How is it that inflation can affect everything EXCEPT wages?
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Despite what you see in the headlines, what’s happening right now is *not* inflation by the standard definition. Wages and median income by and large are not increasing at the pace of cost of living.
This is profiteering and price gouging, pure and simple.
Example: the last time US gas prices were this high, oil was ~$185/barrel. That was 2008. Oil is ~$95/barrel right now.
We’re getting fucked to keep corporate profits high and the stock indices pointed up.
The things needed to produce the products cost more and the things needed to provide services cost more. Why would a business boost wages when the things to make the product costs more and is hurting their profit. Raising wages reduces profits too which business owners don’t want.
However when there are less jobs available and people begin jumping ship to another company that’s paying more to attract higher quality candidates, they have to raise their pay and benefits in order to attract more workers so they don’t have staff shortages.
I hope that was simple enough. If you have more questions feel free to ask
Technically inflation only affects the value of the currency (dollar) – prices adjust whenever the seller adapts to that new value. You can see how the incentive is slanted so that goods and services will adapt to the market value quickly but wages and other negotiable expenditures will be much slower
What are you talking about? Inflation directly impacts what your wage is worth.
Because wages are based on supply and demand like many other things. People are not as limited a supply and technology makes people even more worthless in some cases.
Wages do increase due to inflation but it’s more slowly than prices. The reason for that isn’t really corporate greed or unions (ask those folks from nations with strong unions if their wages are keeping up with prices right now). Wages go up slower than prices because they are negotiated less often. Unless you are doing gig work where the price gets set on every project, you probably negotiated or accepted your wage the day you started and only renegotiate once a year, if that. But EVERY TIME you walk into the grocery store to get milk, you are having a price negotiation. The grocer can raise the price on milk every day, heck every hour and you, for your part, can accept or reject that price (you’ll probably accept the price, but maybe start consuming less). So there are more opportunities for prices to change while wages rarely have the opportunity to go up. Most wage increases happen when people switch jobs, which doesn’t happen on the daily. In the US, real wages have increased more in last two years than they had typically been doing, in part because so many folks ended up switching jobs due to the pandemic economic shake-up.
Well, if you want to do away with the middle class – I mean honestly who would want such a thing???… you just utilize pay compression by raising minimum wage for a non career job, such as McDonald’s, to say 15$ per hour, make no change to said middle class and raise all prices.
They do tend to be closely linked actually. Look up “wage price spiral” for a classic relationship that can play out which is essentially a self-feeding circle of higher wage growth leading to higher inflation which leads to even more wage growth… and so on and so forth.
That being said, you can have times when inflation rises but wages don’t keep up. For instance if you have a bunch of commodity price spikes resulting from global supply chain disruptions and/or shortages (perhaps arising from war or adverse weather situations) during a low growth/recessionary period, you would likely see prices rise faster than wages. This is because the commodity shortages drive up costs to produce goods and services (e.g., jet fuel costs rise, forcing airlines to increase flight prices) but people have less means to buy goods and services because of the economic recession (e.g., they buy less plan tickets which in turn leads to lower sales for airlines and thus leading to lower revenue to operate the business meaning lower ability to raise wages).
You got it backwards… Inflation doesn’t affect anything, it is metric based on things…It is like the current temperature outside
If general prices go up based on previous year that is called inflation…
Companies raising prices “because of inflation” are either ignorant or lying…
Prices are wages are determined by employers and companies are more or less arbitrary…
p.s.: Inflation does affect wages… It devaluates it!
When a company raise their prices it is reactionary. They basically react to increased cost of raw materials and such. They need to have a certain margin of profit to stay a float.
When cost of say … lumber … goes up, so does paper made from wood pulp, and that in turn increases cost of cardboard and products packed in cardboard boxes… and so on.
Wages are not like this, they are negotiated, you have to literally ask for a raise.
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