How many times do we have to do this?

Here is a graph of real wage growth by income percentile in the US, which I'd strongly prefer people to share over the productivity pay gap chart. Even better, you could post it worth a more recent chart showing the post-pandemic decline in inequality:

that smug editor does not say anything which disputes the chart's validity as a measure.

@ramsey49281649 As a measure of inequality it may be valid, but it is presented as a widening gap between the productivity of workers and their compensation. A graph of compensation and productivity for the bottom 80% may work here, but that's not what it is.

do tell, what remarkable innovations in the past 50 years have increased the productivity of executives and managers so extremely that they, in comparison to workers, account for what is still a widening gap, when the editor's charts are compared to one another

@ramsey49281649 The original chart is measuring productivity using real GDP. I've no idea how much of the increase is attributable to the top 20%, and neither does the chart. For it to actually show productivity and compensation diverging, you must *assume* their productivity hasn't grown.

i don't have to assume that at all, i assume that productivity has grown, and that compensation for workers, not executives, workers, has been stagnant relative to inflation

@ramsey49281649 Why would you expect the compensation for only the bottom 80% to grow in tandem with the productivity of 100% of the economy? Also, here's the real median personal income for the US over time. It has not stagnated.

yep i meant relative to productivity* adjusted wages for 80% growing parallel to growth in productivity would not be disproportionate, and it has fallen off more and more from relative parity.

@ramsey49281649 It wouldn't be disproportionate only if you assume that all of the growth in productivity is attributable to the bottom 80%, which the chart doesn't show.

The first objection is bad. "Sure, the price of sirloin steak has gone up by 25%. But the price of cricket protein hasn't budged. So if only you'd eat cricket instead of beef,you'd realize that your paycheck goes just as far as it did before, you ignorant non-economist swine"

Multiple corrections, none of them actually refuting the thesis

The measure of productivity used is just a version of net domestic product that has been adjusted for hours worked. It does not measure the productivity of non-supervisory workers—it also includes things like rent paid to landlords.

i don't get this - 'chained inflation' just means when people have $10 to spend on dinner, they buy chicken, because they can't afford beef anymore...it's just a result of inflation, a symptom of it, people can't afford what they want because prices are higher. what is the connection between that and the chart?

Frankly I don't think they should have included that in the video, since it doesn't explain most of the gap and is relatively difficult to understand through short-form video. When economists build price indices, they're trying to measure the prices for the typical basket of goods purchased. They aren't trying to measure living standards, which would require some subjective judgments about what's necessary to live a good life and what gives people utility. If you want to see how living standards look over time with a fixed basket of goods, you can use a price index that suits your purposes. I personally think chain-weighting is more realistic overall—think of how people used to buy really expensive computers in the 1980s that have since fallen out of fashion in favor of newer, cheaper models. But in this case, the bit about how "productivity" using the whole economy while compensation does not is more important.

that's absurd to measure a 'typical basket of goods' and leave out the qualitative differences between the products they used to get and the products they used to be able to afford......if you think that, then you can't really justify the CPI's hedonic adjustments either right? i mean how can you quantify the fact that the cheapest cars are better now than before? if you are building a 'price index', you have to factor in the fact that the price has gotten so high, people are forced to purchase inferior products. it is absurd not to count that in somehow. your example of computers getting cheaper is different because that is not due to monetary factors, that is due to an increase in productivity, that is depreciation due to technical factors (market driven increase in productivity).

Fuck that guy.

That’s amazing. He made exactly the case (the bottom 80% getting much less of the productivity than the top 20%), then declared it wrong and obfuscated with other irrelevant charts. I’m bookmarking this one.

Don't you think it's misleading to present productivity for 100% of the economy as if it's productivity for only the workers compensation data is displayed for?

It depends what you’re trying to show! They wanted to show that “the workers” aren’t getting as large a share of productivity gains as they used to. But who are “the workers”? Excluding the top 20%, calling them “management” seems sensible.

If they wrote "Productivity (whole economy)" or something like that in the chart itself I wouldn't find it objectionable. The labeling as it is now is bad.

+ "Hourly compensation (non-supervisory)", of course

How come the share of income for the bottom 80% has even decreased at all (instead of increasing), if the government has been increasingly distributing wealth from rich to poor over the last decades?

The chart measures compensation, so I don't think that would make much of a difference.

Clearly, it makes a difference that's why the second curve is higher than the first

I don't think "average hourly compensation", as referred to in the chart, would include taxes and transfers. I would take it literally.

I know, I'm not talking about the other chart, I'm talking about this one. As he says, there has been increasing redistribution to the bottom 80%, yet their share of the income *even including said redistribution*, is falling. I'm asking "how come this is the case"

Oh, Christ. I'm sorry, I'm tired. There's a lot of people to respond to so I didn't understand you. Their share of income including redistribution is falling because said redistribution has not been strong enough to "correct" the inequality growth entirely. That's all.

