3 ms·

Also another factor, once employers start paying a market-clearing wage, then increase their prices, supply will meet demand.

• crmd 4y ago
  …or not raise prices. I think the root cause of our broken economy is that way too much of gross margin has been flowing to owners/capital instead of workers.
  • lamontcg 4y ago
    That is because in the short-run everything is sticky so they resist spending more on salaries. So everyone is hiring, but nobody is willing to pay more. If conditions persisted then they'd be forced to start raising wages in order to increase output. Due to the fact that we're also still fairly supply constrained on output they also resist hiring more workers at higher salaries when they're finding it hard to source their inputs (and since everyone is in that same boat, they're not missing out compared to their competitors by not focusing on increasing output). And right now the Fed is also signalling that they're going to crash the economy so it makes absolutely zero sense to start hiring more people at higher wages right before a recession.