roccoccoSafredi OP t1_jaaxdh6 wrote
Reply to comment by addctd2badideas in Baltimore, the problem isn't a lack of jobs: "We can’t find people to work" - The newest threat to Biden's climate policies. by roccoccoSafredi
It's impossible to "just pay people more". That creates a wage and price spiral that wipes out the gains from increased pay.
The option exists to convince employers to lower their margins, but that requires completely rewiring our entire economic system. That's never turned out well.
Capitalism: it's the worst economic system except for all the others.
okdiluted t1_jab68ex wrote
it's extremely possible to do this in a system where there's never been a larger disparity between the income of hourly workers and the income of owners/managers. they'll cry poverty if they can't buy a third vacation home while skilled workers are struggling to find a job that won't break their bodies and will still let them pay rent. add that into the refusal to invest in training or entry-level jobs for newer/younger workers and you've got a labor force that's retiring/dying out and no new takers because people have bills to pay and don't want to be treated like they're disposable. i'm a skilled tradesman and i deal with this as my day to day reality. places are desperate for skilled workers but won't pay us enough to live on, they'll brag about record profits but deny us raises because of "the economy", they overwork what small labor force they do have so we're all even more overextended and prone to injury while they refuse to hire or train up new people, and that penny wise dollar foolish attitude is gonna end up hurting them even more than it hurts us when that unsustainable cycle finally catches up to them.
MotoSlashSix t1_jaco6d3 wrote
So, first of all this claim about "wage price spiral" is a myth debunked by multiple economists who cover the topic.
What's funny about your claim is, folks who say similar things never point to C-Suite/Executive compensation as part of some "wage price spiral" or talk about how much stock buy backs contribute to lack of re-investment which can affect consumer prices and reduce employment compensation.
One doesn't have to touch margins to address executive compensation. That doesn't require re-wiring an entire economic system.And placing regulatory restrictions on stock buy backs does not require "re-wiring" an entire economic system.
macgyversstuntdouble t1_jadimyo wrote
"Debunked" - yet your first link literally describes it as a valid condition.
> And if, say, 10% is the headline number for the increase in pay, then 10% is an excellent focal point for price increases, even though overall costs haven’t risen that much. So prices may rise just as much as pay, sending the wage-price spiral into overdrive.
Your second article talks more about how it isn't ethical for workers to sacrifice themselves to stop inflation (inherently agreeing that the wage price spiral is real), and the third article is more of that. These aren't debunking the wage price spiral. They are just saying it isn't the most important thing out there.
The wage-price spiral is real. It isn't the only thing driving inflation, but it is driving inflation. We've literally seen this. It isn't a debate. Wages go up, prices go up (because the employer isn't eating those costs: it's passing them on to the consumer). Then wages go up to match the prices that went up. Hello 1970s and 1980s. Eventually it stopped so it isn't an infinite spiral (no duh!) - but the impact is tangible and real, and history shows it clearly.
Putting absolute knowledge into a bunch of economists is foolhardy. How many economists were agreeing with Jay Powell that inflation was "transitory" in 2021? No large scale mass of PhDs contested it. They largely agreed with him! Yet they were all wrong.
It sucks, but something has to break in the next few years. Asset prices, interest rates, employment, wages, government deficit spending, dollar strength, international markets - something has to give. Inflation won't until there is actual pain to stop it.
MotoSlashSix t1_jae9ow7 wrote
>yet your first link literally describes it as a valid condition.
Being a "valid condition" and claiming those wage increases are the primary driver of a price increase "spiral" is not the same thing. So claiming that increasing wages will cause price increase spirals is nonsense.
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>Given the paths of prices and pay in the past year, I believe these concerns are probably overblown. And one reason is simple math. Labor isn’t the only input into most goods and services. When the cost of labor increases, the costs of the other inputs don’t necessarily change. So the overall cost of producing a good or service doesn’t increase as much as the cost of labor alone.
Or to put it another way, this is part of what your analysis left out:
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>Worrying about wage‐to‐price passthrough after a period of excessively expansionary policy is therefore akin to lamenting gravity as the cause of hurtling to the ground after someone has thrown you from a plane. Encouraged by politicians such as Johnson, the wage‐spiral concept encourages businesses and workers to blame each other, mistaking the consequences of inflation for its origins.
macgyversstuntdouble t1_jaeezpn wrote
> When the cost of labor increases, the costs of the other inputs don’t necessarily change. So the overall cost of producing a good or service doesn’t increase as much as the cost of labor alone.
So everyone can get an 8% raise this year, and the people who own those companies will also get their 8% increase in profits too (aka their wages). And that won't increase inflation! Brilliant! /s
You see - this is what broad increases in wages do. They increase the cost of doing business. The Fed is trying to curb that by cooling the economy, but we've got a shit-ton of economic momentum going forward and it's hard to stop a train that Congress shoves a trillion dollars in new spending every year.
If you think that wages are not correlated to prices, you are dumb. I think you understand that there is a wage price correlation (as all your papers state), but you instead contend that there is instead something bigger driving inflation. That may be true - but wages are sticky.
Your boss doesn't tell you "Prices have come down on goods, so you get a 6% decrease in wages". However, we expect "prices are up 8%, here's your 8% increase in wages". One of these is sticky, and it's why many are pushing for wages to lag more. It sucks, but it's real.
In no way is the wage price spiral "debunked" by your articles. It exists. They agree the correlation exists. The only question is: is the wage increase broad or narrow. It is clearly broad right now, and that makes inflation itself stickier, which is inevitably bad.
RadicalSidewalks t1_jab9cs6 wrote
Got it! Strategy: continue to blame the million+ workers rather than the hundreds of executives (and by proxy, policy makers) who prioritize year over year profit margins above all else
roccoccoSafredi OP t1_jaba9sy wrote
Policy makers, absolutely.
Everyone else is just a cog in the system though.
Public companies have to have their stock prices go up. If they don't investors will put their money into companies who's stock prices do.
All those other people: CEOs, managers, etc... If they don't help do that, they're gonna get replaced with people who do.
It's an ugly system, but it's the best we've come up with.
RadicalSidewalks t1_jabc5ue wrote
So what’s your base argument here? You clearly understand that capital owners will do anything in their power to acquire more capital, pay workers bargain basement wages, and (legally and illegally) snuff out unionization. So we mustn’t make reforms that system but rather…….what? Tell workers to pull themselves up by their bootstraps?
roccoccoSafredi OP t1_jabcrer wrote
I'm not really sure what the solution is. But I know the problem isn't "there are no jobs".
It's impossible to solve the problem when we don't understand it though.
S-Kunst t1_jac0rcw wrote
Paying people more who have no skills, in these areas, is wasting money. Its great when a person makes the attempt to learn, but most come to the job with no foundational training. All their education was in a liberal arts curriculum, which is not universally helpful.
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