Thursday, April 13, 2017

Ruminations on "Returns to Experience"

We wrote yesterday about early and late ceiling occupations, whether one reaches peak earnings early or later in a career. I've had additional thoughts about the issue which I'd share with you, if you find the topic interesting at all.

Take the life of a carpenter who never becomes a contractor, but just keeps building houses career-long. I'd argue that while he will reach peak earnings in absolute inflation-adjusted dollars relatively early in life, his perceived affluence may nevertheless escalate later in life.

This is because, in the normal course of events, his children will have grown and left home and he will have fewer mouths to feed with a given income. Thus in middle age he may be able to afford a boat or an RV, which the budget wouldn't have covered earlier in life when he was buying scout uniforms and car seats, formula and diapers.
Think of the old adage "a rising tide lifts all boats," a way of saying a good economy improves everyone's lot. There is some evidence the adage is no longer true, if it ever was, particularly for the minimally educated who face competition from eleven million undocumented aliens seeking the same low-level jobs, depressing those jobs' wages.

Perhaps what those experiencing a lack of returns to experience are sensing is that the "rising tide" of the last couple of decades hasn't lifted their personal "boat," or the "boats" of those like them, at all. All the lift in the economic "tide" has gone to the upper 25% or so, with much going to the upper 1%.

Ads for cruises have to seem cringe-worthy to people living paycheck-to-paycheck, unable to write a check for $500. HGTV programs about people looking to buy overseas vacation places must have the same effect. They see affluence all around them, but do not experience any of it in their own lives. Hence depression, substance abuse, addiction, and suicide.