Author Topic: Perceptions/expectations of salaries in relation to inflation  (Read 5432 times)

jeromedawg

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Perceptions/expectations of salaries in relation to inflation
« on: January 21, 2016, 04:33:37 PM »
Hey guys,

Just thinking out loud here but what are your guys' take is on what we perceive or expect to be "high salaries" vs "low salaries" and everything between in relation to inflation? For example in the software field, it just seems [to me] like a lot of people view "making over $150k" is the new "making over $100k." (these days, getting into six-figures isn't such a huge deal to as many people as it was before I'd reckon...). Or, if you're just coming out of college, "making $60-80k" is the new "making $40k-50k" - I guess it's all subjective and also depends on where you live, and it's probably easier to make these kinds of comparisons between now and 50 years ago (e.g. when our parents or grandparents talk about how they bought 5 cent hamburgers from McDs and how making $20k a year was a lot). Or maybe I'm just living in another world with the figures I threw out there... (like with the coming out of college figure - I just read on Quora some guy post how his net salary was $175k [base $105k] being hired on at Google straight outta college - I'm sure working for a Silicon Valley tech giant makes a huge difference of course, in addition to whatever skills/skillset you have that might be in high demand).

Anyway, just curious to hear people's opinions in general. Or maybe my question is mostly rhetoric and there's one very simple answer (inflation). Sorry, kind of an open-ended question here - not even sure why I'm asking it! Maybe just from me reading around here about different perspectives on whether or not to take certain jobs at a certain salary and in a LCOL vs HCOL area, etc, as well as recently reading (in the general news) about how 62 people own half the world's wealth, among other things.
« Last Edit: January 21, 2016, 04:38:18 PM by jplee3 »

sol

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #1 on: January 21, 2016, 05:13:28 PM »
My only piece of advice is that if you want your salary to keep pace with inflation, you should not take a government job.  Congress has decided the US government should be reducing purchasing power for all of its employees year over year.

We've had a cumulative total of 3% pay raise over the past six years, while inflation had been more like 9% over the same time period.   It's one of the reasons I'm leaving federal service.

deborah

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #2 on: January 22, 2016, 03:10:15 PM »
People really tend to get inflated ideas about what is normal. Look up the average salary of people in your country - above that is high.

JZinCO

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #3 on: January 22, 2016, 03:34:52 PM »
Speaking form my experience, entry level and mid level salaries have not changed, in my field, over the past decade since I started in it.
Of course, as one is gaining experience and qualifies for better positions (from entry through mid level), their salary should increase beyond inflation due to promotions. In my field, one is generally peaked out around 70-85K (and again, has been for the past decade). To echo soil, this may be related to the fact that the federal and state govts employ over half of individuals in my field.


JZinCO

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #5 on: January 22, 2016, 04:20:53 PM »
Speaking form my experience, entry level and mid level salaries have not changed, in my field, over the past decade since I started in it.
Of course, as one is gaining experience and qualifies for better positions (from entry through mid level), their salary should increase beyond inflation due to promotions. In my field, one is generally peaked out around 70-85K (and again, has been for the past decade). To echo sol, this may be related to the fact that the federal and state govts employ over half of individuals in my field.
Well, looked at BLS to see if my perception held up. According to BLS, mean, nominal wages have gone down 5% in the past decade (from 54K to 51K). Using the CPI, if the salary rose with inflation, the mean wage should have risen to 67K).
Taking the long view, wages were $1100 in 1910 which is equivalent to 28K today. My field boomed through the 50s to 80s which may explain the above-inflation growth in most of the 20th century; however it continues to decline seeing 10% loss in positions over the past decade.
« Last Edit: January 22, 2016, 04:25:49 PM by JZinCO »

onlykelsey

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #6 on: January 22, 2016, 04:32:48 PM »
http://www.advisorperspectives.com/dshort/updates/Household-Income-Distribution.php

I was going to post a similar link.  It's not really a smooth bell curve, it seems.  Salaries for the upper 20% seem to have grown a lot (which is maybe the upper half of college graduates??), while the rest have stagnated. 

