This article is political theater by a historically liberal publication. It's here just in time to push the idea that 8 years of Democratic rule has helped people "climb out of poverty" and that at least 4 more years of it will be even better.
However, this is a very favorable interpretation of the data. Incomes are going up in large part due to increases in the minimum wage, which will ultimately cause a rise in prices. The unemployment numbers do not include the 2.2 million "missing workers" that have simply given up on finding a job [1]. Finally, most of the "health insurance" this article refers to carries such high deductibles that the people that have these policies can't afford to use them. So they are paying relatively high monthly premiums for coverage that they'll never be able to use except when they go to the ER, which they could have done before Obamacare and without the monthly hit for the premium.
The economy is slowly recovering, but this article is a prime example of putting lipstick on a pig to carry out the left-wing political agenda of getting Hillary Clinton elected.
Silicon Valley prices are inflated because of artificial supply constraints. When housing is so expensive that unskilled labor can't even afford to live 90 minutes from the city, wages will rise until they can move a reasonable distance from the city and thus prices will rise to accommodate the wage increase.
We have just started hitting goals for inflation and job growth so it makes perfect sense that a poll from 2015 will indicate that the public is discouraged.
edit: look at the CPI chart I posted and you will notice the period of deflation in 2015. Deflation is bad.
The article argues that people are leaving poverty by moving to places with higher minimum wages and through places with large populations increasing their minimum wage. Which means expensive-to-live-in places like San Francisco, DC, New York etc because those are the places with the higher minimum wage. It also means that the places they're moving to will become more expensive because of more demand for housing.
Incomes of those that have managed to get a job are rising because of state-mandated increases in minimum wage - not because of natural market forces. Businesses have two ways to compensate for the higher cost of labor that has been imposed on them: they can hire fewer people, and they can raise prices. Some will do both. But prices will rise - they just haven't yet because most of the increases in minimum wage were fairly recent.
While the overall impact of minimum wage increases on prices is far from settled, history has not shown it to lead to the catastrohic increases that are oft-foretold by opponents.
For instance, one full year after Washington's wage increase, we aren't seeing marked price increases [0].
If the effects of the wage increase on businesses was as profound as the doom-sayers wanted us to believe, then a year is certainly more than enough time to have seen them.
>they can hire fewer people
An expanding economy (which is partially fueled by higher incomes), helps to offset displacement of workers. Further, it's not as if businesses were seeking to hire workers they didn't need in any case. In fact, the ever-striving for optimal efficiency and productivity combined with automation is largely to blame for the lower labor demand/stagnant wages that precipitated the need for an increased minimum wage in the first place.
Indeed, it surprises me how employers are given so much credit for creating jobs when they're responding to demand. The more people who can (or are willing to) spend money on products and services, the more jobs are created. Businesses may start jobs but it's the consumers that make them viable.
You've edited your top-level comment from "Incomes are going up, but so are prices" to "Incomes are going up in large part due to increases in the minimum wage, which will ultimately cause a rise in prices" in response to friendlygrammar's data. Why didn't you mark the edit, which substantially changes your claims?
Testament to the current political reality: ideology trumps facts.
It's an old saying that democracy depends upon an informed citizenry, but what happens when the citizenry doesn't act in accordance with the information?
It's been "wisdom" for so many years that low taxes and low minimum wage results in increased employment and better prosperity for all. Guess what. It hasn't worked.
And it's a stupid argument to make when productivity is such an important measure that never gets factored in. How productive are workers who can't afford to properly live ?
>Businesses have two ways to compensate for the higher cost of labor that has been imposed on them: they can hire fewer people, and they can raise prices.
This is the "big lie" about the minimum wage.
Reality is that profits get hit first and profits get hit hardest.
Business lobbies and restaurant associations spend millions lobbying to prevent minimum wage increases. That would be completely irrational behavior if they could just pass on the costs to the consumer.
I don't like seeing comments like the parent on HN. Instead of adding to a discussion of economics and poverty, it tries to distract everyone with politics and ideology by throwing around (rhetorically) loud, aggressive and unsubstantiated allegations, inviting a response on that level.
Ideology and anger are not substitutes for facts and reason; they are threats to all the latter have built - as they have been for centuries - and a danger to us all.
Like most government measures of inflation the CPI has an interesting way of measuring of pricing changes, especially in technology. For example, suppose that a 2GB USB flash drive in the CPI basket of goods is discontinued and replaced with an 4GB model at a slightly higher price. The BLS compares this to the price of the old 4GB model and counts this as a price decrease even though most consumers end up paying more, and the same with every other aspect of technology. Now factor in the fact that tech has been stuck in a kind of red queen's race where you need higher and higher spec devices to continue, for example, viewing the same web pages and you can probably see the issue here.
