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> Thinking that labor costs do not impact product costs is grossly ignorant. No one is arguing that labor cost doesn't impact product cost, but the fact is tha

> Thinking that labor costs do not impact product costs is grossly ignorant. No one is arguing that labor cost doesn't impact product cost, but the fact is that in general it doesn't impact product price. Or to put it the other way: can you imagine a business not increasing product price as much as they can, regardless of the product cost, as long as the supply is matched? If they can increase the price, why would they wait for cost to rise before doing so? The outcome is that business/landlord already charge as much as they can, and increased cost doesn't change the product price, since they already chareg as much as they can.

syshum 5y ago
You seem to be missing the fundmental problem here Sure not all prices are infinitely elastic, but if Labor costs out strip the ability to prices to absorb them that do not mean the business simply magically makes them go away, no that business goes bankrupt and wages go to $0. Owners / Investors demand a return on investment, if the market average is 8%, and business x is only returning 4% why would an investor continue to keep their capital there? Worse still if inflation is 3% and the business is only returning 2% the investor is LOSING MONEY by keeping their capital in the business, better to cut their losses and move on This mythical position where by businesses just "absorb the cost" because the prices are not elastic is pure fantasy