> Because no one would actually be better off. Prices would instantly double. It's just a change of units, like going from getting paid in $ to getting paid the same amount in ¢.
This is so basic but so many people miss it. I have continually explained this to my parents. It doesn't matter how good your 401k is doing if it leads to eggs being $12 a dozen in your retirement.
Historically, that hasn't happened when worker's wages increased. Prices do tend to go up (they always do) but not to the degree that it makes the wage increases worthless. When minimum wages go up, workers lives improve. Also, when companies don't have an excuse, consumers simply won't pay $12 for a dozen eggs. Every consumer has some idea of what things are worth and if a company tries to jack prices up for no reason consumers feel cheated and stop paying.
There's zero reason why companies can't all just triple their prices right now, except that if they did, people wouldn't pay and their profits would drop. Companies constantly test consumer's acceptance of price increases and usually only increment their prices slowly so that the next generation they rip off doesn't know any better having always grown up with the slightly higher prices.
The supply shortages of the pandemic broke the system. It gave every company an excuse for price gouging, and at first, much of that was legitimate supply/demand and consumers were understanding. Then as the supply of goods came back they started using the inflation narrative (complete with "printed money" excuse) to justify further increasing prices, but now we have a growing pile of evidence that they were lying and were just pocketing the extra money. Naturally, and rightly, people are starting to feel ripped off.
You make an assumptions that is false. 1. Minimum wage increases != wage increases. It's a small subset. The poorest of the poor is never the problem.
> Every consumer has some idea of what things are worth and if a company tries to jack prices up for no reason consumers feel cheated and stop paying.
The recent inflation proves otherwise. Many costs have remained sticky for no added benefit. If this was true then we would never have inflation - because the inflation the last 2 years has been so extreme that your belief should have come to pass without any help and much earlier when the supply shocks subsided.
> Then as the supply of goods came back they started using the inflation narrative (complete with "printed money" excuse) to justify further increasing prices,
This just proves the point further - consumers continued spending despite the rising costs. But now you'll say they're only now started to feel ripped off? Seems awfully convenient for your argument, but isn't consistent. What is consistent is that raising interest rates have helped somewhat.
The fed is doing the right thing and yes it impacts wages as it impacts other asset classes. Again, if your eggs cost 300% more but your wages increased, it doesn't matter, in the end you're still likely losing.
> It's a small subset. The poorest of the poor is never the problem.
You're right that we've never seen the effects of raising everyone's wages at once.
> This just proves the point further - consumers continued spending despite the rising costs. But now you'll say they're only now started to feel ripped off?
For the first two years of the pandemic, people weren't happy about the price increases at any point, but they were both desperate for the familiar comforts they'd been denied (due to lock downs, businesses being shutdown, or supply shortages) and also they understood that there was a unprecedented global crisis going on, so they expected that prices were higher due to issues outside of anyone's control. American households went heavily into debt to get the things they wanted and felt that they deserved after all they'd been through and sacrificed.
As soon as the supply started to return to normal consumers were flooded with messages about how inflation was driving up prices and companies said to consumers "We know our prices are higher, but it's not our fault! It's this damn inflation that's to blame! We're all in this together!" and so consumers felt they were being ripped off, but not by the companies. Instead they were told to blame the pathetic amount of disaster relief people got in the first years of the pandemic so that they could keep their rent paid and feed their families, and we see that even after all the evidence we have of companies making record profits there are still people in this very thread who blame "money printing" for the rising prices.
Companies were able to deflect blame very well, even as one by one, examples were coming out about how certain companies and industries making money hand over fist. Over the last year or so more and more people are starting to catch on and feel like they have been being taken advantage of, which they have been, but it's not a binary switch where every consumer suddenly stops paying for things that are clearly over priced. Many consumers have been buying less.
I know people who no longer buy goods they used to, or don't buy them as often because of the unfair prices. I myself have a list of companies I don't buy eggs from anymore because they were caught raising prices while blaming "bird flu" when they were not impacted by it. People do respond negatively to unfair price hikes, but in the last few years they were lied to and fooled into thinking that "We're all in this together" and are now in the process of learning that they were being cheated. That's what this article is. It's teaching people that they were cheated. Not everyone one will read it though. It'll probably take a while before most everyone understands that they have been being ripped off and start acting accordingly, assuming that they don't just feel defeated.
It's also harder for consumers to counter giant unnecessary price hikes when every company is doing it at once. If my kids want PB&J for school lunches, and every single company selling peanut butter raises their prices by $3, I'm kind of screwed! If the meat industry raises their prices again and again after pulling in record profits for the least two years I'm still stuck paying the price if I really want a cheeseburger. Lack of competition means that it's harder for consumers to get alternatives at reasonable prices, and for some products no alternative will be equal.
What I can say is that driving worker's pay down isn't going to cause a single company to lower their prices. It's just going to cause large parts of the US population to be priced out of things they could once afford. Companies won't care though. They'll charge everyone else more to make up for it. That means eggs still cost more, only now most people don't get to have them.
The source of the problem isn't wages, it's greed and until the source of the problem is addressed and dealt with every consumer, rich or poor, is going to suffer for it one way or another.
> You're right that we've never seen the effects of raising everyone's wages at once.
We just saw it - a year ago - and it coincided with the worst inflation in decades. Look at the 80s - same thing - high inflation and high wages go hand in hand. They're not to blame, per se, they're just a clear indicator of inflationary periods of time.
Of course it is nonsense to solely blame pandemic relief (vs years of cheap cash and PPP loans) for inflation. I don't think you give the American people enough credit. They're not stupid drones going around. They want to buy things, and they didn't care that it cost more. Companies caught on quickly (like anyone else would.) Compound that with the fact that most conveniences are staffed by wage slave jobs that most americans would turn their noses up at, then you have rich people waiting in long lines at McDonald's as opposed to cheaper options.
> The source of the problem isn't wages, it's greed and until the source of the problem is addressed and dealt with every consumer, rich or poor, is going to suffer for it one way or another.
No one is saying that wages are the source of the problem. They may contribute a small piece. In any case, railing against "greed" borders on the mythical. Why is the voracious apetite of many american consumers not considered greed, as well? Moral crusades have no place here, in my humble opinion.
This is so basic but so many people miss it. I have continually explained this to my parents. It doesn't matter how good your 401k is doing if it leads to eggs being $12 a dozen in your retirement.