The CPI also makes heavy use of geometric rather than arithmetic means which de-emphasises the goods which have risen most in cost on the assumption that consumers will substitute them for one of the cheaper alternatives, even if they're not substitutes. For example, until 2016 the CPI used the geometric mean for prescription drugs, assuming that if - for example - EpiPens shot up in price consumers would substitute them for other drugs which didn't even treat the same condition. (Notice that this article uses 2015 figures.)
Bring in Robert Reich and Thom Hartman, because the article is yet another piece of low-quality, establishment propaganda aimed at making people feel good about being systematically cheated and glad to incur externalities the rich shift onto everyone else. Furthermore, most new wealth is hyperconcentrating at the very top in a highly unmeritocratic, corrupt fashion, due to advances in technology and the insider-political complex which is able to self-reinforce favorable economic polices at the expense of everyone else, while the middle- and lower-class subsidize the rich with corporate and estate welfare approximately 6x more so than actual welfare. Granted that most jobs and labor can/are being greatly disrupted by technology, people are being freed up to do basically nothing while gains of efficiency aren't being adequately shared to ensure shared survival... there simply isn't enough work to go around any longer while at the same time there is also a massive imbalance in wealth accumulation. I think only a basic guaranteed income, either offered to all citizens voluntarily by the rich or more likely by the state, is one of only a couple of irreducible ways to redistribute money to ensure a minimal standard of living.
I don't find any of your arguments convincing. Despite the off-putting tone of your comment I will address the points you raise.
You suggest that the publication of this article has been timed to coincide with the US election, but the catalyst is clearly the release of the US census data. I don't see any evidence to suggest that the US Census Bureau has a political agenda.
You say that increasing income is going up 'in large part' due to increases in the minimum wage. But this ignores the article's claim that "a main driver behind the impressive 1.2 percentage point decline in the poverty rate ... was that the economy finally hit a tipping point after years of steady, if lukewarm, improvement". Even if we look only at increases in the minimum wage, it seems obvious to me that minimum-wage labour represents a small fraction of total business costs, so such wage increases will only have a small affect on inflation. And the bond market seems to agree: 30-year treasury bonds currently pay 2.33% while the inflation-protected version pays 0.56% [1] so Wall Street expects inflation for the next 30 years will average only 1.77% per year.
You say that the unemployment numbers do not include 2.2 million potential workers who are no longer looking for work. But even if we include these numbers the unemployment rate has still gone from about 11% in 2010 to 6.2% now [2]. That seems perfectly consistent with pulling millions of people out of poverty.
You suggest that 'most' people who have gained insurance under Obamacare cannot afford the high deductibles except for ER visits. But where is the data to back this up?
[2] The page
http://www.epi.org/publication/missing-workers/ says that the 'missing workers' would add 1.3% to the current unemployment rate. Since the number of 'missing workers' is roughly unchanged between 2010 and now I would expect that the difference was also about 1.3% in 2010.
> Most of the "health insurance" this article refers to carries such high deductibles that the people that have these policies can't afford to use them. So they are paying relatively high monthly premiums for coverage that they'll never be able to use except when they go to the ER, which they could have done before Obamacare and without the monthly hit for the premium.
Healthcare in the US is still horribly broken, but Obamacare was a step in the right direction. Many more people now have access to preventative care and though deductibles are still high, hospitalization will be less financially catastrophic than it was without insurance. Overall this should reduce costs as fewer uninsured patients will end up being treated in the ER, reducing costs passed on to everyone else.
A public option would be cheaper than the current compromise.
Yeah right: TINA, anything left of Reaganism is a rose-tinted delustional pinko socialist infantile temper tantrum. It's all about "poor life choices" and we need to "make whatever your country Great again".
Isn't that amazing how much things improve when elections are coming?
In my parent's country Spain, they have deferred some statistics two years in order to make it look better for the elections.
The US is not better in this regard, you don't like the numbers? change the statistics methodology and you have the numbers you want. Read "shadowstats if you are interested in the details.
I have never seen so much unilateral support for democrats on the US media in my life. There are seriously worried over Trump, both on the Republican side and democrats.
This just proves to me that the all the fear mongering that has been surfacing recently is because of the election. A few months ago the average person wouldn't have been talking about interest rates and the fed, you'd think from the discourse today that everybody had a Phd in Economics.
