If the wages go up to combat the inflation why do we keep bumping up the price of things instead of leaving it as it is?


Edit: thank you very, very much for all the anwsers. At this point I’m not in total darkness and have a big picture of how economics works. It’s FAR more complex than I initially thought it would be. It’s crazy!

In: 80

Easy answer (and mostly true): corporations are greedy

But…when wages increase people have more buying power. Sellers know this so they increase their price to get more of that money. Catch 22 in a way. The big disconnect is that small, local businesses mostly keep this in line when they can because their customers are more sensitive to price increases. Large, stock owned companies have only one goal and that is to maximize shareholder value by whatever means necessary. They’ll squeeze you for every last dime and don’t give a damn about it.

When it comes to things like food it gets a little more complicated due to all of the variables that go into producing, harvesting, and distributing crops but, since most farms are owned by corporations, some similarities apply there as they do to retail. A corporate farm couldn’t give two shits if they price you out of a food item because they’ll either just switch to another food or find someone else to buy it.

Meanwhile, workers just want reasonable wages and don’t get them.

If wages go up the cost of the product or service you produce goes up. The company you work for raises the prices for its product or service to cover that increased cost.

Circle goes on.

The sole reason typical businesses exist is to make money. If they do not make money there is no reason for the company, or your job, to exist.

10 people all have $100. there is a gallon of milk that normally sells for $5. all 100 people want the 1 gallon of milk. the first person says ‘ill pay $5’ for it, but the second person really wants the milk and says ‘ill pay $6 for it because i want it really bad’. then another guy who wants the milk says ‘fuck it ill pay you $20’. so it sells for $20.

then another gallon of milk comes a few hours later, and one of the guys who saw what just happened said ‘ill pay $20 for that gallon’ and it gets sold for $20.

Because when wages go up, that means the cost of labor goes up. When the cost of labor goes up, the results of said labor go up to compensate for the increased costs.

Inflation is a secret tax. The government prints more money than is needed for replacement. The government gets to pay off its debts quickly and cheaply with the new money supply it creates. This has a chain reaction effect through the economy and causes prices to go up due to the increased money supply.

It can be beneficial for a government to do this. It’s not necessarily bad. However, too much paying off debts with newly created funds and loans can cause instability.