I figured, but then I feel that the video is somewhat dishonestly presented, because most people's point when showing that chart is that our productivity gains have disproportionately gone to the wealthy (evidenced by increased inequality). And clearly, as the video also shows,

government redistribution programs have not been enough to offset this... So his framing of this as some kind of debunk seems weird. A more honest framing would be "yes, your point is correct but here are some caveats about this chart"

Your nuance means little to nothing for those 80% (or probably 95%), and I am fairly sure that THAT is the main target group whenever that chart is shared. What this plot nicely illustrates is that at the cost of wage stagnation for the vast majority of workers the rich have been able to enrich themselves even faster.

Wage stagnation has not occurred for the majority of workers. Here's the inflation-adjusting median income over time. What the chart really illustrates is the relatively fast growth in non-wage and supervisory compensation:

Fuck, sorry, that's income in general, not wages. I mean, it's still the median income, and I would have to assume you want to look at all income people earn, not just wages.

What was this video supposed to prove? Managers are workers too?

@grok when did the US begin the transition to increased financialization? Does it roughly align with that chart?

@grok What exactly are you trying to prove? Nothing Grok just posted contradicts what I just said.

@grok Why do you think that graph is being shared? Are people concerned that money is vanishing into the void?

@grok No, they're sharing it because they think workers aren't being paid for what they produce, and they think this chart has data that proves it. It doesn't.

@grok Because when the say "worker" the don't mean manager or CEO.

@grok Sure. And if you wanted to compare the productivity of workers to their compensation, you could do that. The chart doesn't.

I'm an upper-class, well-paid professional - frankly, I'm an elitist snob. But this video is not at all persuasive. The gains in productivity are not being shared with the bottom 80%.

I wouldn't expect aggregate productivity gains to be shared evenly before taxes. Certainly I'd like to see a larger and more efficient redistributive tax regime, but the method used in the original chart makes the results unsurprising.

@GordonGekko420 Figures

Is this a joke? "CPI basket of goods is periodically updated to include new goods and remove items with decreased spending"

The economist detected opinion rejected.

So if we adjust it how he wants and even if we include CEOs and so on there is still a very much noticable gap. And the economic share of the bottom 80% also has been declining even if we go with the line 'some researchers' (whoever they are) propose.

Even when he does all the adjustments, it’s still concerning! Kind of an overly condescending video

Please do weekly reviews of charts

What that guy is missing, and it should be obvious, is that at some point there was a strong relation between the two which was broken. That is the point everyone is making. You may try to explain it away, but the relation was there, and now it's not. The complaint isn't wrong

Good video. Would doing it by wealth instead of income tell a different story though? Given that the less wealthy are less likely to take part in the stock market and housing appreciation?

This guy does a fantastic job of showing how statistics can be used to lie your ass off. Terrible job of disempowering the impact of the chart though, because his arguments against it are awful. 'Your wages aren't worse if you buy less' is an awful take.

The chart takes real GDP, the sum of all income earned in the US, calls it "productivity", then compares it to a measure of compensation that excludes both supervisory compensation and non-wage compensation. Don't you think that's really misleading?

Not to the point of the graphic. In reality, that chart is accurate to 80% of workers. The fact that fatcat mcgee has been slurping up a far bigger share than before doesn't fix it.

Ok, but that's not what the chart says. The chart is presenting the data as "productivity" and compensation, not inequality over time.

Again, for 80% of employees, this chart is accurate.

You don't have a measure of productivity for the bottom 80% that you've compared to their compensation, though. You're just assuming it would say the same thing without checking.

What do you propose would be strictly 'supervisory productivity'?

If you use the measure of productivity the chart does, that'd just be their compensation. In the colloquial sense of productivity, that's obviously silly. I'm not sure what other measure would be used to determine who contributes most, but I'd be happy to see one.

@Peter_Turchin What do you think?

Imagine thinking this is a dunk. “Well if we factor in the fact that now you can only buy chicken instead of steak, and the professional managerial class is making more, and wealth transfers are up, then we can massage the chart to look slightly less bad”

If the government was handing out more literal cash to people I wouldn’t mind lumping “transfers” in with actual cash, as it is I think it’s a bit disingenuous to hand wave away the difference.

Have you never looked at the industry level prod/comp charts? They suggest the same thing more clearly. In manufacturing, e.g., compensation has grown far slower than productivity, as an example. Not to mention comp increases are partly insurance costs.

Let me guess, you didn’t mention that house prices haven’t been used in most price indices since 1983

That simply isn't true of the CPI. "Housing represents about one-third of the value of the market basket of goods and services that the Bureau of Labor Statistics (BLS) uses to track inflation in the Consumer Price Index (CPI)."

The CPI measures the price of a basket of goods people consume, not invest in. That's why rental equivalence is used instead of prices. More importantly, if you say house prices aren't used in the CPI, you mislead people into believe no measure of housing prices is used at all.

Yeah yeah

Why would you compare the *average* home price to the *median* household income? There's also no adjustment for square footage here. I've done this myself while making that adjustment, and incomes grew slightly faster than home prices.

if you start from the conclusion you really can rationalize anything

Again, this doesn't measure what you say it's measuring. I care about rising rents in these places, but I wouldn't use this chart to show that the cost of housing has outpaced incomes in the whole US.

@grok resumeme el video

this guy is a numbskull