Stagnation.

Americans and the firm-size wage effect.

Any topics around economic stagnation (and/or economic growth) are pretty hard to break down in something akin to a blog post. They are obviously complicated and multi-faceted, and because most people in the world probably got a B-Minus in Econ, a lot of people really have no effin’ clue what they are saying when they discuss this stuff. If you go on Facebook anywhere around a jobs report, you get half the clowns screeching “Fuck you, Obama!” and posting memes of rising unemployment. Then the other half is like “greatest President ever” and posting the same memes with the numbers going in reverse. Related: social media is driving us apart.

I’ve never really understood the “unemployment rate” argument among white, middle-class people with jobs. (People much smarter than me don’t get it either.) If you’re hollering about the unemployment rate on social media, you probably fall into three camps:

• I have a job and don’t really give a shit, but this seems like a good conversation to enflame others

• I have a job and care deeply

• I don’t have a job and OMG THIS RATE IS SO REAL

The way you perceive the economy is kind of contextual relative to your own deal. It’s hard for an individual to have a macro level understanding of the economy because, I mean, you got a specific car in your specific house and you buy certain specific brands.

The bottom line on a lot of this for the last few years seems to be that job growth is rising (thanks, Obama!) but wages are stagnant. So we may have some legitimate economic stagnation going on. In different political debates (egad), you’ll hear various ideas on how to fix this. A lot of these ideas are tied to firms supposedly creating jobs and making them well-paid. Hmmm. I would never see that logically happening, but now there’s research that explains it better. Let’s try.

Economic stagnation and the firm-size wage effect

This one isn’t hard to grasp. Basically, if you work for a bigger place, you should probably make more money. That’s an easy-to-get version of what “firm-size wage effect” means. If Microsoft hires you as a sales manager vs. a startup hiring you, Microsoft can probably base you more base initially. Right?

Here’s a new article on Wharton’s website about firm-size wage effect; it’s predominantly based on this paper about economic stagnation and inequality issues arising here. The ultimate finding is that the middle and bottom of the wage scales feel the biggest negative effects from the degrading link between firm size and wages. At the top of the wage scale? You experience essentially no loss.

Here’s the money shot from one of the researchers: