admin-ajax.php

Wages and hours worked | Are things really just peachy?

According to the talking heads, everything is alright.calculator coin money save debt

“Just peachy”, they say.

But very few people I speak to give two hoots about gross domestic product, our trade balance or other economic statistical babble.

It comes down to how much they earn and how much work they can get.

Take a gander at the following two charts.

They speak volumes….

Employment

Pity only the wicked Right wants to talk about such things, and in a language and tone that resonates with most.  

ad_build_wealth

I am reminded of a Steve Earle lyric from 21st Century Blues

It’s hard times in the new millennium
Getting by on just the bare minimum
Everything’s loose and nothing to spare

So does what you’re building, or looking to buy, suit this new paradigm?

Or do you – like so many of those jabbering about things economic – think this is just a minor hiccup that will soon pass?

Keen to hear your thoughts.



Want more of this type of information?


Avatar for Property Update

About

Michael is director of independent property advisory Matusik Property Insights. He is independent, perceptive and to the point; has helped over 550 new residential developments come to fruition and writes his insightful Matusik Missive


'Wages and hours worked | Are things really just peachy?' have 2 comments

  1. Avatar for Property Update

    March 19, 2017 @ 1:06 pm Glenn Groves

    I have so many thoughts on this that they may not all fit in one comment! If I leave multiple comments that is why. In varying degrees of relevance/importance:

    1. My studies included both statistics and psychology, and my first comment is that the way the annual wage graph is represented – as growth only not level – is accurate, and factual, and emotionally misleading:
    1.1. Wages are still growing, but the emotional impact of the graph makes the reader feel that things are getting worse/falling. A graph that showed wages instead of wages growth would show that things are still improving, just not at the same rate. I know this is subtle, but it does make a difference.
    1.2. I suspect the time period makes this worse; it seems unlikely that wages grew at 4 percent for decades on end. ANY stats can be made to say anything at all by being selective about the time period. If a 40 year graph showed that wages growth was lower now than for the 40 years prior that would be far more relevant.
    1.3. All markets have highs and lowes, wages are no different. This is why decades of history are needed to draw reasonable conclusions.
    1.4. As long as wages growth is at least equal to inflation things are not bad. The best graph would be decades of wages growth charted against inflation. Wages growth not compared to inflation is not remotely useful information and will very likely be misleading even though factually correct.

    2. Wages per hour worked is more relevant than wages overall as a measure of meaningful long term productivity growth:
    2.1. This does assume that people are getting enough hours to pay their way in life of course; that is such an individual measure that I have no idea how that could be checked. (And please see the next point, EXTREMELY relevant to this.)
    2.2. We have had 200 or so years of productivity growth; it is a promising sign that people are starting to work fewer hours (BUT SEE NEXT POINT) – money is not an end in itself, it is a means to an end – to ensure safety, survival, and a fair level of comfort and enjoyment in life. At some point we should work less and spend more time with the people we love, in the places we love, doing the things that we love. Productivity improvements exist to serve us, not the other way around.
    2.3. I would be worried if productivity per hour dropped – but as long as we produce enough to be safe, secure, reasonably comfortable etc. and productivity per hour keeps increasing then we are doing well and it is time for money and productivity to work for us instead of the other way around so to speak. (BUT SEE NEXT POINT)

    3. Beyond a certain point more money does NOT improve life:
    3.1. And for the financially incompetent – which is almost everyone – they always feel that point is always a little bit more than they earn now… but that is due to their illiteracy not their income.
    3.2. When most people get a pay rise they just spend more on non productive things (AND SEE NEXT POINT) – more money does not make them better off in the long term.
    3.3. Often, more money makes people WORSE off as they spend even more than whatever the increase in income was.
    3.3. And it is even worse – many people borrow against their future productivity to buy financially non productive things now. Getting a pay rise tends to make this worse. For the financially illiterate, getting a pay rise tends to actually make them worse off, not better.
    3.4. More money helps the financially literate, and subtly hinders the financially illiterate. Only practical financial education and habits can significately help the financially illiterate. Financial literacy is the educational crises of our time. (Partly because education in other areas is so good, leaving financial education as the gaping chasm in our educational system.)

    4. Productivy growth WILL NOT improve the trade balance until financial literacy improves (assuming productivity growth increases wages):
    4.1. When people are paid more, most spend more – they buy shiny things, most of which are imported.
    4.2. In other words, no matter how hard we work to produce more to export, most people who are paid more as a result then just go and buy stuff that was imported – undoing any improvement in the trade balance.
    4.3. Made worse by people borrowing against future income to buy shiny mostly imported things now
    4.4. Made worse by Australia mainly exporting raw materials and importing finished goods – in other words exporting at a lower price and importing at a higher price.
    4.5. In summary, increasing productivity as a means to improve the balance of trade is a mugs game – like the cat chasing it’s tail, and like the hamster on the wheel, no matter how much we increase productivity the target of balancing trade will remain out of reach due to human behaviour – more specifically, the behaviour of the financially incompetent/illiterate – the majority of Australians and indeed the majority of people world wide.
    4.6. As a result, once again, effective and practical financial education and literacy are the only means to improve the balance of trade in the long run.

    Those are the main points… let’s see if the web site will actually accept this “war and peace” length comment, and hopefully keep the line feeds as well!

    Cheers,

    Glenn

    Reply

    • Avatar for Property Update

      March 19, 2017 @ 1:45 pm Michael Yardney

      Thanks Glen
      As you can see our website did accomodate your lengthy comment.
      I appreciate the time you took and the thoughts behind it.

      Reply


Would you like to share your thoughts?

Your email address will not be published.
CAPTCHA Image

*

facebook
twitter
google
0
linkedin
0
email

Michael's Daily Insights

Join Michael Yardney's inner circle of daily subscribers.

NOTE: this daily service is a different subscription to our weekly newsletter so...

REGISTER NOW

Subscribe!