Yes, I'm aware of the finer details. Obviously a contrived example, but has roots in reality. I'm sure you can understand working out a thought experiment with

Yes, I'm aware of the finer details. Obviously a contrived example, but has roots in reality. I'm sure you can understand working out a thought experiment with tens of variables doesn't work very well on a simple text discussion? It's common to approach problems from an "all else equal" perspective in economics and hold other variables constant for certain thought experiments. And there can be very real contrived cases where these constraints make sense. Say you have two widget making machines, one per company, and each requires two employees minimum to operate. And there are only two employees in the labor force? So marginal value of one employee is 0, but two is high. The result is, all of the jobs can't be filled and wages will rise to some equilibrium point dictated by the relative value of the jobs. Say company A is Amazon, and the job brings $20/hour of value to them. Company B is a local business and the job brings $15/hour of value to them. In this scenario all the workers go to Amazon of course. Assuming wage is the only consideration, its more economically beneficial for Amazon to pay $16/hour to get all the workers while company B doesn't get any. Of course the marginal value of an additional worker will change depending on the number of workers. The fundamental point is, once the pool of labor becomes vastly smaller than the number of open positions, it becomes quite inflationary and destructive to businesses. Some may say it's fine, and intended. But this is what tends to trigger an inflationary spiral. Companies continually compete for workers, causing wage hike spirals, which compresses margins, which leads to price increases. And at the end of the day, your nominal wage goes up, but your real wage may only rise marginally, or even go down. Now in the real world, I would expect labor force participation to kick in at some point and subdue the effects.