I understand that there are shareholders and costs increase, but surely the cost increases should be at the rate of inflation?
I know a load of companies increase by like 3.9% + Inflation every year – so why is it that when employees get pay rises they’ll always be less than the rate of inflation?
Doesn’t that just mean employees get poorer every time? Where does the extra 3.9% money actually go? Where does the difference between employees payrises and rate of inflation go?
Are all companies just screwing their employees or is there some other reason I’m not realizing?
In: Economics
Companies are incentivized to get as much labor for as little cost as possible. The end goal is profits. Paying employees more costs them profits. Not paying employees enough costs them labor, which **may** or may not impact profits.
The main issue is employers can usually go short staffed for a little bit while they look for new employees. Employees generally can’t go very long without income before they start losing things like food and housing.
The the employer has more leverage in this game and is usually the one to get away with paying less because there’s a larger pool of people willing to work for less than the ones willing to hold out for more pay.
The smaller companies won’t have this flexibility, but a company like amazon can lose hundreds of people and just shuffle who’s left around without losing a step.
It’s only when the people unite in mass, like unions that they start to worry.
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