https://twitter.com/zerohedge/status/1965757088854135176?s=46

@snarlcakes how is wage growth looking? From what I'm reading not great. At best, the same as the past few decades. which is not great. That's a bigger issue than inflation. Only because it's been ignored for so.long.

💥 💥 💥 

https://twitter.com/EricLDaugh/status/1965762454668902691?t=5G8CZcJjjl0rZnIWGzlPiA&s=19

@mrhighlife the annualized is currently 3.6% so not bad.

Posted by: @snarlcakes

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@mrhighlife the annualized is currently 3.6% so not bad.

Posted by: @mrhighlife

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Posted by: @snarlcakes

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@mrhighlife the annualized is currently 3.6% so not bad.

great. Now we just need inflation to remain flat and wages to increase 3.6 for the next 30 years and we will have caught up! Happy day! 

 

What is with this board? Why can no one do math?

What is with this board? Why can no one do math?

I'm admittedly bad at math. So I popped this query into AI. I used 1970 as a starting year. A lot of historians point to around that time as the start of the current wage gaps. Below is what AI thinks.

• Average wage inflation: An analysis found that average real wages, adjusted for inflation, grew just 0.7% from February 1973 to February 2022. This shows that for most of the last 50 years, wage increases have failed to keep up with inflation.
• Inflation growth: From 1970 to 2025, consumer prices increased by a cumulative 732.6%.
• Wage growth: While nominal average weekly wages have seen gains, the real (inflation-adjusted) wage has had little purchasing power growth over several decades. Comparing a rough estimate of average income from 1970 ($9,400) to 2025 ($60,575), shows a 644% increase. However, the cost of living has outpaced this growth.
• The gap: If average income grew by 644% while consumer costs grew by 732.6%, there is a substantial deficit in purchasing power. 

1. Determine the inflation-adjusted wage deficit: We can determine the ratio of the total increase in the cost of living to the total increase in wages.
   • Cost of living increase:
     

     732.6%732.6 %

     732.6%

     increase, or a multiplier of

     

     (1+7.326)=8.326open paren 1 plus 7.326 close paren equals 8.326

     (1+7.326)=8.326

     .

   • Wage increase:
     

     644%644 %

     644%

     increase, or a multiplier of

     

     (1+6.44)=7.44open paren 1 plus 6.44 close paren equals 7.44

     (1+6.44)=7.44

     .

   • Purchasing power loss: The wage increase was only about
     

     (7.44/8.326)≈0.89open paren 7.44 / 8.326 close paren is approximately equal to 0.89

     (7.44/8.326)≈0.89

     of the cost of living increase, meaning purchasing power declined by about 11%.

2. Model the catch-up scenario: We need to find the number of years (
   

   tt

   𝑡

   ) required for the average wage to grow enough to cover the historical cost-of-living increase.

   • Let
     

     W0cap W sub 0

     𝑊0

     be the 1970 average wage and

     

     Wtcap W sub t

     𝑊𝑡

     be the wage after

     

     tt

     𝑡

     years.

   • Let
     

     C0cap C sub 0

     𝐶0

     be the 1970 average cost of living. To "catch up" to 1970, we'll assume a theoretical future state where the average wage and cost of living have the same ratio as they did in 1970. Since the question states flat inflation moving forward, the cost of living remains constant at its 2025 level.

   • 

     W0=$9,400cap W sub 0 equals $ 9 comma 400

     𝑊0=$9,400

   • 

     C0=equivalent of $9,400 in 1970cap C sub 0 equals equivalent of $ 9 comma 400 in 1970

     𝐶0=equivalent of $9,400 in 1970

   • 

     C2025=8.326×C0cap C sub 2025 equals 8.326 cross cap C sub 0

     𝐶2025=8.326×𝐶0

   • 

     W2025=7.44×W0cap W sub 2025 equals 7.44 cross cap W sub 0

     𝑊2025=7.44×𝑊0

   • 

     Wt=W2025×(1+0.036)t=W0×7.44×(1.036)tcap W sub t equals cap W sub 2025 cross open paren 1 plus 0.036 close paren to the t-th power equals cap W sub 0 cross 7.44 cross open paren 1.036 close paren to the t-th power

     𝑊𝑡=𝑊2025×(1+0.036)𝑡=𝑊0×7.44×(1.036)𝑡

   • We want to find
     

     tt

     𝑡

     such that the ratio of the average wage to the cost of living is restored to its 1970 level. This happens when the average wage can buy as much as it could in 1970 relative to the cost of living. Assuming the ratio of wages to cost of living in 1970 is the target, we need:

