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
The cause of the current inflation is shortages. IE, there is less stuff being produced per person than there was pre-Covid.
When shortages are the cause of inflation, there is no way for wage growth to outpace inflation simply because money does not cause stuff to magically pop into existence. As people get paid more money, stores sell out of stuff quicker and raise prices until they’re no longer selling out of stuff. The reason the store is no longer selling out of stuff, despite the shortage, is because the price increases outpaced the rate of wage growth.
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