Coming out of Cornell in to the beginning of the recession in 2008, it seems like my friends were excited for 40K year jobs, and coming out of law school in 2011 a chunk of that same generational cohort was unemployed (while a lucky few of us were starting at 160K).

JLee

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #7 on: January 22, 2016, 07:31:01 PM »
Speaking form my experience, entry level and mid level salaries have not changed, in my field, over the past decade since I started in it.
Of course, as one is gaining experience and qualifies for better positions (from entry through mid level), their salary should increase beyond inflation due to promotions. In my field, one is generally peaked out around 70-85K (and again, has been for the past decade). To echo sol, this may be related to the fact that the federal and state govts employ over half of individuals in my field.
Well, looked at BLS to see if my perception held up. According to BLS, mean, nominal wages have gone down 5% in the past decade (from 54K to 51K). Using the CPI, if the salary rose with inflation, the mean wage should have risen to 67K).
Taking the long view, wages were $1100 in 1910 which is equivalent to 28K today. My field boomed through the 50s to 80s which may explain the above-inflation growth in most of the 20th century; however it continues to decline seeing 10% loss in positions over the past decade.

Aren't the nominal wage numbers already adjusted for inflation?

I'm a red panda

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #8 on: January 22, 2016, 08:18:14 PM »
http://www.advisorperspectives.com/dshort/updates/Household-Income-Distribution.php

I was going to post a similar link.  It's not really a smooth bell curve, it seems.  Salaries for the upper 20% seem to have grown a lot (which is maybe the upper half of college graduates??), while the rest have stagnated. 


According to the never ending political ads "It's called the wage gap, and it's only getting worse."

Starting salaries in my industry (which requires a masters degree either for entry level or it's expected within a year or two, and a lot of people have doctorates) seem to be up from a decade ago, but not a lot- now $40k would be good.  And raises are only about 1-2% a year. An awesome year would be 3%, some years were none.  The only way to make more money is to switch jobs, but there are only so many companies to do that in...

Of course, I consider $40k to be a really low salary... but 2 of those puts a household right about the 2nd quintile; perception means a lot.
« Last Edit: January 22, 2016, 08:22:01 PM by iowajes »

ulrichw

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #9 on: January 22, 2016, 09:00:11 PM »
[...]
Well, looked at BLS to see if my perception held up. According to BLS, mean, nominal wages have gone down 5% in the past decade (from 54K to 51K). Using the CPI, if the salary rose with inflation, the mean wage should have risen to 67K).
Taking the long view, wages were $1100 in 1910 which is equivalent to 28K today. My field boomed through the 50s to 80s which may explain the above-inflation growth in most of the 20th century; however it continues to decline seeing 10% loss in positions over the past decade.

Aren't the nominal wage numbers already adjusted for inflation?

Nope - nominal wages are the non-adjusted numbers. Real wages are the ones that are adjusted. (https://en.wikipedia.org/wiki/Real_versus_nominal_value_(economics))

Given JZinCO's example, in his field *real* wages, which represent more accurately the spending power represented by the wages, went down even more (using the same inflator JZinCO used, final wages would be around $41,000 dollars stated in terms of the same dollars as the initial wage).

JLee

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #10 on: January 22, 2016, 09:57:34 PM »
[...]
Well, looked at BLS to see if my perception held up. According to BLS, mean, nominal wages have gone down 5% in the past decade (from 54K to 51K). Using the CPI, if the salary rose with inflation, the mean wage should have risen to 67K).
Taking the long view, wages were $1100 in 1910 which is equivalent to 28K today. My field boomed through the 50s to 80s which may explain the above-inflation growth in most of the 20th century; however it continues to decline seeing 10% loss in positions over the past decade.

Aren't the nominal wage numbers already adjusted for inflation?

