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The conventional wisdom that higher wages inevitably lead to higher prices, however, is flimsy

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posted on Sep, 9 2018 @ 07:24 PM
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This isn't my title it's an excerpt from the article, the main part I want to focus on. I kind of read over the article and agree with the basic premise that wages and inflation have totally decoupled and inflation is off on it's own spinning out of control.

Very Credible NY Times


The conventional wisdom that higher wages inevitably lead to higher prices, however, is flimsy, some economists argue.

“It theoretically makes sense,” Michael R. Strain, an economist at the conservative American Enterprise Institute, said of the link between wage increases and inflation, “but empirically, it’s increasingly difficult to find a real strong link.”


Interestingly enough they added this in at the end of the article.

Study From Federal Reserve


Our analysis finds that wages and prices tend to move together, complicating efforts to disentangle cause and effect. We document evidence of a more stable wage Phillips curve than a price Phillips curve, which is consistent with the idea that subdued wage growth is symptomatic of the existence of slack in the labor market.


Michael R. Strain


Experience
Administrator, New York Census Research Data Center, 2011–12
Economist, Center for Economic Studies, US Census Bureau, 2008–12
Assistant Economist, Federal Reserve Bank of New York, 2005–07
Education
Ph.D., M.A., economics, Cornell University
M.A., New York University
B.A., Marquette University


AEI Board of Trustee's


The Honorable Richard B. Cheney

Dick DeVos
President
The Windquest Group


Dick Cheney on board of trustees along with Dick Devos.

Anyway, do you agree that there is no real correlation between raising wages and price??




posted on Sep, 9 2018 @ 07:26 PM
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I wouldn't worry too much about it. Social credits is the new currency anyways.



posted on Sep, 9 2018 @ 07:29 PM
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a reply to: rollanotherone

Yeah, acting a certain way and being able to "fit in" is more important than what you are capable of accomplishing

very weird, odd world we are heading into



posted on Sep, 9 2018 @ 07:32 PM
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a reply to: toysforadults


Of course there is a crorellation. If it costs you more to produce goods and services then you have to charge more. ECON 101 man, If I am selling little plastic figurines and I am charging 1.00 / unit while paying my employees 10.00/hour and then I up my pay to 15.00/hour then my cost has gone up so my sell price must go up.



posted on Sep, 9 2018 @ 07:33 PM
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a reply to: norhoc

That's what we all know or thought anyway but uhhh, apparently not?

Here's the problem is that people only have so much to spend before you reach the market cap at which point wages have no choice but to go down in order to remain competitive in the marketplace



posted on Sep, 9 2018 @ 07:38 PM
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originally posted by: toysforadults
a reply to: rollanotherone

Yeah, acting a certain way and being able to "fit in" is more important than what you are capable of accomplishing

very weird, odd world we are heading into

Yup. Skill based be damned. Virtue signal to the winning popularity and you shall be rewarded.



posted on Sep, 9 2018 @ 07:41 PM
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Higher wages will inevitably lead to higher taxes and cost for health care insurance. the democrats will see higher wages as a source of new government tax money.

In the long run the taxpayers will see little new money in there pockets.



posted on Sep, 9 2018 @ 07:49 PM
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Payroll should fall around 30% of a companies gross revenue.
They also must take into consideration that some years they lose money.

But I do believe raising payroll expenses will lead to higher costs of the products being produced.



posted on Sep, 9 2018 @ 09:01 PM
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originally posted by: toysforadults
a reply to: norhoc

That's what we all know or thought anyway but uhhh, apparently not?

Here's the problem is that people only have so much to spend before you reach the market cap at which point wages have no choice but to go down in order to remain competitive in the marketplace


Not quite. A certain percenage of revenue goes to payroll. If payroll goes up by 10%, then the cost of goods also has to go up. The alternative is that payroll doesn't go up, and instead the internal distribution of wages changes so that some go up while others go down. When this happens, it tends to create a larger chunk of people with disposable income which results in higher sales of products that have inelastic demand. In contrast with simply raising payroll which results in higher prices and puts people in the same spot.

Competition is to promote the second scenario, but in most industries competition doesn't actually exist, so the first occurs instead.

That can only be fixed through legislation that deals with wealth inequality.



posted on Sep, 9 2018 @ 09:17 PM
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When they raise the minimum wages here, things go up right away. I have been watching that happen for a very long time. Flimsy evidence my A$$. It is so easy to see that only an idiot could not see it. On top of just adding the wage, the wage overhead also goes up. Like employer payed SS and medicare and an increase in Workers comp and liability and unemployment contributions. So multiply the raise by one and a quarter or more to show what the employer needs to recoup just to remain even.

I think there are some idiots calling themselves economists, there is no way that prices do not increase with widespread increases in wages. Competition cannot help if everyone is boosting wages, everyone jumps up the product or service in that case.



posted on Sep, 9 2018 @ 09:28 PM
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Higher wages do lead to increases in prices. However, those price increases don't necessarily show up in all goods. Some goods, particularly technology, tend to decrease over time. For example, computers and TVs.

On the other hand, goods which are highly dependent on incomes like real estate, most certainly will see price inflation as a result of higher wages. Restaurants as well.



posted on Sep, 9 2018 @ 09:54 PM
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a reply to: toysforadults

There is a correlation between the two. However there is a much bigger correlation between prices and corporate greed, and the absolute necessity for business owners to profit more than the previous year.

I've worked in the world of minimum wage employees my whole life and whenever wages increase prices always increase at a higher rate than the cost of producing goods. Meaning when the minimum wage goes up the business owners still come out on top. The costs always gets passed back down to the lower and middle-class for the sake of the 1%.

