Sunday, May 15, 2022

Have Rents Gone Up - Or Wages Stagnated? Or Both or Neither?


People complain that rents are too high today.  Are they, or have wages stagnated?

Returning from the condo via the Blue Ridge parkway, we camped out overnight at Big Meadows campground, in a tent, no less.  It gave me time to think.  In 1987, I moved to Alexandria, Virginia to work at the Patent Office and met Mark See.  We moved in together in a one-bedroom apartment that cost $650 a month, utilities included.  Our condo is one-bedroom also, although sligthly larger and somewhat nicer, I think, and rents for $1450 a month, which seems like a lot of money to me (well, so does the price of a cup of coffee - you did read the title of this blog, no?).

But according to an online calculator, $650 in 1987 would be about $1650 today, so if anything, the cost of rent has gone down.  I looked up the actual building we lived in, and sure enough, rent for a one-bedroom is about $1600, so it appears rents in this very hot metro market are in line with inflation since 1987.  Rents in the depressed little town we live near aren't much less - you can expect to pay $1000 or more for a decent apartment in a good neighborhood.

But what about wages?  Mark went to work for Williams-Sonoma for the princely sum of $14,850 a year and I was working as a GS-7 Patent Examiner for the whopping sum of $22,000 a year.  Doesn't seem like much today, but it was an OK salary back then.  Today, well, some things have changed, others haven't.

A new Patent Examiner makes about $57,000 or so today, which compares favorably with inflation.  If you have a worthwhile college degree and are working in a high-demand profession, salaries have kept up, if not in fact, accelerated.  For an "assistant store manager" at Williams-Sonoma, however, things might not be so rosy - about $40,000 a year.  But actually, if you take into account inflation, that is not a bad salary at all - actually more money than Mark was making back in the day.

So what is all the beef over rents and salaries?   Well, for starters, I am using two selected data points (which I know the data for).  Not everyone is an assistant store manager or a Patent Examiner.  There are people working as clerks and other minimum-wage jobs, and Federal minimum wage is stalled at $7.25 for what seems like forever.  For such folks, life is not so hot - they are making Mark's 1987 salary but paying nearly triple the rent in 2022.  The numbers simply don't add up for them.

Of course, things are changing.  The so-called "labor shortage" is resulting in a bevy of new union activity.  And most retail and fast-food outlets are advertising wages far above minimum wage these days - often double the amount.  Still hard to get by on $14 an hour in a major metropolitan area.

Now, of course, some on the right are blaming Democrats for this "labor shortage" - claiming that it was government giveaway money that caused people to stay home and not work.  But my memory goes beyond 18 months (I'm not a goldfish for chrissakes!) and I do recall President Trump signing those "stimulus checks" and making a big deal about it - and the "stimulus" being approved by a Congress that included a Republican majority in the Senate - the same folks who approved extending and enhancing unemployment benefits as well.  Yea, we did get one final check in the first days of the Biden administration - but that was over two years ago.  I don't know about you, but stingy or not, I haven't been living on that $1400 for the last 28 months!

So what is going on with the strikes and the "no one wants to work anymore" nonsense?  Well, I think there is a demographic shortage of labor.  Assholes like me took early retirement and the next generation is smaller than the baby boomers.  They have choices - people are hiring.  It is not that "no one wants to work anymore" but that people prefer to work for the company that pays more money because inflation is eroding their buying power.

As workers, we may not think we have leverage in the wage bargaining world, but there reaches a point where it simply doesn't pay to work at some jobs.  For example, if I was to go to work at the local Home Depot (and indeed, they offered me a job, unsolicited!) I would have to drive about 15 miles each way, which means about an hour of my time, unpaid, as well as 30 miles on the car which even at IRS deduction rates (and commuting is NOT deductible!) I would have to spend at least $15 a day just going to and from work.  At minimum wage, that means I spend the first two hours of work just paying to get there.  And if I go out to lunch, well that's two hours more.  You don't start making money until the afternoon, and even then, you gross only $29.  When you take out payroll taxes (for social security and medicare - about 10% with State and Federal Income tax) you are making $22 in take-home pay for a full day's labor.  Sorry, but that's just not worth it to me.

And I can see where it isn't worth it to someone else, either.

Of course, the people who are motivated and work hard have no trouble finding jobs and getting raises and getting paid more.  We hear a lot online from complainers who claim they can't find a job in this tight-job economy and that they can only find low-wage jobs.  But if you scratch the surface of these stories, they are from people who are serial quitters (staying at a job just long enough to collect unemployment) or people who steal from their employers.  If you think I am kidding, check out the losers on "antiwork" sometime - they brag about stealing from work and "ghosting" employers and trying to scam the unemployment system.  For them, the world sucks, but largely because they made it suck.  Depression is a helluva drug.

The upshot?  Well, things aren't quite as bad as they seem.  Sure, for the dude or dudette who got a degree in "liberal arts" from an expensive college, who borrowed way too much money, had a good time and got shitty grades, the world sucks.  And I agree we shouldn't be allowing 18-year-olds to sign their life away.  Then again.... personal responsibility.   The same people whining about their poor life choices would chafe any restrictions on their "freedums!" if we tried to regulate how much they could borrow.  It is a tough balancing act.  And I am not sure that "blanket" loan forgiveness is the answer - and the continual talk of it only encourages young people to take out such loans - or graduates to not bother paying them back.

Speaking of student loans, I had those as well - about $38,500 of them.  In today's money, that's nearly a hundred grand, and yes, I paid them all back.  Then again, I didn't major in Agitation Studies, nor did I take out as much in loans as they offered to me.  And in graduate school, they throw money at you.

For the majority of people today, well, life isn't so desperately bad.  People who made better choices in life - for example, to borrow less money for a degree, to study something worthwhile, and to take the courses seriously - they are not in such a bad situation.

It is like the homeless "problem" in the USA - we think it is some huge problem of insurmountable proportions, until you realize that the homeless population in the USA is less than 0.2% of the overall population of the United States.  Yes, it is a problem.  No, it is not a staggering problem, except for the homeless people involved, who are often victims of mental illness and/or drug abuse, not financial setbacks.

But people want to push narratives, and one of the most popular in any era is "we have it so much worse that folks who came before us!" or "the world is going to pot!" as we all like to feel sorry for ourselves, wallow in depression, and externalize our problems.

But "doing the math" in this case would seem to illustrate that for two young people starting out today in Alexandria, Virginia, with the same or similar jobs that Mark and I had, at the same or similar apartments that we rented, well, the wages and rent would be about the same, as adjusted for inflation.

For someone working a more menial job, back then or today, well, life would be harder.  But then again, being poor has always sucked, hasn't it?