Nope - nominal wages are the non-adjusted numbers. Real wages are the ones that are adjusted. (https://en.wikipedia.org/wiki/Real_versus_nominal_value_(economics))

Given JZinCO's example, in his field *real* wages, which represent more accurately the spending power represented by the wages, went down even more (using the same inflator JZinCO used, final wages would be around $41,000 dollars stated in terms of the same dollars as the initial wage).

Ahh, I missed that - thanks!

electriceagle

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #11 on: January 22, 2016, 11:01:52 PM »
Inflation-adjusted salaries are falling in most western countries. My opinion: its the robots.

https://en.wikipedia.org/wiki/Technological_unemployment

Quite a lot of jobs that were done by a human are either being done by a computer, or being done 90% by a computer. Many of those lost jobs are junion level professional positions that young people would use as a stepping stone in their careers.

Salaries are determined by supply and demand. When there are too many employable people, salaries fall.

Many of the jobs that remain untouched by automation are manual labor jobs that have always been low wage because huge numbers of people can do them.

I've yet to see any viable policy proposals to address this. Low-cost education to prepare people for higher level employment is great for those individuals who are inclined to more complex work. I'm not sure what to do about the rest.

onlykelsey

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #12 on: January 23, 2016, 07:24:01 AM »
Quote
I'm not sure what to do about the rest.

This is not mustachian, but it seems like the people from this group who thrive in Manhattan find ways to increase consumption for the wealthy (i.e. they deliver groceries or garden or dog walk or cook or whatever for the 1%).

use2betrix

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #13 on: January 23, 2016, 07:56:07 AM »
http://www.advisorperspectives.com/dshort/updates/Household-Income-Distribution.php

I was going to post a similar link.  It's not really a smooth bell curve, it seems.  Salaries for the upper 20% seem to have grown a lot (which is maybe the upper half of college graduates??), while the rest have stagnated. 


According to the never ending political ads "It's called the wage gap, and it's only getting worse."

Starting salaries in my industry (which requires a masters degree either for entry level or it's expected within a year or two, and a lot of people have doctorates) seem to be up from a decade ago, but not a lot- now $40k would be good.  And raises are only about 1-2% a year. An awesome year would be 3%, some years were none.  The only way to make more money is to switch jobs, but there are only so many companies to do that in...

Of course, I consider $40k to be a really low salary... but 2 of those puts a household right about the 2nd quintile; perception means a lot.

Fortunately, people are able to research this knowledge prior to obtaining degrees and focusing on a career path. This information is easily obtainable.

Not all degrees should get equal pay, for obvious reasons. Sometimes, it seems people think other wise.

Take a career like social work for example. I don't know much about it, by say a 4 year degree is often required and people start around 30k-40k and can hope to max out some day at 60k-70k. These are guesses, but I'm sure the information is readily available. Now take a bachelors of science in nursing. The income could likely be double that. Again, I'm sure to research that is pretty easy.

It baffles me that someone picking social work, would do all that work, and then constantly whine about the money. Like... Why didn't you do a 5 second Google search before wasting 4 years of your life? Maybe they enjoy social work, which is great! But don't whine about something you should have known going into it.


ender

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #14 on: January 23, 2016, 09:16:16 AM »
It baffles me that someone picking social work, would do all that work, and then constantly whine about the money. Like... Why didn't you do a 5 second Google search before wasting 4 years of your life? Maybe they enjoy social work, which is great! But don't whine about something you should have known going into it.

Plenty of parents never bother to talk to their kids.

Plenty of societal pressures (and business interests of universities/colleges) push people to do a 4-year degree or they will be a failure, and so this doesn't help when parental wisdom is not present.


onlykelsey

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #15 on: January 23, 2016, 09:18:27 AM »
Quote
Plenty of societal pressures (and business interests of universities/colleges) push people to do a 4-year degree or they will be a failure, and so this doesn't help when parental wisdom is not present.

