Thanks, Peter. I think wages are not increasing as fast in Texas for workers because we have an abundant supply of workers. In some states minimum wage is commonly $15/hr for jobs requiring no skills or experience, but in Texas there are still many jobs that pay $10 and still expect experience. You could say our cost of living is lower, but for renters and people who live paycheck to paycheck, it doesn't feel lower because they feel inflation more. Fast food prices and car insurance premium increases is really hurting working people.
Where labor is in abundance wages are always going to be lower. Where labor is scarce wages are always going to be higher. Wages are the price of labor and are affected by scarcity and surplus the same way prices for other goods and services are.
That being said, since the Pandemic Panic Recession the number of wage-earners nationwide who report living paycheck to paycheck has increased. This has some interesting ramifications, in particular for inflation and money velocity--something I touched on when discussing CBDCs.
Money velocity is a key metric to understand when grappling with inflation and pricing issues. Simply put, money velocity is the rate of turnover of money. When people spend more and save less, money velocity increases. When people spend less and save more, money velocity decreases.
It surely is not a coincidence that we got inflation shortly after money velocity increased particularly among the lower income groups.
Whether due to shifting preferences or enforced unemployment due to the Pandemic Panic Recession, people began spending more and saving less in the recession's aftermath.. Money velocity increased, and so did inflation. That the increases in money velocity occurred among the lower income strata also meant that the inflation was felt primarily by the lower income strata.
The wage differential between Texas and other states is attributable in large measure to cost of living differences among the several states. States such as Texas and Florida are generally cheaper overall, and so wages are going to be similarly lower (when I was a Voice and Data Network Engineer working as an independent consultant I had a client fly me out to California to oversee a set of router upgrades, because it was cheaper to pay me my Texas consulting rate plus per diem plus hotel and rental car than it was to contract the job out locally).
The constant caveat when discussing inflation and cost of living for different parts of the US is always "Your Mileage May Vary". Different goods and services experience different inflation rates in different parts of the country at different times.
When it comes to how your paycheck is being impacted by inflation, you are always going to be the best observer. You will know far better than anyone at the BLS or the Federal Reserve if your spending habits are being constrained because of inflation.
The nationwide data shows that, overall, inflation remains a problem in this country. Given the breadth and fundamental lack of accuracy in the nationwide data, that alone should suffice to confirm that what people are experiencing about inflation in their personal lives is real and real painful.
Thanks, Peter. I think wages are not increasing as fast in Texas for workers because we have an abundant supply of workers. In some states minimum wage is commonly $15/hr for jobs requiring no skills or experience, but in Texas there are still many jobs that pay $10 and still expect experience. You could say our cost of living is lower, but for renters and people who live paycheck to paycheck, it doesn't feel lower because they feel inflation more. Fast food prices and car insurance premium increases is really hurting working people.
Where labor is in abundance wages are always going to be lower. Where labor is scarce wages are always going to be higher. Wages are the price of labor and are affected by scarcity and surplus the same way prices for other goods and services are.
That being said, since the Pandemic Panic Recession the number of wage-earners nationwide who report living paycheck to paycheck has increased. This has some interesting ramifications, in particular for inflation and money velocity--something I touched on when discussing CBDCs.
https://newsletter.allfactsmatter.us/p/for-the-love-of-money-why-cbdcs-must
Money velocity is a key metric to understand when grappling with inflation and pricing issues. Simply put, money velocity is the rate of turnover of money. When people spend more and save less, money velocity increases. When people spend less and save more, money velocity decreases.
It surely is not a coincidence that we got inflation shortly after money velocity increased particularly among the lower income groups.
https://newsletter.allfactsmatter.us/p/on-inflation-its-the-inequality-powell
Whether due to shifting preferences or enforced unemployment due to the Pandemic Panic Recession, people began spending more and saving less in the recession's aftermath.. Money velocity increased, and so did inflation. That the increases in money velocity occurred among the lower income strata also meant that the inflation was felt primarily by the lower income strata.
The wage differential between Texas and other states is attributable in large measure to cost of living differences among the several states. States such as Texas and Florida are generally cheaper overall, and so wages are going to be similarly lower (when I was a Voice and Data Network Engineer working as an independent consultant I had a client fly me out to California to oversee a set of router upgrades, because it was cheaper to pay me my Texas consulting rate plus per diem plus hotel and rental car than it was to contract the job out locally).
The constant caveat when discussing inflation and cost of living for different parts of the US is always "Your Mileage May Vary". Different goods and services experience different inflation rates in different parts of the country at different times.
When it comes to how your paycheck is being impacted by inflation, you are always going to be the best observer. You will know far better than anyone at the BLS or the Federal Reserve if your spending habits are being constrained because of inflation.
The nationwide data shows that, overall, inflation remains a problem in this country. Given the breadth and fundamental lack of accuracy in the nationwide data, that alone should suffice to confirm that what people are experiencing about inflation in their personal lives is real and real painful.