Michael

Sorry to hear about your wife's lay off.

In today's global economy, it is very difficult to compete if costs are high. Germany restructured in the 2000s eliminating minimum wage and other employee protections and has fared the best of all the big EU economies since the 2008 crash. The UK has been restructuring since the 80's and has also done well but a significant number of workers are now on "zero hour" contracts.

The world has been going through an evolutionary change since the '70s and overall countries that have resisted change the most have suffered the most.

The Silicon Valley pays high wages, good benefits, good PTO, and usually severance when employees are laid off. However those are company policies and could change in an instant if the companies becomes uncompetitive (especially from foreign competition).

In today's global economy, companies will almost always move to where they can produce products cheaper. In the US, foreign car manufacturers opened plants in the south since Detroit labor unions were too restrictive. Prior to GM and Chrysler going bankrupt, it was estimated that cars from Detroit were $2,000-$4,000 more expensive than equivalent cars manufactured in the south or overseas.

It does suck but the world has changed. China only became a world economic power because it went from a welfare state to a dictatorial capitalistic state with few worker protections. South Korea also has few worker protections. Both of those countries have caused havoc with the Japanese economy for the past 35 years which previously caused havoc with the western economies. The world is in a continuous cycle of changing competition producing winners and losers.

Consumers are the driving force. Sometimes consumers will pay more for products made in their country but even in Japan where consumers would seldom buy foreign products since it was unpatriotic, consumers are now buying Korean or Chinese products since the price can be half the price of locally produced products.

kodokan

Have you come across the podcaster Dan Carlin, Michael? He had an interesting show recently in which he discussed income inequality, positing that sure, capitalism and the free market system might work as far as setting the 'right' wage for a task/ product/ function, but what if it's lower than people are expecting? He references some recent speech in which a billionaire said it's not that wages are too low, it's that expectations are too high... He goes on to suggests that the golden age of the last half of the 20th century could well be a blip caused by WWII, and that it was never going to be the long term normal to have a 'middle class' lifestyle on a semi-skilled wage, when the norm throughout history (he's a mad historian) is for those people to merely subsist.

Here's the link - I think it was show number 287: Dan Carlin - Common Sense

(His personal views are libertarian/ contexted against Ancient History - it's not that he thinks subsistence wages are a good idea, he just wants society to actually DISCUSS free markets/ capitalism/ democracy, and see if the world they're producing is one we actually want. I find he always gives me something to ponder deeply, whilst doing the cleaning )

Michael

I wish there was an easy solution to wage/wealth inequality but creating job security and raising everyone's wages doesn't accomplish that since the industries will be priced out by world competition. Ross Perot was anti-free trade but is that the solution or does that just turn a developed economy into a third world economy?

As far as wage/wealth inequity, do we set a limit as to how much wealth someone can have? Does anyone really need to be a billionaire? Should Bill Gates, Steve Jobs, Larry Ellison, Richard Branson, Mark Zuckerberg, and many others have been limited in their wealth accumulation even though they all created tens of thousands of jobs for their country? Should entertainers and athletics have their incomes limited even though we as consumers pay to see them or if their name is on a product, we pay more?

One reason for wage/wealth inequity is that developed countries don't produce the manufactured goods or develop the natural resources that occurred before and those types of jobs lifted everyone's wages. Just saying that someone should be paid more or given job security isn't the solution. The UK did that in the '60s and '70s and lost their automobile manufacturing industry. Europe tried to hang on to their electronics manufacturing industry with government incentives and subsidies but in the end, they lost them anyway. The French government has spent 10s of billions of dollars trying to create a "French Silicon Valley" since the 1980s with little success (I suspect a short work week, long vacations, job security, and products late to market doesn't go very well together with high tech). Now if a developed country wants to manufacturer products that compete with products produced by developing countries, the wages would be so low that nobody would want the jobs.

Most of the wealth that has been created since the '80s have been through investment and since the rich have the money, their wealth has significantly increased. How do we solve that problem? Do we tax the rich more which does seem logical but the rich have the power and always get the loopholes and tax benefits because of their power. This is not just a US phenomenon but it occurs throughout the world. Probably the US more than any other developed country is trying to put a stop to tax evasion though worldwide taxation for US citizens and residents and FATCA. France had a super tax on millionaires but that was eventually overturned by the courts.

