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You’re imagining every firm gets 2% savings every year. That isn’t how it works. Most firms have rising real wages: real wages rose during the 2% inflation per

by graeme 3y ago

You’re imagining every firm gets 2% savings every year. That isn’t how it works. Most firms have rising real wages: real wages rose during the 2% inflation period. But sometimes a firm needs to lower costs. Having a small bit of inflation lets a firm do so without either firing people or actually cutting nominal wages.

derangedHorse 3y ago
> real wages rose during the 2% inflation period There is no consistent "2%" inflation period. If a year were to have 6.5% inflation (like with year 2022-2023), most firms will not raise real wages to match it. Over the last decade we've had a 2.82% average inflation rate with 4.41% variance showing how much we overshot both metrics. source: https://www.usinflationcalculator.com/inflation/consumer-price-index-and-annual-percent-changes-from-1913-to-2008/ https://www.usinflationcalculator.com/inflation/consumer-pri...