I have sympathy for people who make bad decisions with respect to four-year (or two-year) degrees.  I was orphaned as a teenager and really was only saved by choosing a college which has need-based financial aid.

It's really the graduate degree people that get to me.  At 17 you can easily share blame with society, your school system, your parents, etc, but not at 23 after a college education.  Google is your friend!

use2betrix

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #16 on: January 23, 2016, 09:35:27 AM »
In this day and age, with access to the Internet, I don't agree that picking a degree and not at least researching the income, can be blamed on anyone other than the person getting the degree.

I can see it now, "hey Johnny, we want you to go to college and be a social worker."

- Johnny really wants to be a nurse. He does research and lays out facts regarding income, employment, job prospects, and knows he would love a career in nursing.

So Johnny lays out all those facts. In black and white, proven statistics.

Are you telling me that there are parents out that that would say, "Johnny, despite your proven statistics and where your passions lie, we really think being a social worker would be on your very best interest"

And even then, if you're parents aren't paying for it, it's REALLY not their choice. If they are paying for it, then good for you and you have a free education, and you can go back on your own and double major with another year or 2 of something you really love.


My mom, dad, brother, and sister all have their bachelors degree from the same school. 5 out of my 6 cousins have bachelors or masters, as do their 4 parents.

I do not have a bachelors. Do you think there was no pressure though? Instead, I did a TON of research and laid out my plan to my parents. I didn't even need their buy in as I was an adult, but enjoy having their moral support. In return, I was making over 100k by the time I was 23 and now over 200k at 27.

I guess maybe I am the exception as by the time I was 18, and in many ways before, I held myself accountable and did research to make my own choices. That's why I have a hard time grasping why adults are still blaming their life decisions on others. Sounds like they were not ready to go to college, nor leave the support of their mom and dad until they could make their own choices.

ender

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #17 on: January 23, 2016, 09:39:15 AM »
I do not have a bachelors. Do you think there was no pressure though? Instead, I did a TON of research and laid out my plan to my parents. I didn't even need their buy in as I was an adult, but enjoy having their moral support. In return, I was making over 100k by the time I was 23 and now over 200k at 27.

I would be very careful generalizing your level of perception and introspection as a teenager to the teenage population as a whole...

It might have worked for you, but this approach is frankly not a realistic option for most (it's possible, but not realistic).

jeromedawg

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #18 on: January 23, 2016, 09:47:23 AM »
I do not have a bachelors. Do you think there was no pressure though? Instead, I did a TON of research and laid out my plan to my parents. I didn't even need their buy in as I was an adult, but enjoy having their moral support. In return, I was making over 100k by the time I was 23 and now over 200k at 27.

I would be very careful generalizing your level of perception and introspection as a teenager to the teenage population as a whole...

It might have worked for you, but this approach is frankly not a realistic option for most (it's possible, but not realistic).

I agree.... Sounds like an exception to me. Most teenagers that age are worried about other things and likely not as mature. I know of a guy around the same age as trix at my last company who also avoided college and was working in my group but he was an intern for the longest time and certainly wasn't commanding a $100k+ salary... Maybe he's close to that now. There are always going to be those exceptional people who are smart enough to get into google and Facebook not having gone to college or having dropped out. But they are few and far between in relation to the general public.
« Last Edit: January 23, 2016, 09:50:18 AM by jplee3 »

use2betrix

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #19 on: January 23, 2016, 09:50:29 AM »
I do not have a bachelors. Do you think there was no pressure though? Instead, I did a TON of research and laid out my plan to my parents. I didn't even need their buy in as I was an adult, but enjoy having their moral support. In return, I was making over 100k by the time I was 23 and now over 200k at 27.

I would be very careful generalizing your level of perception and introspection as a teenager to the teenage population as a whole...

It might have worked for you, but this approach is frankly not a realistic option for most (it's possible, but not realistic).

The same can be said for the mocking attitude in these forums regarding people who were never taught to handle money, or taught to live frugally.

