Management is not nearly as smart as they want us to think.
It is when you have an unlimited supply of workers with zero protections. The breaking of the social contract makes all the old rules no longer apply. They will drive us to the absolute edge of torches and pitchforks and keep us there, forever. They will come up with newer and better ways of determining where that line is, and just how far they can push it. And we will sit here like obedient dogs and take it.
Pretty much every local newspaper has been bought up and now almost exclusively talks about ads... err.. I mean national issues. And it isn't even articles that these papers write, rather just the same article published by someone like The McClatchy Company.
Same thing happened to broadcast news.
There was also more a desire to serve public interests prior to Reagan getting rid of the rules on media consolidation. It wasn’t perfect but it was much better than what we have now. News media is much more beholden to corporate interests now than in the past.
Big print newspapers were mostly independent and subscriber-funded, so they answered to their subs rather than advertisers.
The Economist is still independent and subscriber-funded. But, most sub-driven publications now have to fight tooth and nail to stay above water, so the writing needs to be tailored towards engagement/clicks :/
This has never (really) been the case with "mainstream" media. "The media" in common parlance is a farce. Historical news has almost always been agenda driven, and was key to the American revolution, Labor reforms in the US, etc. Those things are not "mainstream media."
My teenage son who was still in high school at the time went from $10/hr to $17/hr as a restaurant worker in small town Florida. This was 2022-2023. In the same period, my salary as a principal software engineer went up 3%
But for higher wage earners basic cost of living expenses (food/energy/rent/etc) make up a smaller percent of their overall income, and so they are relatively less affected. And if they don't aggressively demand their pay keep up with inflation then their relative rate of gain will naturally fall behind.
So the pay situation you describe isn’t surprising at all
For corporations who don't have a money machine, yes, it's not a good time. You will not get new funding. For established corporations, I'd say that it's pretty sunny days, especially considering layoffs.
There was a hefty bit of catchup in the past few years for the lowest earners.
> "The problem – economics research has repeatedly shown that this is not the case."
And economics research has also repeatedly shown that this IS the case. I'm not supporting that argument, I'm just saying that you have conflicting bodies of research. Everyone here is engaging in motivated reasoning, depending on who they think the boogie-man is.
Humility means being clear about how much you can possibly say from the evidence at hand. Humility means thinking more about confounding factors than about things that you believe to be true.
I'd also love if we talked more about access to resources instead of money.
So in this very specific case, the inflation that we've experienced over the past few years was NOT due to wage increases. You look in the microscope and see this to be true. Wages increases were not a primary cause of inflation (in this time period)
The problem is when you generalize and say 'Wage increases do not cause inflation'. The problem is that you have exited your historical context and you are moving into a new context. Wage increases certainly CAN contribute to inflation; they were not your most recent problem, but they might be your NEXT problem.
The other difficulty is that the human brain wants to be satisfied, it does not want to understand all possible context. So the brain loves it when you can just say "Here is the problem, the whole problem fits in this box, and here is the one single, simple cause of the problem."
(Apologies for overusing the word 'problem')
"It’s now significantly more deadly to be homeless [in Cali]. Why are so many people dying?"
https://news.ycombinator.com/item?id=39578218
The idea wage increases are inflation is a disgusting.
No reason to cap wages because companies "might" pass the cost to consumers. They are already raises prices simply for more profits.
2. Yes companies hide behind real effects as a justification.
3. Those effects are real anyway.
Wage increases are ONE driver of inflation. The size of this effect depends on a lot of things.
Price increases are ONE driver of inflation. The size of this effect depends on a lot of things.
When something does not go the way you want, you can't just pick the cause.
No matter what starts an avalanche, it will continue to propagate itself.
It's fine with me if you are mad at greedy companies.
It's fine with me if you are mad at me.
My request is that we get more comfortable with the idea that multiple causes can contribute to an effect, and the size of those contributions can change over time.
edit: the site layout seems completely messed up in chrome
Uncaught TypeError: Cannot read properties of undefined (reading 'value')
at Q (App.js:694:57)A good example is "By definition, inflation-indexed wages cannot result in a higher inflation rate. Wages indexed only to inflation will actually reduce the inflation rate, if productivity is positive, which it typically is." No - if you have an inflation-indexed wage, it will go up when inflation does, regardless of what productivity does. You can't just infer that productivity has risen because the inflation-indexed wage went up - in this specific instance, it's clear that it hasn't, because nothing has changed except the inflation index.
Inflation is best thought of as a feedback loop. Every expense is somebody else's income, so if expenses are going up across the economy, somebody is getting more money. That gives their suppliers leverage to raise prices and their customers a need to raise prices or go out of business. The rate is going to be uneven across different sectors, which is where the CPI vs. nominal vs. real wages behavior comes in. Real wage increases are nominal wages * CPI, by definition, so if most of the increase in prices is accruing to labor, real wages will be positive, while if most accrues to capital, real wages will be negative.
The main model used by central banks for modelling inflation is the New-Keynesian Model. This model explains that the rate of inflation is related to the level (sic) of real marginal costs, desired (Note: not realized) mark-up (profit margin) and inflation expectations. The main element through which wages feed through to inflation is the real marginal cost. However, if current wages are below pre-pandemic real wages (which for many still are), then real marginal cost is lower, thus pushing the inflation rate down below the 2% inflation target.
During the 2021-23 inflation surge, the supply shock and bottlenecks created significantly pushed up the real marginal cost of production (things like over-time, things like it taking to produce longer than before due to supply delays etc). This has reverted bringing back down the level of real marginal cost. Which is why we are close to the 2% inflation target.
The mechanism regarding price setting - between firms and workers - is actually really nicely put by a recent Werning and Lorenzoni paper - Inflation is Conflict. Interestingly, they are capable to generate a theoretical result where we have inflation with no money! Meaning there is no monetary policy.
I am not asking this to be snarky, but do you recall any time in our lives where increase in prices mostly accrued to labor?
Energy prices happen to be going up because some people are ideologically committed to raising energy prices and reducing energy production in order to stop climate change. This includes the current US president, who signed a bunch of executive orders right after taking office that increased gas prices by restricting fossil fuel production.
The sanctions on a certain gigantic gas station that is currently at war with one of its neighbors are also a major driver of inflation. There was also transitory inflation due to pandemic era supply chain disruptions. When factories are shut down for health reasons, less stuff gets made and the price of that stuff goes up.
What did not cause inflation? People being able to buy houses, start businesses and find jobs because the interest rates were low. Raising interest rates and putting people out of work is just treating a symptom when the real solution to inflation is to lower energy prices by producing more energy. That means repealing anti-fossil fuel policies[0] and it also means trying to negotiate an end to wars rather than funding the belligerents forever with endless foreign aid.
[0]: Climate change is real and should be addressed via technology not austerity. We are not going to solve anything by making people in developed (1st world) countries poorer or by keeping people in developing (3rd world) countries poor. Those advocating climate austerity are the main motivating factor driving climate change denial because many people will assume its just a hoax powerful people made up to make them poorer.
I'm sorry, what?
https://www.cnn.com/2023/12/19/business/us-production-oil-re...
https://tsscolorado.com/dems-unveil-system-changer-bills-to-...
I'm not certain the statement "Inflating the money supply by billions of dollars to fund several expensive conflicts" reflects reality.
The root cause IMHO is that especially in the US there is barely any competition any more. No matter where you look, it's at most five to six different (multi)national megacorporations... and so they can extract many billions of dollars from the economy every month. Enshittification, just on macroeconomic scale.
Yup. Soon enough it'll just be two guys arguing over a fair price for Canada.