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I'm pretty sure your example just demonstrates the point that I was making originally though. Assume there is a massive shortage of food workers, food prices in
by makomk 4y ago
I'm pretty sure your example just demonstrates the point that I was making originally though. Assume there is a massive shortage of food workers, food prices increase and the food industry starts pulling people from other industries like ad-tech which can no longer offer competitive salaries. This implies an aggregate shift in spending from discretionary consumer purchases (which are specifically what fund ad-tech and the advertising industry) to food. In other words, people have on average become poorer: they have to spend a larger proportion of their money on essentials like food and have less left over for other stuff. Which is, of course, just another way of saying that on average people's wages have shrunk in real inflation-adjusted terms.
(It's not like the other stuff can just become cheaper in order to make up for it either - remember, all the other industries are suffering the same underlying cost pressures as the food companies and the whole reason they're losing the competition for workers is because there's no longer enough people willing to pay the increased prices they'd have to charge.)
If I remember rightly, the proportion of a country's workers employed in food production is even pretty good approximate measure of how advanced an economy is, with more advanced economies employing a much smaller proportion of their workers that way and having much more doing other things.