UK General Election 2015

[arbboy]

If you think you are underpaid go into the market place and find a job which pays more in the market place.  If your skill set cannot find said job then how are you under paid?  You are only worth what the market decides to pay you based on your skill set.  If your skill set isn't big enough get your head down and improve your skill set rather than sit around and moan you are suffering from real wage reductions.

It is a pretty simple concept i have used every time i thought i wasn't being paid enough.  Has always worked for me for 26 years since i started my paper round in 1989.

[mulhuzz]

If you think you are underpaid go into the market place and find a job which pays more in the market place.  If your skill set cannot find said job then how are you under paid?  You are only worth what the market decides to pay you based on your skill set.  If your skill set isn't big enough get your head down and improve your skill set rather than sit around and moan you are suffering from real wage reductions.

It is a pretty simple concept i have used every time i thought i wasn't being paid enough.  Has always worked for me for 26 years since i started my paper round in 1989.

you're right, your concept is simple. actually too simplistic. why?

answer: because that's not a macro concept. Since there will always be demand for some low paid work which doesn't require much 'skill' (in the way you're using it) then you can't have the entire economy just 'get better'.

of course over time you can change the shape of labour market with sufficient investment also in supply side (skills, training, etc) and also e.g. automation of certain job roles, switch from manufacturing to service, etc but whilst demand for low paid work exists, you can't instantly move the economy overnight.

let's take job A as 'low skill/low paid' - note here I'm not passing comment on anyone who does those jobs, just making a point. Let's say there are 100.000 people who do job A in the country, and demand is somewhere around that rate and that this group of people is suffering from wage suppression. Let's also imagine there's no time lag, and overnight we can make them all job B, some high skilled and well paid job, maybe a Doctor, lawyer, engineer, whatever.

What happens to supply of job B - rises. So what happens? supply up, demand therefore down, therefore wages surpressed. You've moved wage suppression to another part of the economy. Congrats. Although in fairness, you've probably moved it to an area that can better sustain it. So half marks for that.

What happens to supply of job A? Crippled. So what happens, wages rise because of demand. Or rather, they might, if we assume there isn't a turtle below (it's turtles all the way down) like somebody currently unemployed to take the role. So what happens? Wages probably rise, but not in the same amount (the turtles) as they fell in the other group and so there's some labour flight back into the industry. So supply rises and prices (wages) fall again.

So what have you achieved? Simplistically, you've reduced some unemployment but made little difference in net real wages (rise in one, offset by another) and you've done all that whilst magically solving social mobility. Because we've assumed you'd magically make a job A a job B overnight, which patently isn't obvious or easy to do.

[DaveShoelace]

This thread reminds me how there are so many people shit loads more intelligent and knowledgeable than me.

Good thing though, learned tons.

[Doobs]

There is no doubt that Osbourne (and by association, Cameron) is responsible for a massive real terms fall in wages which was absolutely and positively avoidable (certainly at least in magnitude) had we dealt with the crisis like almost any other country. This 2013 article has a nice overview, if you're interested.

I thought the free market (barring the relatively recent minimum wage legislation) was responsible for setting wages? I'ld love you to explain in a couple of sentences how you think this government is depressing real term wages, cos I certainly didn't understand the mechanism from the link you posted.
Which other European countries do you take as a model for dealing with the economic crisis? I thought we were the envy of most of the rest of Europe for our levels of employment.

If you're talking European, I'd go with both France and Germany. Whilst are employment numbers are decent (and let's ignore the debate about what counts as employment and assume all European countries have similar/comparable accounting methods - which is a pretty iffy claim, but let's assume it for now) our productivity is not great. That's obv related to employment and GDP so it's important to think of all the measures (weighted accordingly) together in order to get a decent picture of what is really happening. The fact absolutely remains that in terms of recovery, we are absolutely miles away from where Osbourne said in June 2010 we would be by the end of last parliament and somehow he's being presented as having saved the economy. My own view is that he's throttled a recovery which would have occurred anyway, although certainly not everything he's done has been bad and I don't say that.

If you'll allow a non-EU state, then I think America. You only have to look at the relentless march of the Dollar vs the Euro in recent times to see that their approach has been vastly superior. Had we followed the US route I think we'd be far outperforming every European economy in terms of recovery now - ofc it's worth noting that being able to print your own money helps a lot in this regard, something the Eurozone can't do (although they basically are, with Mr Draghi buying debt etc, but it's not as scalable or specific as a QE program the BoE could (and has!) implement(ed)).

Re Wage Repression: this is more complex but basically, you're correct. The market, free of government intervention, will set the wages. What the labour market doesn't set (but certainly can have influence on and be influenced by) is inflation.

