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The economic consequences would be an increased percent of the economy going to wages instead of returned as dividends and stock buyback. Wage income also has a
by throwaway48476 2y ago
The economic consequences would be an increased percent of the economy going to wages instead of returned as dividends and stock buyback. Wage income also has a higher velocity of money increasing economic activity.
- layer8 2y agoWage increases also drive inflation. And given the uncertainties of the present times, people might opt to save more of their earnings rather than spending it all.
- throwaway48476 2y agoThis is why people should index wages as a percentage of the total enocomy. Because 'inflation' only means anything when compared to something else. Just saying inflation is meaningless by itself.
- layer8 2y agoI agree with binding salaries to an index. However, if the index is accurate (which is a whole other can of worms), then it implies that the buying power would stay the same, and you would need extra justification to add a pay raise on top. Of course, in reality different products/services have substantially different price developments relative to inflation, and it’s difficult to predict whether essential costs of living will be relatively more or less affected by inflation.
- throwaway48476 2y agoIt's simpler to just say wages are x% of gdp.
- layer8 2y agoNot sure that would make sense. And it probably would appear like communism to the US, because one company or industry increasing the GDP would then translate into benefitting the workers of all other companies/industries. Also, if GDP decreases, salary would have to decrease as well.
- throwaway48476 2y agoI don't think you understand what I said. Instead of nominally inflation which is gamed, use total wages as a percentage of GDP.
- layer8 2y agoUse it as what? As a measure of inflation? I don’t quite see the relation to the value of currency then, which is what inflation is supposed to measure.