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If you showed up for work and your boss said they were going to pay you 2% less today how would you respond? That is a broken contract. Wages before the Fed we
by tastyfreeze 3y ago
If you showed up for work and your boss said they were going to pay you 2% less today how would you respond? That is a broken contract.
Wages before the Fed were weights of gold or silver that were called dollars. If I agreed to work for an ounce of silver a day I'm not going back if the company decided they were just going to pay me 3/4 an ounce instead.
- nequo 3y agoYou will go back if you have no other company who would pay you more than 3/4. And that’s what you get when there is no inflation but the employer side of the labor market becomes more concentrated or employers collude to only ever pay 3/4.
- tastyfreeze 3y agoYou have a very different model of human behavior than I do. Businesses don't fuck over their employees if they want to continue having employees. Also, in this scenario my savings doesn't also depreciate. When the employer decides to pay less I still have the full value of what I have already earned. With inflation, my current earnings are reduced and any dollar savings I have are reduced.
- nequo 3y agoI’m not talking about human behavior so much as about market structure. You go with the best offer that you get. If 3/4 is the best offer because your employer has driven labor-market competition out of town or because there wasn’t much competition in town to begin with (think Walmart or Amazon warehouses), then you need to take 3/4 or else be unemployed. Savings help you for a while but if you’re like most workers, eventually you’ll need a job again. But I think you’re also right in that inflation helps employers lower wages without being upfront about it.