Not trying to be a jerk here, but that just feels pretty flimsy.
IMO it's more that the 2020-2022 inflation made a long-standing NIMBY-driven cost crisis *worse* and highlighted its relevance to the voters' lives, not that voters were magically right about this ONE two-year bout of inflation whose wage impact, by your own admission ("barely back up") was mostly mitigated over the next two years.
To me, that's the only way to reconcile the fact that eggs and gas went back down and, again, median wages are mostly back to where they were, with the fact that people are still hopping mad about it. They're not mad about the past 2-4 years alone, they're mad about the past 40 where dramatic economies-of-scale in consumer commodities masked an overall affordability crisis.
Thank you for answering, though. I'll get off my soapbox now.
This is true -- but it is tragic that the lesson that even _smart_ policymakers will take from this, is that it's politically safer to calibrate for too little stimulus and allow a grinding period of high unemployment (like we had after the 2008 crash), than it is to overstimulate and have a burst of inflation.
If you look at the decade from 2008-18, as we were gradually recovering to full employment / at-potential GDP, we left trillions of dollars unproduced. We're collectively massively poorer than we should have been.
But it is better for your re-election chances to immiserate 10% of the population (many of whom aren't voters anyways) than to make the whole electorate mad about rising prices, because even if wages keep up, which they did -- by 2024 real wages in the bottom quintile were above the trendline from before the pandemic -- it doesn't matter, you get shellacked at the ballot box.
The only reason the race was close was that Trump is a uniquely bad candidate. If the Repubs had nominated Nikki Haley she would've won a Reaganesque blow-out.
(Meanwhile, the lesson that _dumb_ policymakers may take is that, like Nixon in the face of the first oil shocks, they should impose idiotic price controls or screw with the Fed. We may well get a re-run of Nixonomics in the next two years, as Trump imposes inflationary policies and then tries to deal with the consequences with whatever dumb-ass sledgehammer comes to hand.)
The focus on Q2 2020 could be an issue. The people that had jobs (earning wages) were probably high paid/work from home individuals. The “low wage” jobs individuals were furloughed/laid off. This moved the median much higher.
Later, the low wage jobs came back, moving the median down. It is difficult to compare wage distributions with the pandemic wage distribution.
I think there may be an issue with dealing with the composition effect. The people that had jobs in Q2 2020 in the middle of the pandemic were individuals that were more likely to have high paying jobs/work from home. Others were furloughed/laid off. This moved the median much much higher.
Post-pandemic, the lower end of the wage distribution got rehired, bringing the median down.
You read my mind with this post. Thanks for writing
Why focus on 2Q20-2Q22 instead of 2Q22-2Q24? Just curious.
Because that is when wages fell, and they are barely back up to where they were before the pandemic
Not trying to be a jerk here, but that just feels pretty flimsy.
IMO it's more that the 2020-2022 inflation made a long-standing NIMBY-driven cost crisis *worse* and highlighted its relevance to the voters' lives, not that voters were magically right about this ONE two-year bout of inflation whose wage impact, by your own admission ("barely back up") was mostly mitigated over the next two years.
To me, that's the only way to reconcile the fact that eggs and gas went back down and, again, median wages are mostly back to where they were, with the fact that people are still hopping mad about it. They're not mad about the past 2-4 years alone, they're mad about the past 40 where dramatic economies-of-scale in consumer commodities masked an overall affordability crisis.
Thank you for answering, though. I'll get off my soapbox now.
People expect their wages to grow over 4 years, not to be about where they were before
Indeed, they do. I don't dispute the macro-analysis, just the micro-details.
Look at it this way, it was a bigger and more prolonged drop than the wage hit from the great recession.
This is true -- but it is tragic that the lesson that even _smart_ policymakers will take from this, is that it's politically safer to calibrate for too little stimulus and allow a grinding period of high unemployment (like we had after the 2008 crash), than it is to overstimulate and have a burst of inflation.
If you look at the decade from 2008-18, as we were gradually recovering to full employment / at-potential GDP, we left trillions of dollars unproduced. We're collectively massively poorer than we should have been.
But it is better for your re-election chances to immiserate 10% of the population (many of whom aren't voters anyways) than to make the whole electorate mad about rising prices, because even if wages keep up, which they did -- by 2024 real wages in the bottom quintile were above the trendline from before the pandemic -- it doesn't matter, you get shellacked at the ballot box.
The only reason the race was close was that Trump is a uniquely bad candidate. If the Repubs had nominated Nikki Haley she would've won a Reaganesque blow-out.
(Meanwhile, the lesson that _dumb_ policymakers may take is that, like Nixon in the face of the first oil shocks, they should impose idiotic price controls or screw with the Fed. We may well get a re-run of Nixonomics in the next two years, as Trump imposes inflationary policies and then tries to deal with the consequences with whatever dumb-ass sledgehammer comes to hand.)
The focus on Q2 2020 could be an issue. The people that had jobs (earning wages) were probably high paid/work from home individuals. The “low wage” jobs individuals were furloughed/laid off. This moved the median much higher.
Later, the low wage jobs came back, moving the median down. It is difficult to compare wage distributions with the pandemic wage distribution.
I think there may be an issue with dealing with the composition effect. The people that had jobs in Q2 2020 in the middle of the pandemic were individuals that were more likely to have high paying jobs/work from home. Others were furloughed/laid off. This moved the median much much higher.
Post-pandemic, the lower end of the wage distribution got rehired, bringing the median down.