I at one time thought there was a "magic bullet" to create wage/wealth equality but what I've seen over the past 35 years (except the Clinton years and the high tech boom), there doesn't seem to be a "magic bullet" except to educate the population in latest technology industries that are not competitive with developing countries industries. Education alone won't solve the problem but a country must also have flexible employment laws that attract the capital to invest in those industries.

As consumers we have contributed to the inequality. CEO pay, even though very high, is very small part of the inequity. Until consumers say, we are not going to pay unreasonably high prices to see entertainers and athletics or purchase high priced products that are endorsed by them will inequity will remain high. Also as consumers we need to educate ourselves in finance and not give away our money to people to invest for us (people that are making large amounts of money that creates inequity). There is only so big of a pot of wealth in a country and the more consumers give away, the greater the inequity becomes.

kodokan

The way that people seem to think about wage inequality only in the context of arbitary nation state boundaries is odd , to my mind. US billionaires swanking about in their yachts whilst US Rust Belters lose their factory jobs, take retail and restaurant jobs, and halve their incomes, is bad. But at the same time, it's been a great gain and a step up in living standards for a bunch of people in China/ India/ etc. So the income equality between those two groups of people has in fact narrowed, if you look globally along the entire spectrum. Why is one type of income inequality bad, and the other not?

And that's not to mention that much of the 1950s Leave It To Beaver lifestyle was not only due to a post-war production boom, but to institutionalized and legalized race and gender discrimination. In a 'be careful what you wish for' fashion, most families are now sending two adults out into full time work for half as much each as the single man used to earn, relative to his spending power and the wages of those around him. Should we send women back home and turn people of color away at the factory door so that semi-skilled middle-aged white men can feel good about themselves that they were the one whose sweat and toil paid for the new washing machine?

Globetrotta

[QUOTE=Michael;11605419]Sorry to hear about your wife's lay off.

"The world has been going through an evolutionary change since the '70s and overall countries that have resisted change the most have suffered the most."

Highly poignant given that it was then western societies abandoned Keynesian economic theory and turned to a neo-liberalism and so the death of manufacturing escalated and if you recall the governments espoused that there would be service jobs and then IT jobs both of which are now outsourced in abundance. In the case of car manufacturing Britian had over 50 car companies before WWII. The notion of 'made in GB, or USA or for that matter Australia' is no longer sustainable - stupidity is if people don't have jobs they cant buy things basic economic principle of revenue generation, yet governments sign FTA's like they are some great global alliance when in fact they are just selling out the workforce.

Michael

I do get a little confused about the good old days.

I was a teenager in the 1950s and lived in a open pit mining town where everybody claimed that the mining jobs paid very well, good benefits, and easy to get. However my father worked in the mines when I grew up and we lived in a run down house in a rural area and my mother used to patch my jeans. A big deal at the time was owning a 7 transistor radio, not having a party line (telephone line that was shared with a neighbor), having a few dollars to go to the nearest town on a Friday night, and if your family was doing very well, you had a black and white TV that picked up a few channels (not always clear). For a clothes washer, my mother had a washer with a ringer and after she washed the clothes, they were put on the line even in the middle of the winter. Showers weren't common so people didn't bath much. Refrigerators were small and the freezer section froze and had to be defrosted often. We had a wood stove for cooking. Light fixtures we gaudy. Whatever you owned, you tried to make it last another year and as long as it did the job, that was the only thing that was important.

In 1961 I joined the Navy and the airplane trip from Minneapolis to San Diego took over 10 hours. Long distance phone calls were so expensive that I never called home while in basic training. After basic training, my salary increased to a whopping $87 per month. At the end of basic training, I was assigned to electronics/radar school at Treasure Island in the San Francisco bay. The military recommended to take leave prior to the assignment and I flew home but the trip from San Diego to Minnesota and back to San Francisco was about $350 but fortunately the military gave me $200 to fly to San Francisco so I could afford the trip. After electronics school, I was assigned to Naples Italy with the first stop at Virginia Beach, then the Azores, then Morocco, then to Rota Spain, and finally to Naples. The trip took over two weeks as I had to wait for airplane flights at each of those locations. The trip to the Azores took 18 hours on a DC7 and the trip to Spain and Italy was on a very noisy C130 plane with web seats. While in Italy, I went on vacation to London and that was also on a prop plane. I also few to Pisa on a DC3 that had a cursing speed of about 100 miles per hour and it landed going so slow, when it landed at the end of the runway, the plane just stopped.

