Don’t try to tell me my wages are sharply increasing either, because they’re not! Nor are my friends, family, or neighbors.
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Wages are going up, but it doesn’t mean all companies raise them at once… you may need to land a new job to see a pay bump, wait for your next review cycle, etc. (eg. my company gave double the usualy cost of living raises this year, 4% vs. 2% most years).
But the extra costs are going throughout the system.
Raw materials to make things are higher due to shortages. When it costs more to get steel and microchips, the refrigerator costs more to make.
Hiccups in the supply chain like delayed shipments, boats taking longer to unload in port due to lack of dock workers, etc. mean ships aren’t where goods are that need shipping, so cargo shipping costs are much higher. Transport from the ports to warehouses and stores are higher due to fuel costs and labor costs.
Stores have less inventory to sell, but rent, utilities, etc. are the same… which means they need more profit margin on each item sold to cover those fixed costs. Think of a car dealership with $100k in monthly expenses for rent, utilities, marketing/advertising, employees, etc. If they sell 100 cars a month, it means they need $1000 profit just to cover those costs. If they can only sell 20 cars due to lack of inventory, then they need something like 5x profit per car to make up the difference just to cover those expenses… hence the “market adjustments” and high margin add-on products like warranties and nitrogen filled tires.
So let’s go back to that refrigerator. Used to sell for $1800. Now it’s selling for $2000. But the materials to make it cost more, and the freight cost to transport it from the factory to the store’s warehouse costs more. And the store employees got raises due to difficulty retaining employees. But store sales volume is down because half the fridges the store normally carries are back-ordered. So now do you get a better idea of where all that extra money ends up?
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