In fact, we have a whole forum topic dedicated to mocking and making fun of people. Many people were raised frugal and/or "naturally" had that mindset that many others did not.

I don't think the difference between that example, and placing the blame on a person who makes poor lifelong decisions, is as different as you may believe.

ender

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #20 on: January 23, 2016, 09:56:08 AM »
I do not have a bachelors. Do you think there was no pressure though? Instead, I did a TON of research and laid out my plan to my parents. I didn't even need their buy in as I was an adult, but enjoy having their moral support. In return, I was making over 100k by the time I was 23 and now over 200k at 27.

I would be very careful generalizing your level of perception and introspection as a teenager to the teenage population as a whole...

It might have worked for you, but this approach is frankly not a realistic option for most (it's possible, but not realistic).

The same can be said for the mocking attitude in these forums regarding people who were never taught to handle money, or taught to live frugally.

In fact, we have a whole forum topic dedicated to mocking and making fun of people. Many people were raised frugal and/or "naturally" had that mindset that many others did not.

I don't think the difference between that example, and placing the blame on a person who makes poor lifelong decisions, is as different as you may believe.

.... I don't disagree with this either (?).

use2betrix

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #21 on: January 23, 2016, 09:59:10 AM »
I do not have a bachelors. Do you think there was no pressure though? Instead, I did a TON of research and laid out my plan to my parents. I didn't even need their buy in as I was an adult, but enjoy having their moral support. In return, I was making over 100k by the time I was 23 and now over 200k at 27.

I would be very careful generalizing your level of perception and introspection as a teenager to the teenage population as a whole...

It might have worked for you, but this approach is frankly not a realistic option for most (it's possible, but not realistic).

I agree.... Sounds like an exception to me. Most teenagers that age are worried about other things and likely not as mature. I know of a guy around the same age as trix at my last company who also avoided college and was working in my group but he was an intern for the longest time and certainly wasn't commanding a $100k+ salary... Maybe he's close to that now. There are always going to be those exceptional people who are smart enough to get into google and Facebook not having gone to college or having dropped out. But they are few and far between in relation to the general public.

I am no doubt an obvious exception, my point was more related that a person should have a well thought out plan entering college or at least by the time they're done with their gen-eds.

My point was less about myself, and more about people using the Internet to plan their future as opposed to just taking orders from their parents without the slightest bit of research...

jeromedawg

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #22 on: January 23, 2016, 10:12:36 AM »
I do not have a bachelors. Do you think there was no pressure though? Instead, I did a TON of research and laid out my plan to my parents. I didn't even need their buy in as I was an adult, but enjoy having their moral support. In return, I was making over 100k by the time I was 23 and now over 200k at 27.

I would be very careful generalizing your level of perception and introspection as a teenager to the teenage population as a whole...

It might have worked for you, but this approach is frankly not a realistic option for most (it's possible, but not realistic).

I agree.... Sounds like an exception to me. Most teenagers that age are worried about other things and likely not as mature. I know of a guy around the same age as trix at my last company who also avoided college and was working in my group but he was an intern for the longest time and certainly wasn't commanding a $100k+ salary... Maybe he's close to that now. There are always going to be those exceptional people who are smart enough to get into google and Facebook not having gone to college or having dropped out. But they are few and far between in relation to the general public.

I am no doubt an obvious exception, my point was more related that a person should have a well thought out plan entering college or at least by the time they're done with their gen-eds.

My point was less about myself, and more about people using the Internet to plan their future as opposed to just taking orders from their parents without the slightest bit of research...


Makes sense. Most teenagers don't have the mindset to go do things on their own without mom or dad approving. I'm sure this is partly due to parenting but also the way a person is wired. Some may be more inclined to DIY and explore at an earlier age. Either way I think parents should foster independent thinking... I'm sure it's harder said than done. But that's what I want for my kid - research all your options and tell me what you think is best. Then we'll talk.

