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
>I understand that there are shareholders and costs increase, but surely the cost increases should be at the rate of inflation?
Inflation is average. Maybe the costs for the stuff a cat food factory needs to make cat food increases by 6%, but the cost for stuff a TV set factory needs to make TV set increase 2%.
>why is it that when employees get pay rises they’ll always be less than the rate of inflation?
Absent minimum wage laws, labor is worth what someone is going to pay for it and people are apparently still willing to work for increase that are less than what overall inflation is in society. Turns out most people would rather work for an effective decrease in salary than lose their house and go live in a cardboard box.
I’ll also note inflation affect people differently. If you’re locked into a 30 year fixed -rate mortage, your payment basically never increases even though inflation is making it easier to pay your mortage back- maybe your pay has increased 2% instead of 3.9% per year, but your mortage increase will effectively stay at 0% for the next 30.
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