Wednesday, April 23, 2014

Salary vs Inflation


While  researching this post, time and time again I realized that there is one factor that matters to those in control of wages and the economy.  People in the U.S. that make 50 k are just as happy as those that make 350 k.  If people make below $50 k they are much less happy.

So what... the reality is that money doesn't make you happy, big deal.  True, however with the increasing financial gap I am interested how far this will go.  Happiness for most consists of  having food, shelter, family and a few toys.  Well Toys are cheap, family is free, food is subsidized and shelter, well shelter depends on where you live.

My Silly guess is that wages will not increase on average more than 2% yearly over the next 20 years.  So a person making $100,000 today can expect to make about $151,000 in 2034 in the same job.  During that time expect prices for things like coffee to go from $10 to $22 a pound.  

Around the world salaries are skyrocketing as technology and communication make the world smaller.  U.S. companies are cashing in on low wages and an ever increasing skill base from around the world.  The U.S. worker is an increasingly expensive commodity despite the vast numbers of unemployed and wages adjusted to a CPI that significantly favors the wealthy.  

Importantly I am not suggesting that there will be mass suffering, on the contrary, the importance of retaining a docile underclass is critical for everyone.  Wages elsewhere will increase to the point that eventually, maybe by 2055 average workers in any "third world" economy, will match those in the U.S..

So while wages stagnate, the U.S. and world economies will continue to grow as more value is driven by new markets.  Lifestyles will continue to improve as the cost of energy, communications and travel diminish.  Toys will be cheap, family will be free, food subsidized and shelter, well shelter depends on where you live.

So what do you think?.... Go ahead and tell me that I'm wrong.  This is just a silly guess.