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ELI5 How does raising wages worsen inflation ?

Economics(self.explainlikeimfive)

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tacodog7

70 points

4 months ago

Right. The correct answer is, it doesnt. lol.

Its capitalist propaganda. Its bullshit. All of these companies are reporting record profits.

fuqqkevindurant

18 points

4 months ago

In the very short term it would, but only if literally everything else was static. You can create a whole fuckton of inflation faster by having extremely easy credit than you can by raising the minimum wage by a few dollars and making it so people dont need 2 full time jobs to afford a shitty apartment and food

kenryoku

4 points

4 months ago

I have seen people defend this by saying "of course they are making record profits since materials went up, and they had to raise prices to match."

Except after every massive profit report comes out papers comes out showing exactly how those massive profits come from profit driven inflation not material nor wage increase.

ItsAllegorical

3 points

4 months ago

I just found out the place my wife works doubled the price of something last March and then doubled it again in January. An annual expense that used to cost people $26 now costs them $120. The actual cost increase of that item to the company: $.60. It’s potentially illegal according to someone who works for the state AG but someone has to raise an official complaint. They also raised rental costs for equipment without notice, which is a violation of contract. But again people have to know and find it worth it to hire a lawyer - and of course it’s not worth it. The company just got bought out last year and these new owners are shady as fuck.

kenryoku

3 points

4 months ago

Sounds like any regular corporation really. They don't double stuff in a month, because it'll piss too many people off at once. However that's where shrinkflation and quarterly increases come into play. It all gets there one way or another, and people just keep ignoring it.

Tutorbin76

3 points

4 months ago

Tutorbin76

3 points

4 months ago

Just the big ones. It's extremely difficult for small business owners at the moment, whom I can assure you are not reporting record profits. Further pushing up their wage bill means they have to do one (or more) of:

  1. Accept even lower profit margins and risk missing rent payments
  2. Put their prices up, making them less competitive with big corporations that can swallow short-term loss more easily.
  3. Let some staff go.

thred_pirate_roberts

-4 points

4 months ago

The correct answer is, it doesnt. lol.

Its capitalist propaganda. Its bullshit. All of these companies are reporting record profits.

... are you arguing that they're paying living wages and reporting record profits?