When I was in Naples, I only made one call back to the US which cost a fortune (about $7 per minute). The military base didn't have any phones to call the US so to make the call, I had to go to the Italian phone exchange, request them to connect me to the US, and then wait for about 3 hours and they would call me to go to a certain booth when the connection was made. When the military on our base wanted to communicate with the military in the US, they used a 10,000 W UHF transmitter with a headset and a push button mouthpiece. Sometimes it worked and sometimes it didn't.

When I got out of the Navy, I started working in the Silicon Valley for $450 per month. Long distance phone calls to the Midwest were $3 for 3 minutes so a half hour call would cost me about 8% of my monthly salary. The company had an 800 line to Minnesota and employees could use the company phone after hours. A few times I did that to save money but if I talked too long, someone would get on the line and say "will you please get off the line so others can use it". I worked with world's largest supercomputers that cost $10 million just for the mainframe and then about another $10 million for the peripherals.

During the late 1960s, I was transferred to Geneva on a nice expatriate salary and jets were common then so the trip was great. Most of the Swiss engineers couldn't afford housing on the open market and applied for government subsidzed housing which were big high rises with small units in Meyrin. Because there were so many of these high rises together with no character, it would have probably been considered ghetto apartments in the US but being Swiss, they took care of them very well. A round trip back to the US on economy class was about $1,000. Some of my friends that lived in the Geneva area didn't have phone service and they weren't scheduled to get phone service for 7 years but the phone company said they could get phone service within a year if the residents of the area paid for running the street cables up front and then the telephone company would use that payment to pay their monthly bills until the money ran out. The cost was over 6 months salary up front but residents were behind the eight ball and many chose to pay the upfront money. For a while I lived in the Jura mountains about 30 minutes outside of Geneva but didn't have phone service. Once I had to make a call to Geneva so I went to the local village and made the phone call and was shocked at the cost. I later found out that there weren't any direct phone lines from Geneva to the Jura and that all calls went through Paris and that was why a call of 30 miles cost a lot of money and the quality was extremely poor.

What is confusing it that economists claim that real incomes have dropped over the past 35 years but I wonder how they are calculating that. Cars are better quality with much better mileage, airline tickets are cheaper with better service, a PC built in the late 1980s exceeds the power of the supercomputer that I worked on in the late '60s and now everyone owns their own computer, telephone costs are near nothing in relation to a person's salary, cell phones are common even among the poor, a 42 HD flat panel TV is cheaper than black and white TVs cost in the '50s and a color TV in the '60s and cable, SAT, and the internet is available with clear video and isn't fuzzy like back in the '60s and '70, you can get just about anything in a hardware store to do it yourself but when I was in Geneva, I had to hire an electrician to put a plug on the refrigerator since "do it yourself" projects were very limited, everyone has nice clothes washers and dryers with big nice looking self defrosting refrigerators and dishwashers and self cleaning ovens. Today you can buy many different kinds of light fixtures that look nice at a reasonable price. People now replace appliances, light fixtures, and other things because they look out of date.

It appears that when economists calculate real income, they don't take into account quality and technology. For them, it appears that a car is a car no matter if it has a life of 50,000 miles, breaks down every few miles, isn't safe, gets 12 mpg, and has obsolete technology or is a car that has an error free 200,000 miles with safety built in, has the latest technology, and gets 40 mpg. With TVs, it appears to be the same that a black and TV is the same as a color TV which is the same as a flat panel HD TV and it doesn't matter about the quality of the picture. When it comes to computers and that didn't exist at the consumer level until recently so I'm not sure how they calculated real income for that. As far as phone calls, I suspect they just took the average phone bill during different years and just determined how much each cost and didn't consider that people now are using the phone more, calling long distance, and using cell phones including smart phones and hand held phones. For airline travel, they must not be calculating the cost per flight but the total cost of airline tickets per year. If that is the case, then if in the 1960s the average person flew once every 10 years and today they fly once a year and the tickets cost the same, today flying would cost 10x more than the 1960s.

