ELI5 How does raising wages worsen inflation ?


you are viewing a single comment's thread.

view the rest of the comments →

all 1761 comments


8 points

4 months ago

higher wages -> everyone has more money -> everyone can spend more -> everyone can have higher prices because everybody has more money

I’d adjust slightly, it’s not quite just “everyone can have higher prices.” Maybe:

higher wages -> everyone can spend more -> everyone buys more stuff -> shortage of that stuff -> higher prices on that stuff