You're very likely a smart guy, so I apologise if this next bit sounds patronising, it really isn't meant to, but let's take a simple example:

I decide to pay you £1000 / year (let's ignore taxation and say it's net, for now) to post on blonde.
In the first year, you have £200 left at the end of the year, accounting for your usual (and let's imagine they are fixed) expenses.
In the second year, you only have £100 left, because your expenses have increased £100.
In light of your increase expenses (and my increased profits, because I sell the blonde posts you create), I decide to increase your salary by £50/year.
So you've had a a real cut in wages of 5%, right? 10% due to inflation, offset by a 5% increase in wages.

So without government intervention, wages generally fall due to inflation, prices rise faster than wages. That's true of basically every style of government.

what's bad is that when government either actively or inactively supports activities which suppress wages (either in their role as an employer, or as government). Examples include: pay freezes in public sector, support of zero hours contracts, slower than inflation rises in a minimum wage and benefit cuts or higher taxes which (like VAT) affect the poor way more than the rich. previous gvts have used the benefit and welfare state to support real wages (although personally I'd prefer a system of universal basic income). It's also arguable that wastage contributes (like £xbn spent on Universal Credit then scrapped is money which could have supported wages, etc) but I don't think it's the biggest cause. It's obvious that the more money people have, the more they will spend and as long as the level of personal debt doesn't hit some given ceiling, this is supportative for the economy. So policies that support (indirectly or directly) wage suppression are a net bad for the economy. in theory, businesses are supposed to be able to reduce their payroll expenditure with wage suppression and thus become more profitable, but at some point the money needs to come back to consumers.

Does that make sense?

No, not at all.

For many years earnings outstripped inflation, see this for instance. 

http://www.ons.gov.uk/ons/rel/lmac/earnings-in-the-uk-over-the-past-25-years/2012/sty-pay-over-25-years.html

Having UK wages growth below inflation is very much a recent phenomena.  They haven't outperformed inflation recently because we had a severe financial crisis, and not because the Government is delberately forcing wages lower (well at least not in the  private sector).  Why would a Government be deliberatley causing wage supression?  It makes no sense, Governments want happy voters, not sad ones.

I certainly wouldn't be assuming wage inflation undershoots price inflation in any long run economic forecasts I do.  And if I did, I'd be a bit less relaxed about running a stinking deficit than you seem to be.

And that article has just used selective periods to justify the argument.  Firstly our country is much more reliant on the financial sector than any other large EU country, so we were always likely to be hit hardest by a financial crisis.  So if you produce a graph of economic growth starting the exact year before a big financial crisis, we are always going to be struggling.  You could almost use that graph to prove anything and I think you have.

The UK's economic growth has also surpassed France, Germany and Belgium since then, so the end point is also very convenient for your point.  And Australia hasn't been succesful because it has a bigger minimum wage, it is because it is very rich in natural resources, and there has been a massive commodity boom in the forst part of this century.  This has also meant that their minimum wage is always going to look big, because the currency is so strong.

But then you quote the success of the USA.  But it has a lower minimum wage, worse corporate greed and worse inequality than we do.  Yet you think we are suffering because we are deliberately suppressing wages, yet they are a shining example?

Just seems a whole load of nonsense thrown together to try and prove some fallacy that suits your view of the World.

 

[neeko]

One of the biggest causes of wage stagnation is the globalisation, if a job can be done for cheaper in China then it will. We like that we can buy cheap stuff from them but it has exported lots of jobs that would otherwise have been done here.

Neither party can do much about it.

[Marky147]

This thread reminds me how there are so many people shit loads more intelligent and knowledgeable than me.

Good thing though, learned tons.

You're not the only one

[mulhuzz]

I don't think we're struggling because and only because we're supressing wages.

I think wage surpression is hindering the economy badly though. I should have clarified that wages generally tail inflation in times of recession regardless of government, apologies.

however, this is the longest real term fall basically ever, so yes, I think it's a problem of magnitude.

One of the biggest causes of wage stagnation is the globalisation, if a job can be done for cheaper in China then it will. We like that we can buy cheap stuff from them but it has exported lots of jobs that would otherwise have been done here.

Neither party can do much about it.

Then it's a question of retooling the economy, surely.

[Waz1892]

Haven't validated it, but just had this snippet shared with me;

Football working class game!?

19 of the 20 clubs (areas) returned a Labour MP.

SW6 being the 1 club not too.

[scotty77]

There's a debate on Breakfast Show, and one guy countered anothers praise for Cameroon by saying, he hasn't done a great job because of the number of people using foodbanks.

Could be fair comment, but when did foodbanks actually come in? Yes, I know we have kitchens etc, but to me "foodbanks" is a fairly recent phenomenon on a national scale, and five years ago I don't recall them being anything other than a stigmatised resource, only for the homeless.