If you take quality, technology, convenience, amount of use, and usability into consideration, I'm not totally convinced that real incomes has declined in the past 35 years.

scrubbedexpat091

We don't call them zero contract here in BC, but the public sector and most of the healthcare jobs (that haven't been outsourced) have become casual on call, this way they don't have to pay full benefits and just add an extra 12% usually in lieu of benefits, no set hours, but depending on the agency may end up full-time but with none of the benefits as your casual on call.

I have a nursing friend who works 40+ hours a week, 7 years in now, and still can't get a full-time position.

In the jobs I do, causal on call hasn't caught on yet.

We have some basic rules for employers who are ending employment though but it won't always mean compensation if the employer gives working notice instead.

scrubbedexpat091

Biggies for a lot of people is food, and housing. I wasn't around in the good ole days, so no clue what rent and food costs vs pay was like, and its obviously not like this in every region or city.

Here rent/housing costs are so high and don't match the income levels in any way. You will find a lot of people paying 50-70% or more of their monthly pay just for housing.

Food and rent is becoming a very real hardship in these parts.

(housing costs are inflated mostly due to foreign investors buying up residential units, with a lot of investors leaving their units empty and thus reducing the amount of available housing. Recently in Vancouver a house sold for 500,000 over it's listing price.)

Electronics and such might be cheaper, but who cares about those when housing and food is becoming hard to provide.

(granted the US has food stamps which I am sure helps, Canada doesn't help with food, and food bank help varies, but here its 2 times a month, 2 days of food.)

Michael

I wish it was that simple to just put up trade barriers. During the great depression, countries around the world put up trade barriers trying to protect their workforce but that lead to even a greater economic decline and eventually to WWII.

Following WWII, the Soviet Union and China didn't participate in trade agreements with the west (the WTO) and their economies ended up in shambles with extremely poor quality and shortages from housing to manufacturing to farming and technology fell far behind the west. On the other hand, the west reduced tariffs between countries and quality and availability increased, technological advances took place, and the west prospered.

Since the developed countries are basically competitive with each other, should we now say that developing countries can't export to developed countries anything developed countries want to build and let the western countries build those products at double or triple the price? If that would have been done in the 1960s, then China, South Korea, Singapore, Hong Kong, and Eastern Europe would not be economic powers and there wouldn't be such a thing as developing countries but just rich and poor countries. Under that theory, it wouldn't have made sense for eastern block countries to be allowed to join the EU since they are poorer and just take away jobs from western Europe. If trade barriers were put up, we would now likely be fighting WWIII between the rich and the poor countries.

If only the developed countries had to compete with each other, it's like the "good old boys club" where no one is going to rock the boat but if they have to compete with developing countries, they have to innovate. It would be the same if Detroit didn't have to compete with Japanese and German cars and then cars from Detroit would likely have the same quality as the 1960s and a much higher cost than today.

The problem is that western businesses took the easy way and moved manufacturing to low labor cost countries instead of innovating in western counties. If tariffs are raised, are you going to buy flat panel TVs, Smart phones, computers, etc. at double or triple the price? That is a complex question and if price rises, people may purchase those but less often and then production will fall making those products even more expensive. Hundreds of millions of smart phones, computers, and flat panel TVs can be produced each year at low price for two reasons, manufacturing is cheap and the number produced is large. If the cost is increased, the number sold will decrease which will increase the price which will decrease the number sold creating a cycle.

Michael

Mark Twain said “Buy land, they’re not making it anymore” which is true but there is plenty of land around at a cheap price but not where you want it.

Housing costs have always been issue in areas where people want to live or where jobs are available. It is basic economics that if people have the money, they want to live in the nicest area and closest to work as possible. As an area or city become more desirable and/or jobs become more available, housing prices rise.