Regarding growing up frugally or poor, a good example of this disparity is my wife. She grew up during her parents having hard financial times. The result: she's pretty frugal and won't buy what she doesn't need. Her older brother grew up in times of prosperity and has a very free-willed disposition towards spending and enjoying life. Both her parents are not financially keen or frugal. I think she attributes bad experiences like utilities being shut off because her parents couldn't pay (but would go in debt on other things) to her general outlook on being conservative with her money. Her brother has a harder time grasping this though.
« Last Edit: January 23, 2016, 10:15:20 AM by jplee3 »

sol

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #23 on: January 23, 2016, 10:25:23 AM »
I do not have a bachelors. Do you think there was no pressure though? Instead, I did a TON of research and laid out my plan to my parents. I didn't even need their buy in as I was an adult, but enjoy having their moral support. In return, I was making over 100k by the time I was 23 and now over 200k at 27.

I guess maybe I am the exception as by the time I was 18, and in many ways before, I held myself accountable and did research to make my own choices. That's why I have a hard time grasping why adults are still blaming their life decisions on others. Sounds like they were not ready to go to college, nor leave the support of their mom and dad until they could make their own choices.

Nobody is blaming anyone for making their own life decisions, we're recognizing that not everyone can follow the same path and the goal is to generate positive outcomes for the most people possible.

Using your template as an example, I should say "nobody needs to worry about paying for college, because all of the best schools in the country will offer you full scholarships and college will be free!"  Great that it happened to me, but not a realistic plan for everyone.  Your path is exactly the same in that respect.

A four-year college education is still (for now) the most reliable way to ensure an above-average income in the US.  Yes there are lots of other ways.  Yes some of those other ways can generate even higher incomes, in some cases.  But we don't help the majority of people by recommending the lowest-probabilty paths.  You can't make policy based on exceptions.

use2betrix

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #24 on: January 23, 2016, 11:04:08 AM »
Anyways, all good points. Didn't mean to bring the thread off to a different tangent lol.

Back to the original topic.




JZinCO

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #25 on: January 23, 2016, 01:36:52 PM »
It baffles me that someone picking social work, would do all that work, and then constantly whine about the money. Like... Why didn't you do a 5 second Google search before wasting 4 years of your life? Maybe they enjoy social work, which is great! But don't whine about something you should have known going into it.
I know yall hashed some of this out before, but I don't want anyone to read the quote as a generalized 'if you chose to enter a field that now renumerates poorly, caveat emptor.'
(Don't read this as a refutation of Trixr's statements at all; simply I just think the following should be made known)

Sometimes you have imperfect knowledge when selecting a field; young adults have to choose a path that will influence the career of their 20s if not through their entire adulthood. Colleges have only begun taking graduate career surveys and actually tracking the success of their graduates (thanks in part to govt mandates). It almost behooves a university to hide this information. There is plenty of marketing and disinformation to enter this or that career. All young adults are naive by definition and lack the experience to choose; their parents may not have the knowledge to help the student. How much will you know about the current state of industries and career potentials for new workforce entries 20-40yrs down the road?

The second, is that the conditions of industries evolve. To explain more, about my field, the spotted owl listing in 1990s crippled the forest industry of the pacific northwest. Who among those entering the workforces in the early 80s saw that coming? They saw a growing industry and a great career to be had! The reason my career has had declining wages over the last decade is because, on the private side, NAFTA and other FTAs had allowed for Chinese and Canadian timber flooding into the US. You may have heard about the US-Canadian trade dispute, wherein Canada subsidizes the timber trade which has killed 10,000 US jobs, and the US reacted with a countervailing tariff.  On the public side, the growing movement for reducing govt budgets has led to wage stagnation for state and federal foresters. Even though these factors preceded my entry into the field (mid 2000s), I couldn't have known the full ramifications and probably couldn't have understood how this would impact me at age 18. I'm currently 'adapting' to changing conditions and working in the industry in a way I couldn't imagined before (fire research, then greenhouse gas accounting, now back to fire) which require several non-forestry skills (having to learn concepts in software development and mechanical engineering) to stay current with changing priorities (aka where the money is).
On the flip side, my father studied a young, nascent experimental computer engineering bachelors program. And well, you could have guessed how that worked out. He chose a great career and nobody could have tapped him on the shoulder to inform him about what a great decision that would have become. 

