5 ms·

It's more likely that the wage increases are causing the inflation. The rich typically do not compete for everyday items like groceries and gasoline.

dumdumdumdum 5y ago
But the rich do control the supply for everyday items. People aren't eating more all of a sudden.
- aeternum 5y ago
  Food spending does increase as income increases: https://www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/?chartId=58372 https://www.ers.usda.gov/data-products/chart-gallery/gallery...
  - 4903000 5y ago
    If food spending increases with income, doesn't that mean that rich people's competition over food is proportional to their wealth?
  - dumdumdumdum 5y ago
    This just tells me spending increases. Nothing about absolute consumption. I don't know about others, but I'm consuming about the same amount of milk I was when I was getting $10/hr vs $35/hr. I might buy more "luxury" products (ice cream, organic milk, etc), but I'm certainly not buying more than I was at $10/hr. My caloric intake is about the same. Perhaps, I'm the odd one out. In my case, most of that extra money just went towards rent and a car.
4903000 5y ago
If wage increases cause inflation, then what causes wage increases?
- dominotw 5y ago
  tight labor market?
  - MontyCarloHall 5y ago
    Let’s assume this is the case. Anecdotally [0], I’ve observed (and seen many reports [1]) of the labor market being especially tight in low-margin, low paying industries (e.g. food service, agricultural work, trucking). Perhaps the costs of goods that are now experiencing inflation (dining out, groceries, shipping) were artificially deflated due to severe underpaying of workers. In order to pay people who work in those industries living wages, prices must rise, since margins are so thin that they can’t absorb higher labor costs. Pessimistically, I wonder if this will mean many businesses in those industries will close, since demand will suffer. If wages in the restaurant industry rise significantly (without concordant pay raises across the board), many people will no longer be able to afford to eat out. [0] I recently went to a fast casual Mediterranean place. They recently increased starting pay for workers to $25/hour. A simple pita wrap now costs $15. I went somewhere else. [1] https://news.ycombinator.com/item?id=28834365 https://news.ycombinator.com/item?id=28834365
- deleted 5y ago
  [deleted]
- aeternum 5y ago
  Also inflation. There's definitely a feedback loop and expectations of inflation can be enough to cause inflation.
  - Buttons840 5y ago
    So if wage increases cause inflation, and inflation causes wage increases, how is it more likely that wage increases cause inflation?
bradwood 5y ago
It's excessive QE since the pandemic started... The number of US dollars in existence is up around 40% since March 2020... Source: https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
- throwaway0a5e 5y ago
  And on top of that tons of money was moved into high velocity parts of the economy (i.e. the pockets of everyone who's rent/mortgage/student payments were paused).

dumdumdumdum 5y ago

But the rich do control the supply for everyday items. People aren't eating more all of a sudden.

aeternum 5y ago
Food spending does increase as income increases: https://www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/?chartId=58372 https://www.ers.usda.gov/data-products/chart-gallery/gallery...
- 4903000 5y ago
  If food spending increases with income, doesn't that mean that rich people's competition over food is proportional to their wealth?
- dumdumdumdum 5y ago
  This just tells me spending increases. Nothing about absolute consumption. I don't know about others, but I'm consuming about the same amount of milk I was when I was getting $10/hr vs $35/hr. I might buy more "luxury" products (ice cream, organic milk, etc), but I'm certainly not buying more than I was at $10/hr. My caloric intake is about the same. Perhaps, I'm the odd one out. In my case, most of that extra money just went towards rent and a car.

4903000 5y ago

If wage increases cause inflation, then what causes wage increases?

dominotw 5y ago
tight labor market?
- MontyCarloHall 5y ago
  Let’s assume this is the case. Anecdotally [0], I’ve observed (and seen many reports [1]) of the labor market being especially tight in low-margin, low paying industries (e.g. food service, agricultural work, trucking). Perhaps the costs of goods that are now experiencing inflation (dining out, groceries, shipping) were artificially deflated due to severe underpaying of workers. In order to pay people who work in those industries living wages, prices must rise, since margins are so thin that they can’t absorb higher labor costs. Pessimistically, I wonder if this will mean many businesses in those industries will close, since demand will suffer. If wages in the restaurant industry rise significantly (without concordant pay raises across the board), many people will no longer be able to afford to eat out. [0] I recently went to a fast casual Mediterranean place. They recently increased starting pay for workers to $25/hour. A simple pita wrap now costs $15. I went somewhere else. [1] https://news.ycombinator.com/item?id=28834365 https://news.ycombinator.com/item?id=28834365
deleted 5y ago
[deleted]
aeternum 5y ago
Also inflation. There's definitely a feedback loop and expectations of inflation can be enough to cause inflation.
- Buttons840 5y ago
  So if wage increases cause inflation, and inflation causes wage increases, how is it more likely that wage increases cause inflation?

bradwood 5y ago

It's excessive QE since the pandemic started... The number of US dollars in existence is up around 40% since March 2020... Source: https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL

throwaway0a5e 5y ago
And on top of that tons of money was moved into high velocity parts of the economy (i.e. the pockets of everyone who's rent/mortgage/student payments were paused).