Unfortunately you live in Canada and there seems to be fewer choices where housing is affordable and jobs are available than the US. If you were living in the US, I'd say go south young man, go south to find affordable housing where work is available. I suspect with what you and your wife make, you could find houses or condos to buy for less per month then you are paying for rent in Vancouver in some southern metropolitan areas. I know for you that's probably not possible due to health issues and possible health insurance costs.

scrubbedexpat091

Yeah the health insurance costs make it impossible to live in the US. I have no idea what medication would cost there, but considering what the cash price for them are in Canada, I'd assume they are higher south of the border. Unfortunately several have no generic alternative yet, so cost even more.

One of my wife's is 4.80 per tablet and she takes 2 per day, luckily here the government covers the full cost or we would be so screwed. (not everyone gets full government prescription coverage, most don't.)

4.80*60 = 288 per month. Add mine is which is generic, and her other one, we are looking at around 600 per month in cash prices.

I am pretty sure we would end up financially worse off in the US because of the cost of health insurance, accessing the doctors and all that. Plus insurance companies have a bad habit of not covering mental health issues long term, or at all, which is more important in our situation.

Yes, land in the middle of nowhere is cheaper as are housing, but you need to be independently wealthy, or otherwise have your income from sources that don't require you to have a job since those locations generally have no employment opportunities.

But then you run into healthcare issues as those regions generally lack healthcare because well they are in the middle of nowhere.

We are unfortunately stuck in BC because disability benefits my wife has is provincially funded so once you leave the province you lose it, and some provinces don't have a similar system, and those that do may have different criteria for approval.

In Vancouver the developers are the ones who own the land, if your lucky you will own 1 unit in a condo building, but then you really don't own anything but space.

Single family homes are well over 500,000 now, you should see the dumps that sell for 1 million or close to 1 mil, it's land value as most end up bought by developers/investors and torn down and turned into condos.

Vancouver is a condo city, single family homes are not built much anymore unless the owner of a house tears it down to build a new one, but there is also not much land in Vancouver, most has been built on.

This appears to be the lowest priced house currently listed, a cool 775,000 but since there are no photos, my guess is it's a fixer upper.

2458 E 41ST AV, Vancouver, British Columbia V5R2W5 - V1091617 | Realtor.ca

# 2 @ 789,000 (gov't values this one at 772,900)

5891 BOUNDARY RD, Vancouver, British Columbia V5R2R2 - V1107135 | Realtor.ca

Cheapest house currently listed where I am, 438,000

37808 SECOND AV, Squamish, British Columbia V0N3G0 - V1104849 | Realtor.ca

The government assesses the above home in my city at:

261,000

234,000 land

27,000 building

scrubbedexpat091

Recently in Vancouver a house listed for 1.6 million, sold for 2.165 million.

Basically the listing price in Vancouver is just the starting point, pretty much everything sells above the asking price in a bidding war, but this is a new record even for Vancouver.

Michael

If your wife can't move because of disability, that makes it even harder.

Look at the following link to get US prices for drugs. Sometimes drug prices are much ceaper than expected. You'll have to enter some zip code since they need to indicate local prices at local pharmacies.

Prices, Coupons and Information - GoodRx

I believe under ACA, mental health can no longer be limited. Also surprisingly, stores like Costco, Walmart, Target, and Walgreens have company provided health insurance. Not sure about the hospitality industry but many are unionized in California (don't know about the south).

Pulaski

Houses in my area, somewhat habitable ones, i.e 80-90 years old and might need renovations, start around $40k, with property tax around $450 per year, or you could rent one in decent shape, i.e partially renovated, for around $600. A modern apartment starts around the same rent. The whole state is growing with lots of people coming down from the North East, so there are certainly jobs, though that might mean commuting into the Charlotte area. They've built a lot of hotels there in recent years, though other than when NASCAR has races here, or perhaps the golf tournament at Quail Hollow, I don't know of any recurring annual reason for the hotels to fill up.

Michael

Even if they don't have money for a down payment to buy a house, they could rent an apartment for a year or two and save the money for the down payment at those prices. With FHA mortgages at 3.5% down, that's not a lot of money for a $40K-$80K home.