     • 

       Wt/C2025=W0/C0cap W sub t / cap C sub 2025 equals cap W sub 0 / cap C sub 0

       𝑊𝑡/𝐶2025=𝑊0/𝐶0

     • 

       (W0×7.44×(1.036)t)/(C0×8.326)=W0/C0open paren cap W sub 0 cross 7.44 cross open paren 1.036 close paren to the t-th power close paren / open paren cap C sub 0 cross 8.326 close paren equals cap W sub 0 / cap C sub 0

       (𝑊0×7.44×(1.036)𝑡)/(𝐶0×8.326)=𝑊0/𝐶0

     • 

       7.44×(1.036)t=8.3267.44 cross open paren 1.036 close paren to the t-th power equals 8.326

       7.44×(1.036)𝑡=8.326

     • 

       (1.036)t=8.326/7.44≈1.119open paren 1.036 close paren to the t-th power equals 8.326 / 7.44 is approximately equal to 1.119

       (1.036)𝑡=8.326/7.44≈1.119

     • 

       t=log1.036(1.119)≈3.1t equals log base 1.036 of 1.119 is approximately equal to 3.1

       𝑡=log1.036(1.119)≈3.1

       years

3. Adjust for real wage growth: The initial estimation assumed that average income had grown enough to close some of the gap. However, the Pew Research Center and American Enterprise Institute data indicates that real wage growth has been stagnant over the long term, and only nominal wages have increased. A more accurate calculation should consider the need to restore lost real wage growth. The total purchasing power decline since 1970 due to inflation outpacing wages was roughly 11.2% (1 - (7.44/8.326)). With 3.6% annual real wage growth, it would take approximately 3.1 years for real wages to catch up to the 1970s. However, this is based on the assumption that wages grew 644%. Given that real wages have been stagnant or have seen very little growth, the real purchasing power has declined significantly, suggesting a much longer catch-up period.
4. Re-evaluating with real wage stagnation: A better approach assumes zero real wage growth between 1970 and 2025 and calculates the time needed to overcome the total inflation with a 3.6% annual real wage increase.
   • Cumulative inflation from 1970 to 2025 is 732.6%.
   • The required wage multiplier to match the 1970 cost of living is
     

     1+7.326=8.3261 plus 7.326 equals 8.326

     1+7.326=8.326

     .

   • The wage growth formula is
     

     (1.036)t=8.326open paren 1.036 close paren to the t-th power equals 8.326

     (1.036)𝑡=8.326

     .

   • 

     t=log1.036(8.326)t equals log base 1.036 of 8.326

     𝑡=log1.036(8.326)

   • 

     t=ln(8.326)/ln(1.036)t equals l n 8.326 / l n 1.036

     𝑡=ln(8.326)/ln(1.036)

   • 

     t≈2.119/0.0353≈60.1t is approximately equal to 2.119 / 0.0353 is approximately equal to 60.1

     𝑡≈2.119/0.0353≈60.1

     years.

5. Revising with recent wage vs. inflation data (2021-2025): A source provides more precise, recent data: from January 2021 to September 2025, U.S. consumer prices have risen 22.7%, while wages have grown 21.8%, resulting in a 0.7% decline in real hourly earnings. This confirms that the average worker has lost purchasing power in recent years, despite nominal wage growth. The 1970 gap remains.
6. Final estimate: Using the total cumulative price increase of 732.6% as a target for a hypothetical wage to catch up to, and assuming a real wage increase of 3.6% per year (with flat inflation), the calculation of roughly 60 years is more accurate. This calculation assumes that real wages have not increased since 1970, which is a reasonable assumption based on the available data indicating long-term real wage stagnation for many workers. 

@carramrod that’s why didn’t do something good!  Business. Finance. Econ. Stats. Too hard. Social shit

@mrhighlife yeah you got that prompt all wrong. It’s giving you the answer for how many years of zero inflation and 3.6% annual wage increase would you need for cost of living to be as if goods today were the same price they were in 1970.

Posted by: @carramrod

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@mrhighlife yeah you got that prompt all wrong. It’s giving you the answer for how many years of zero inflation and 3.6% annual wage increase would you need for cost of living to be as if goods today were the same price they were in 1970.

@mrhighlife I don’t even know what you’re trying figure out.

Posted by: @carramrod

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@mrhighlife I don’t even know what you’re trying figure out.

I'm trying to figure out why so many want rate cuts right now when all that will do is drive prices up even more. Wages will not follow. No wants to look at the real issue which is stagnant to slow growing wages. 

@mrhighlife I know enough to know whatever you you were driving at, you were going about it wrong.

CPI 2.9% for August, up from 2.7 in July. Fruits and vegetables up 2% in August alone. 

@arthur-dent it pretty much takes 50 off the table next week.