4 ms·

When people get paid more, the prices of everything go up, including other people's wages. Inflation is often a self-reinforcing cycle.

leroman 5y ago
According to a fact you just came up with? Don’t believe it works this way, most money goes to the top earners, raising lower wages should not have that big of an effect as a result.
- iso1631 5y ago
  Rent is a massive portion of the majority of When two income households became the norm, rather than having more disposable money, the money went into housing costs. Those who owned housing (land) before two-income was normal made out like bandits, but families that didn't are now working 100 hours a week rather than 50 hours a week for the same post-housing income.
- vorpalhex 5y ago
  Please don't be rude for the sake of being rude. Most views hold that increasing the minimum wage increases the cost of goods and services, in particular food, also increasing downstream things like rent, but it's still a debated point and not settled. [1] [1] https://www.investopedia.com/ask/answers/052815/does-raising-minimum-wage-increase-inflation.asp https://www.investopedia.com/ask/answers/052815/does-raising...
  - leroman 5y ago
    Wording a polarized opinion worded as a fact is an attempt to force this opinion on a discussion is a dishonest move, to say the least. Am I rude here to point out that it's his opinion that somehow came on top?
    - vorpalhex 5y ago
      It is when you are probably wrong and in disagreement with most economists, and don't post any citations or evidence. Like, argue for a minority position, but argue, don't just insult.
jcranberry 5y ago
In my understanding Amazon is actually the poster child for how e-commerce has weakened this relationship.
stavros 5y ago
This assumes that the company can't absorb the raises.
- mdorazio 5y ago
  As an example, average restaurant profit margins are between 2% and 6%. They cannot absorb labor rate increases without raising prices or going bankrupt. Margins tend to be similarly low for many other industries as well. Tech is a massive outlier in its ability to absorb large wage increases.
  - Kye 5y ago
    What's the cost of not being willing to pay employees enough to care about doing a good job and hiring enough people to enable good work? I know plenty of people who've stopped eating out or order less because overworked and underpaid employees keep making mistakes.
  - pydry 5y ago
    Their landlords can though. Evidence from LA suggests that this has happened as restaurants negotiated cheaper rents in response: https://anderson-review.ucla.edu/a-15-minimum-wage-may-have-partially-arrived-but-who-pays/ https://anderson-review.ucla.edu/a-15-minimum-wage-may-have-... Restaurants do also have a tendency to be run out of business and replaced by other restaurants when the minimum wage gets hiked though. Restaurant owners take hikes extremely personally. The market can be an unkind mistress.
    - jrs235 5y ago
      McDonalds, Dollar General, Chick-fil-a, and many others are really in the real estate/property space. They just have an affiliated model that supports their (real estate) investments and reduces their risk (of holding vacant commercial property).
  - ipaddr 5y ago
    They go backrupt landlord rents space at lower value cycle repeats. Place does well rent goes up. Wages are a small part of a larger process.
BurningFrog 5y ago
This is the "common sense" view of inflation. It was disproven by Milton Friedman and others over 50 years ago. “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” In 2021, "the quantity of money" is a much harder concept to measure than it was, but the basic insight stands.
- fartcannon 5y ago
  Can you actually prove things in economics? Or is it more like detailed analysis of history?
  - BurningFrog 5y ago
    In Macroeconomics, it's often very hard, because once you've understood something, the various actors can adapt to the new knowledge, and then you have a new and different world economy. That is, if you publish your findings. I assume there are unpublished insights people use to get rich off. I think Friedman's analysis was mostly historical. At least that what I got from reading his book. I've certainly not read any academic papers. In Microeconomics, people can and do prove things based on models that are quite good at approximating reality.
- pjc50 5y ago
  Wrong dead economist: https://www.khanacademy.org/economics-finance-domain/macroeconomics/income-and-expenditure-topic/macroeconomics-keynesian-economics-and-its-critiques/a/the-phillips-curve-cnx https://www.khanacademy.org/economics-finance-domain/macroec... The interest/unemployment mechanism for controlling inflation has worked really well, and is why most of the Western world can hit its 2% inflation targets.
deleted 5y ago
[deleted]
malfist 5y ago
Sure, but are those increases proportional? I don't mind playing an extra 50 cents for a big mac if it means the person serving it to me makes enough at the end of the day to support themselves.