I have a neighbour who used admitted to using a foodabnk, a couple of years ago, and she lives in a four bed, detached house with her son!

I'm not belittleing the significance of them, but Isn't it just that the stigma has lessened massively, and hence the growth in very recent years?!

I think when you're hungry and have no food, you don't care about stigma so much.

It's definitely the case we've seen the a massive decrease in real terms for wages, and I think that's very much the cause of increased use of foodbanks. Of course I think in times of recession/crisis, availability of resources like foodbanks increase, although you might say that's also just a market response to demand. But certainly availability and access have increased, I'd think.

Exactly. In some ways the fact more people have access to foodbanks and less are less stigmatised, is actually a good thing.

Yes, we would all like it that no one has to use them, but the reality of trying to resolve a recession means they are somewhat inevitable, so the fact their use has increased, is hardly Cameron's fault, is my point. The fact that they now provide a backstop to families, is positive, given the circumstances.

http://blogs.spectator.co.uk/coffeehouse/2015/04/was-food-poverty-actually-higher-under-the-last-labour-government/

[mulhuzz]

Farage resignation rejected by party chairman; then withdrawn.

He remains leader and, in his own words, will 'direct UKIP policy from the Westminster Arms'

[Woodsey]

Even Milliclowns bro can't resist having a dig 

http://www.bbc.co.uk/news/uk-politics-32697212

[Woodsey]

 

[doubleup]

The UK's economic growth has also surpassed France, Germany and Belgium since then, so the end point is also very convenient for your point. 
 

not per capita gdp which is the relevant issue when we are discussing incomes.

http://www.tradingeconomics.com/germany/gdp-per-capita

http://www.tradingeconomics.com/belgium/gdp-per-capita

http://www.tradingeconomics.com/united-kingdom/gdp-per-capita

Germany's is much higher than pre-crisis and the uk's has recovered less than Belgium's.

The UK GDP recovery has been entirely caused by more people producing less.

The working population has increased by immigration.  As even skilled immigrants can do low-skilled jobs, it is the low skilled labour supply that is increased the greatest, with obviously the skilled sector impacted but to a lesser extent.  (I don't hear many actuaries saying "they're coming over here and calculating our standard deviations").

[Doobs]

The UK's economic growth has also surpassed France, Germany and Belgium since then, so the end point is also very convenient for your point. 
 

not per capita gdp which is the relevant issue when we are discussing incomes.

http://www.tradingeconomics.com/germany/gdp-per-capita

http://www.tradingeconomics.com/belgium/gdp-per-capita

http://www.tradingeconomics.com/united-kingdom/gdp-per-capita

Germany's is much higher than pre-crisis and the uk's has recovered less than Belgium's.

The UK GDP recovery has been entirely caused by more people producing less.

The working population has increased by immigration.  As even skilled immigrants can do low-skilled jobs, it is the low skilled labour supply that is increased the greatest, with obviously the skilled sector impacted but to a lesser extent.  (I don't hear many actuaries saying "they're coming over here and calculating our standard deviations").

I don't know why you personalise stuff, but the Actuarial Profession is pretty multinational.  No idea on the stats, but I would be very surprised if the proportion of new actuaries born overseas is below the national average.

You don't here them complaining about people coming over here, stealing their jobs, because most of them aren't blithering idiots.

[mulhuzz]

The UK's economic growth has also surpassed France, Germany and Belgium since then, so the end point is also very convenient for your point. 
 

not per capita gdp which is the relevant issue when we are discussing incomes.

http://www.tradingeconomics.com/germany/gdp-per-capita

http://www.tradingeconomics.com/belgium/gdp-per-capita

http://www.tradingeconomics.com/united-kingdom/gdp-per-capita

Germany's is much higher than pre-crisis and the uk's has recovered less than Belgium's.

The UK GDP recovery has been entirely caused by more people producing less.

The working population has increased by immigration.  As even skilled immigrants can do low-skilled jobs, it is the low skilled labour supply that is increased the greatest, with obviously the skilled sector impacted but to a lesser extent.  (I don't hear many actuaries saying "they're coming over here and calculating our standard deviations").

I don't know why you personalise stuff, but the Actuarial Profession is pretty multinational.  No idea on the stats, but I would be very surprised if the proportion of new actuaries born overseas is below the national average.

You don't here them complaining about people coming over here, stealing their jobs, because most of them aren't blithering idiots.

his point, obviously to anyone certainly including you, was that there is a difference between low skilled labour and highly skilled labour. Also because actuaries are very very likely to have a high degree of social/geo mobility (I'm sure you have a model for it...) then no, they don't complain about people stealing their jobs, because they can simply take their labour elsewere. Something not exactly always the case for those in the low paid/low skill group.