adults of all ages who currently fall into these categories.

A business analytical company called Visier Insights divided 1.5 million US-based employees into two groups: Millennials, anyone born in 1983 or later and Non-Millennials anyone born in 1982 or before.

They found that Millennials resign from their jobs three-times as often as Non-Millennials – 29.1% compared to only 9.2%.

https://www.kare11.com/article/news/millennial-job-hopping-on-the-rise/89-563334689

The optimism of wealth and early retirement are not consistent with millennials' actions.

 

[Terrel L. Shields]

"I don't care...just need bodies...would be happy with anyone who will show up for work and can pass the pee test."
- Contractor I know

Real problem here. Colorado it is chronic according to a guy who hires movers for a moving van company. Space cadets cannot understand they cannot get hired with cannabis in their blood. "But it's legal!?!" So they go on the dole and are not counted as being in the labor force.

There are places and jobs... For instance, some truckers in W Texas servicing the oil patch are knocking down $200-300,000/ year. And pipelines are so glutted they are trucking Oil from Midland area to the Texas coast refiners at a cost of $12 or more just to sell it. Truck drivers overall are in shortage but luring them is difficult. Away from family sucks and self-driving trucks loom as potentially idling the entire industry of drivers.

The self-driving issue is a sore one. Companies should have to carry $100 million in insurance and any software glitch should carry penalty for the software engineers up to and including liability for voluntarily manslaughter and 2nd offense should require CEO to go to jail mandatory life in the event of a death.