Back to your regularly scheduled topic..
« Last Edit: January 23, 2016, 01:43:26 PM by JZinCO »

tj

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #26 on: January 24, 2016, 10:35:52 PM »
Sounds like hedonistic adaptation to me. Most people are just never going to hit $150k in annual income. Even most Americans. If you work in tech and like it, I guess consider yourself fortunate and don't follow the crowd that "150k is the new 100k". It seems like a lot of the early retirees you hear about worked in tech and got burned out. Are the crazy tech salaries sustainable over a 3-4 decade career, or is it more like a professional athlete where your compensation is frontloaded while young?

OvertheRainbow

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #27 on: January 25, 2016, 12:34:48 AM »
My only piece of advice is that if you want your salary to keep pace with inflation, you should not take a government job.  Congress has decided the US government should be reducing purchasing power for all of its employees year over year.

We've had a cumulative total of 3% pay raise over the past six years, while inflation had been more like 9% over the same time period.   It's one of the reasons I'm leaving federal service.

But with the Feds, you get great benefits and a pension to balance that out. And private sector isn't really paying that much more if not the same.

sol

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #28 on: January 25, 2016, 12:43:28 AM »
But with the Feds, you get great benefits and a pension to balance that out.

And job security, too.

Quote
And private sector isn't really paying that much more if not the same.

That depends on your sector.  If you're a janitor, the total benefit package from the feds is better than you'll find anywhere else.  But if you're a professional, like a lawyer or a doctor or a scientist, then the feds pay about 80% on the dollar if you include benefits, about 65% if you don't.  Unfortunately, there are a lot more lawyers and doctors and scientists than janitors working for the federal government.

So people who say that government workers earn more than the US average are right, since the government doesn't employ any fast food workers or retail salespeople.  But if you compare job to job?  Educated people always earn more money working for the private sector than they do working for the feds doing the same job.  I'm one of those.

That pension though!  Surely that's worth something, right?  Sadly the (civilian) federal pension is not inflation adjusted so prospective early retirees give up most of the value of it.  If I retire this year and start drawing my pension when I'm eligible in 20 years, it would pay me 10% of my 20-year-old wages.  10% for ten years of service, times my current wage, but not adjusted for the 20 years that lapse between leaving federal service and being eligible for a pension.  It's a good deal for people who work 40 years and retire at age 60 (40% pension!) but I'm not one of those.

JZinCO

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Re: Perceptions/expectations of salaries in relation to inflation
« Reply #29 on: January 25, 2016, 09:26:37 AM »
Sol, somewhere there is a study that compared federal vs private jobs across US metro job markets and found what you are describing. Boiled down, lower skilled jobs are better compensated for, such as store clerking for the DoD on a base, but choosing to be an engineer for the DoD is a big pay haircut.

If I recall, permanent federal employees retain competitive status for life, so it would not be as difficult to work in a federal position for some time, retire early, then regain a federal job for 3 years right before a normal retirement age. Thus pension benefits are calculated using the new highest average salary. It's a what-if scenario I have played out in my head.

edit: Here we are. CBO shows fed vs private salaries, accounting for education.
http://www.cbo.gov/sites/default/files/cbofiles/attachments/01-30-FedPay.pdf
And a discussion. Seems Cato Institute has come out with studies showing federal employees earn more, but I don't think they accounted for different demographies between each federal and private employees.
http://www.govexec.com/pay-benefits/2014/10/public-private-sector-pay-gap-remains-35-percent/96830/
« Last Edit: January 25, 2016, 09:32:55 AM by JZinCO »