I'll just speak for myself here. The economy is definitely ''hot'' but my perception is that the current recovery is incredibly shaky and has been fueled by historically unprecedented central bank interventions. I don't have a PhD in economics but I can read a debt chart and I understand broadly what zero interest rate policies are meant to accomplish. When I read that >50% of all European sovereign debt now has negative yields, some warning lights go off in my head. Unlike in, say, 1998 or 2006, both years I was working full time in tech, when the economy seemed similarly hot but ''felt'' much more stable.
However, in terms of how the economy "felt", it was 2007 when that started biting, with Bear Stearns' travails becoming too prominent to easily ignore.
But, yeah, the mortgage market was already shows serious stress in 2016, but presumably nugget wasn't watching it, he says he was watching the malinvestment from the dot.com crash get resolved.
Again just one person's perspective but it felt like the mal-investment from previous asset bubbles had been allowed to more fully resolve itself. Certainly that was the case with the dot com crash there was real pain felt throughout the system. Whereas this time the housing crash morphed into a kind of economic twilight zone. I have friends who trade on Wall Street who tell me that the market now moves not on economic performance and fundamentals but on perceptions and predictions of Government intervention.
Poverty is certainly relative, depending on the cost of living where you live and your own circumstances. 20K is about half the minimum wage in Australia, but it'd be a lot in some Asian countries. Rural US is going to be cheaper than NYC & SF, and so on.
Psst: if you want people to be able to contact you (eg if they wanted to ask about your freelance web dev, job offers etc), you might want to add a URL / email / Twitter etc in your HN bio. Also, keep an eye on the HN 'ask' tab at the start of every month, in case you want to post in the "Freelancer? Seeking Freelancer?" threads, or look at the "Who's Hiring? (October 2016)" thread. Never know what opportunities can come your way from those.
I am still figuring out how this site works ex. How to get notified of a response like this one.
Yeah although I am using a username. I guess posting my freelance account on UpWork would kind of defeat my anonymity. Oh well... Guess I have to behave.
That's cool! If you'd rather be anonymous, that's totally fine here, plenty of anonymous folks here. I'm not a moderator or anything, just a random HN visitor who saw your first post.
You can track replies by clicking on "Threads" at the top - it lists comments you've made and replies to you. Or you can get email notifications via HNReplies.com, a 3rd party service.
Two quick links in case you find them helpful in getting past that 20K barrier (then I'll quit nagging, I promise!) Take a look at Breaking The Time Barrier [1], a free PDF from Freshbooks, and also check out the free articles that Brennan Dunn posts / emails on freelancing [2].
Wow thanks for the links. Also your response. I did update my profile with a link to my upwork page. I'm not "up to date" with modern technology with regards to web development.
Anyway, again thanks for those links. I realize that I need to build products/services so I'm not trading hours of my life for money.
Freelancing kind of sucks, I practically do work for free, my current job I've been doing for the past three months and it's still valued at most $100.00 however I did bump it up from $20.00 whooo...
We're seeing the same recovery in Europe which is to be expected after a recession (although long overdue). I'm not sure why HN sees it as "left-wing political theater" and "establishment propaganda".
I'm not from the US, but I did a little maths. $21(8 hours/day)(5 day/week)(4 weeks/month)(12 months/year) gives $40320 per year against $40K/per year annually as mentioned in the second paragraph.
The first paragraph mentions that it was spotty part-time work only available when the Washington Redskins are playing. The Redskins are an American football team. They played a total of 21 games last season, including pre-and-post season, of which only 11 were held at FedEx Field, where Carlos worked, and each game only lasted a few hours plus maybe an extra two hours for pre and post game. So try $21(5 hours day)(1 day/week)(11 weeks/year) and you only get $1,155, not $40,320.
However, this is a very favorable interpretation of the data. Incomes are going up in large part due to increases in the minimum wage, which will ultimately cause a rise in prices. The unemployment numbers do not include the 2.2 million "missing workers" that have simply given up on finding a job [1]. Finally, most of the "health insurance" this article refers to carries such high deductibles that the people that have these policies can't afford to use them. So they are paying relatively high monthly premiums for coverage that they'll never be able to use except when they go to the ER, which they could have done before Obamacare and without the monthly hit for the premium.
The economy is slowly recovering, but this article is a prime example of putting lipstick on a pig to carry out the left-wing political agenda of getting Hillary Clinton elected.
[1] http://www.epi.org/publication/missing-workers/