leroman 5y ago

According to a fact you just came up with? Don’t believe it works this way, most money goes to the top earners, raising lower wages should not have that big of an effect as a result.

iso1631 5y ago
Rent is a massive portion of the majority of When two income households became the norm, rather than having more disposable money, the money went into housing costs. Those who owned housing (land) before two-income was normal made out like bandits, but families that didn't are now working 100 hours a week rather than 50 hours a week for the same post-housing income.
vorpalhex 5y ago
Please don't be rude for the sake of being rude. Most views hold that increasing the minimum wage increases the cost of goods and services, in particular food, also increasing downstream things like rent, but it's still a debated point and not settled. [1] [1] https://www.investopedia.com/ask/answers/052815/does-raising-minimum-wage-increase-inflation.asp https://www.investopedia.com/ask/answers/052815/does-raising...
- leroman 5y ago
  Wording a polarized opinion worded as a fact is an attempt to force this opinion on a discussion is a dishonest move, to say the least. Am I rude here to point out that it's his opinion that somehow came on top?
  - vorpalhex 5y ago
    It is when you are probably wrong and in disagreement with most economists, and don't post any citations or evidence. Like, argue for a minority position, but argue, don't just insult.

jcranberry 5y ago

In my understanding Amazon is actually the poster child for how e-commerce has weakened this relationship.

stavros 5y ago

This assumes that the company can't absorb the raises.

mdorazio 5y ago
As an example, average restaurant profit margins are between 2% and 6%. They cannot absorb labor rate increases without raising prices or going bankrupt. Margins tend to be similarly low for many other industries as well. Tech is a massive outlier in its ability to absorb large wage increases.
- Kye 5y ago
  What's the cost of not being willing to pay employees enough to care about doing a good job and hiring enough people to enable good work? I know plenty of people who've stopped eating out or order less because overworked and underpaid employees keep making mistakes.
- pydry 5y ago
  Their landlords can though. Evidence from LA suggests that this has happened as restaurants negotiated cheaper rents in response: https://anderson-review.ucla.edu/a-15-minimum-wage-may-have-partially-arrived-but-who-pays/ https://anderson-review.ucla.edu/a-15-minimum-wage-may-have-... Restaurants do also have a tendency to be run out of business and replaced by other restaurants when the minimum wage gets hiked though. Restaurant owners take hikes extremely personally. The market can be an unkind mistress.
  - jrs235 5y ago
    McDonalds, Dollar General, Chick-fil-a, and many others are really in the real estate/property space. They just have an affiliated model that supports their (real estate) investments and reduces their risk (of holding vacant commercial property).
- ipaddr 5y ago
  They go backrupt landlord rents space at lower value cycle repeats. Place does well rent goes up. Wages are a small part of a larger process.

BurningFrog 5y ago

This is the "common sense" view of inflation. It was disproven by Milton Friedman and others over 50 years ago. “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” In 2021, "the quantity of money" is a much harder concept to measure than it was, but the basic insight stands.

fartcannon 5y ago
Can you actually prove things in economics? Or is it more like detailed analysis of history?
- BurningFrog 5y ago
  In Macroeconomics, it's often very hard, because once you've understood something, the various actors can adapt to the new knowledge, and then you have a new and different world economy. That is, if you publish your findings. I assume there are unpublished insights people use to get rich off. I think Friedman's analysis was mostly historical. At least that what I got from reading his book. I've certainly not read any academic papers. In Microeconomics, people can and do prove things based on models that are quite good at approximating reality.
pjc50 5y ago
Wrong dead economist: https://www.khanacademy.org/economics-finance-domain/macroeconomics/income-and-expenditure-topic/macroeconomics-keynesian-economics-and-its-critiques/a/the-phillips-curve-cnx https://www.khanacademy.org/economics-finance-domain/macroec... The interest/unemployment mechanism for controlling inflation has worked really well, and is why most of the Western world can hit its 2% inflation targets.

deleted 5y ago

[deleted]

malfist 5y ago

Sure, but are those increases proportional? I don't mind playing an extra 50 cents for a big mac if it means the person serving it to me makes enough at the end of the day to support themselves.