I don't know this author, but the arguments that increasing wages will cause inflation, independent of their economic accuracy, are also perfectly tuned messaging for a specific group, the owners of businesses (and the high-level managers). That could be coincidence, but if the beneficiaries are paying attention - and that group is very sophisticated politically - it's probably not.<p>Openly opposing wage increases for workers is political suicide, especially given the context of decades of flat wages and income inequality, and of the pandemic and essential workers, and given that it displays brazen greed and self-interest at the expense of the rest of the country.<p>But if they convince enough people - not everyone - that wage increases cause inflation, while they also stoke fear of it (remember during the Great Recession, fear of inflation was a tactic against Obama's policies), they can reduce the wages paid and keep more profit. It takes convincing people not directly affected by the issue, such as white collar workers who are already highly paid (ironically) and retirees, which IMHO is easy and often done. It also takes convincing people directly affected that their own wage increase somehow harms them, or that they should sacrifice for the country; that's harder, but as we've seen, many people vote against their economic self-interest and even risk theirs and their family's lives for political movements. Remember, they don't need to convince everyone, just enough people.<p>If inflation risks significant harm, and if wage increases are a significant factor (which I don't believe), I think suppressing wages is the last thing we should consider, if we consider it at all.<p>Imagine if they said, 'SV company pricing is causing inflation' or 'wages in SV are causing inflation'.
I feel like a lot of this is the bottom catching up to the top. It seems high net-worths are exploding, driven by a rise in public stocks. Real estate is also ballooning. The natural minimum wage rising so quickly is the natural finish to an inflation whip.
That's funny, because assets have been inflating just fine, and quite quickly, since before the "labor shortage" starting making headlines.
> With the rise of AirBnB, however, houses became valued based on the income-generating-potential of the house, favoring investors while shunning regular homeowners.<p>Highly doubt AirBnB is a big contributing factor to housing prices.<p>Rentals? Sure.<p>But considering travel (the use case for AirBnB) has been locked down and housing prices continued to soar makes this pretty dubious.<p>And tons of condo buildings don't even allow you to use the unit for AirBnB anyway.
as always the real elephant in the room is that inflation is not bad per se, except for those whose wages don't grow as much as the inflation. And wages for low earners will rise. Thus, we are not really talking about inflation but more concretely about redistribution of wealth, only this time the low earners are getting more from the pie. Not the ones with the capital or the ones who don't work (anymore).<p>As for America, this can only be good imo because the inequality has long been way too high. Nonetheless, I don't agree that America will see long and sustained inflation and there are things that will stay too expensive even with rising wages (e.g. healthcare) so these effects will probably be short-lived unless the government policies will change something more substantly (and with the new stimulus packages coming, it could happen).
I think all labor blue/white bordering around the middle class has another thing coming. Okay, so suddenly we’re all too good for the blue collar jobs. Fine, go to school or get training and come to the white collar industry.<p>I can say without any allusions that white collar work is saturated and competitive, so you are showing up to the wrong port.<p>We will need those blue collar jobs, and if industry starts filling it with immigrants while you are off trying to study up and failing to get that white collar job, you’ll lose out double (no income for all those years). All while this is happening, the blue collar industry will further depress wages because they have even cheaper immigrant labor now - the new standard.<p>People will resort back to saving whatever money they have, and living at home with their parents. The economy will stagnate, and inflation won’t be a problem because we were overzealous on the reality of our economy.
Why can't people just get green-pilled on the minimum wage already? I've noticed that when topics like these come up people usually say something about how the minimum wage needs to be higher when the existence of a minimum wage is arguably causing/contributing to these problems.<p>The market sets the price of labor just like the market sets the price of goods. People think that the minimum wage will force employers to raise wages when in reality it just makes those jobs illegal, even if both parties, employer and employee, have an agreement. E.g. what are you going to pay California's hundreds of thousands of homeless people with little to no skills $15/hour to do? Are they really better off with a $15/hour minimum wage working 0 hours and making no money? They have no path up the economic ladder if we chop off the bottom rungs.
This article does not address the basic economic premise of the substition effect, by which consumers will search for cheaper goods of equivalent value.<p>It would strike me that with massive labor shortages, many businesses will look to technology to replace labor. This could be via AI, or other automation systems.<p>Not an economist.
A lot of words and reasoning in the article, but not much in the way of measurement so I went looking and found this: <a href="https://www.thebalance.com/unemployment-rate-by-year-3305506" rel="nofollow">https://www.thebalance.com/unemployment-rate-by-year-3305506</a><p>If anything, the reverse looks to be true. High unemployment is generally accompanied by high inflation.
>During his presidency, Trump tightened the enforcement of immigration from Mexico for two reasons: protecting American jobs, and national security. [...] Without immigrants, industries such as agriculture and hospitality fall apart at their seams. This is yet another isolationist policy, and it asserts an extreme pressure on the supply of workers willing to take minimum-wage jobs.<p>Yes, Trump did that, but he hasn't been President for a while.<p><a href="https://www.cnn.com/2021/08/12/politics/us-mexico-border-migrants/index.html" rel="nofollow">https://www.cnn.com/2021/08/12/politics/us-mexico-border-mig...</a><p>>(CNN)The Biden administration is facing a "serious challenge" at the US southern border, Homeland Security Secretary Alejandro Mayorkas said Thursday, saying the US has encountered an "unprecedented" number of migrants illegally crossing the border.<p>>During a news conference in Brownsville, Texas, Mayorkas stressed the sharp increase of migrants arriving at the US-Mexico border, many of whom are fleeing deteriorating conditions in their home countries.<p>>In July, US Customs and Border Protection apprehended 212,672 people, up from June and amid some of the hottest summer weeks -- when arrests usually dip -- and of those, 95,788 individuals were expelled. Twenty-seven percent had previously tried to cross the border, Mayorkas said, acknowledging that a Trump-era policy that allows border authorities to turn migrants away has contributed to people trying to cross the border multiple times. July marks the highest monthly number of migrants detained at the US-Mexico border in two decades.<p>Adding 116,884 immigrants a month will solve a labor shortage pretty fast.
Actually, keeping interest rates at nearly 0% and printing trillions of dollars/pounds/euros over the last 14 years is the catalyst for sustained inflation.