The rich get richer and the rest get poorer.



posted on Sep, 9 2018 @ 11:16 PM
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And therein lies one of the things that makes the human species so destructive and freaky. Our innate desire "to disentangle cause and effect". LOL

How can anyone start out their mission with this goal and not expect bad things to happen?



posted on Sep, 9 2018 @ 11:37 PM
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The need to continually pay higher dividends to stockholder (mostly owned by rich people) and higher compensation to CEOs and upper management fuels price increases much more than raising wages for the people who actually manufacture goods or provide services. Remember the members of the Walton family (Walmart, Sam's Club) "earn" more money every year than all of the lowest 50% of people in all of the US. Small companies will have problems with wage increases but those CEOs are not making multi millions in wages plus stock options plus other perks. The incredible increase in income disparity between the ultra rich and the majority of people is almost beyond belief.



posted on Sep, 9 2018 @ 11:54 PM
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originally posted by: Bluntone22
Payroll should fall around 30% of a companies gross revenue.
They also must take into consideration that some years they lose money.

But I do believe raising payroll expenses will lead to higher costs of the products being produced.

If increases in payroll primarily are distributed to the upper echelons of a company, wages overall would not rise while prices do...

I know education and medical care has gotten ridiculous, yet I also know that wages overall have not increased appreciably.



posted on Sep, 10 2018 @ 12:00 AM
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What a bunch of Horse S***

Higher wages does not mean higher anything somewhere else except savings and consumptoon. There is 0 correlation.

The cheaper it costs to make something, is what leads to lower prices of that good. That's it period end of story,



posted on Sep, 10 2018 @ 12:11 AM
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originally posted by: SR1TX
What a bunch of Horse S***

Higher wages does not mean higher anything somewhere else except savings and consumptoon. There is 0 correlation.

The cheaper it costs to make something, is what leads to lower prices of that good. That's it period end of story,


Failed economics huh?

I have own and ran my own business now for over 15 years, and yes, while cost to make an item DOES have an impact, wages most CERTAINLY translate to the cost of goods or services.
edit on 10-9-2018 by Whatthedoctorordered because: (no reason given)



posted on Sep, 10 2018 @ 12:39 AM
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originally posted by: Whatthedoctorordered

originally posted by: SR1TX
What a bunch of Horse S***

Higher wages does not mean higher anything somewhere else except savings and consumptoon. There is 0 correlation.

The cheaper it costs to make something, is what leads to lower prices of that good. That's it period end of story,


Failed economics huh?

I have own and ran my own business now for over 15 years, and yes, while cost to make an item DOES have an impact, wages most CERTAINLY translate to the cost of goods or services.



I run my own company too. Without having to result to snide remarks, I can just say that Henry Fords employees being able to purchase his automobiles actually led to lower costs of that automobile as more people able to afford them meant more production and thus the assembly of that product had to become such that it met the demand of the population. However, the higher wages, did not translate to higher priced Model T. Higher wages means prices of goods and services has to go down as more people can afford the good and labor of business as a whole. More competition, better pricing, cheaper methods developed to get the raw material needed to produce the goods and services, etc etc.

If few people were able to afford a phone or a computer, neither would have become mainstream, they would be limited to universities, schools, gov buildings, where the need for them would actually be. It's not higher wages that lead to more expensive pc's, but innovation that led to cheaper pc's and people being able to actually put one in the home, What the H*** did anyones wage going up have to do with the price of phones going down to pennies on the dollar?



posted on Sep, 10 2018 @ 12:43 AM
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a reply to: SR1TX




I run my own company too. Without having to result to snide remarks


You mean like



What a bunch of Horse S***





However, the higher wages, did not translate to higher priced Model T. Higher wages means prices of goods and services has to go down as more people can afford the good and labor of business as a whole. More competition, better pricing, cheaper methods developed to get the raw material needed to produce the goods and services, etc etc.


The problem is, this isnt the 1920s economy, and we dont produce near what we use to produce as far as raw materials here in the US. That translates to having to have more and more shipped in at a higher price. Were simply not producing as much as we use to.

In my business , If i were to give everyone that worked for me a raise to where they were all paid the same, I would have to charge more for my services to cover that cost. Thats just how it works.

What business are you in?



posted on Sep, 10 2018 @ 01:31 AM
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Personally, Ive never understood why the government cannot just set and lock prices for essentials like milk, food, medicine, etc and thus prevent the offsets of higher wages. I mean, the entire economy/monetary/financial system as it is, is a complete farce. Why does inflation have to be a thing? The majority of money today is simply make believe numbers existing only digitally created literally out of thing air.

So why the hell not?? Lock prices in on essentials for set time periods for corporations, increase wages, and make the whole damn game easier on everyone.

I am aware that I am oversimplifying things, but really - inflation only exists to keep us as slaves and because THEY say higher wages must mean higher prices. In reality, that is not necesarry and everyone could just spend a little less on essentials while having more free spending money.

That money would still get pumped back into the economy, and many business owners would likely profit even more so.

That, or just implement a damned cryptocurrency operated on a blockchain already. Create say 10 trillion Uncle Sam Coins trademarked. Distribute them evenly based on people's current assets.

And then operate the economy from there, never another Sammy Coin to come into existence. Totally deflationary.

Taxes could still be paid, totally visible and traceable. And if the governments need money to pay off their prostitutes or bomb people, well then it is up to them to save up for it or make that money otherwise by providing paid services. No more loans, no more debt, no more Fed reserve, and credjt only with coins that already exist and substantial down payments.
edit on 10-9-2018 by Lightdhype because: (no reason given)



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