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.
The labor shortage is the catalyst for sustained inflation
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Re: The labor shortage is the catalyst for sustained inflation
#22>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. Yes, Trump did that, but he hasn't…
Not entirely, as illegal immigrants can be difficult to hire for many industries.
Re: The labor shortage is the catalyst for sustained inflation
#23as 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). As for Ame…
> 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.
Can you elaborate on how it is redistribution of wealth for low earners? Genuinely curious.
Re: The labor shortage is the catalyst for sustained inflation
#24That's funny, because assets have been inflating just fine, and quite quickly, since before the "labor shortage" starting making headlines.
Re: The labor shortage is the catalyst for sustained inflation
#25This article does not address the basic economic premise of the substition effect, by which consumers will search for cheaper goods of equivalent value. 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. Not an economist.
makes sense but automation is hard, it doesn't fall from the sky like manna. Reality is that automating the easiest jobs is the hardest (old Minsky observation) and most essential services you can't substitute fall into that category. No robot plumber or roof tiler in the near future. Article is right to point out that the pandemic together with the anti-migration stance and isolationism is going to push the cost of…
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Re: The labor shortage is the catalyst for sustained inflation
#26I 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. Openly opposing wage increases for…
> 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.
The narrative slants aren't even subtle.
Asset prices skyrocket: "Look, the economy's booming! Hooray!"
Wages go up somewhat: "Oh no, inflation! Watch out!"
[EDIT] I mean for general coverage of these topics in the media, not picking on this particular author.
Re: The labor shortage is the catalyst for sustained inflation
#27This article does not address the basic economic premise of the substition effect, by which consumers will search for cheaper goods of equivalent value. 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. Not an economist.
McDonald's and low-wage employers in general are not automating their entire workforce in the next month. I would wager they are not going to automate 10% of service jobs in the next twenty years. Why do you think it's just around the corner?
Re: The labor shortage is the catalyst for sustained inflation
#28I 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. Openly opposing wage increases for…
I am the author, and my argument is in no means against rising wages. In fact, I think it’s about damn time that wages are rising. The $15/hr living wage movement has fought for this so long, that now $15/hour is barely a living wage anymore.
My argument is actually that the economy is built on the backs of underpaid workers, and now that these workers are demanding their fair value we will either see inflation or the failure of many businesses. I don’t believe a business should be allowed to survive if it can’t afford to pay its employees a living wage, so if my argument implies that it is truly not my intention. Let me know what you think and if you have any suggestions to clear this up in my article.
Re: The labor shortage is the catalyst for sustained inflation
#29This article does not address the basic economic premise of the substition effect, by which consumers will search for cheaper goods of equivalent value. 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. Not an economist.
Many of the things that haven't been automated are unsolved challenges. I'm sure restaurants would love it if you could fully automate their cleaning, answering the phone, or fixing the broken milkshake machine, but we only have partial solutions to those sorts of activities. Which means that if consumers do get pushed to alternatives, it might be getting a frozen pizza instead of a restaurant pizza.
It’s not just about things that aren’t automated yet. There’s also the stuff that is automated in some places, but not automated everywhere yet. Companies who are dragging their feet on modernizing.
Re: The labor shortage is the catalyst for sustained inflation
#30>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. Yes, Trump did that, but he hasn't…
Not entirely, as illegal immigrants can be difficult to hire for many industries.
Ah, "agriculture and hospitality", two industries well known for their diligence in making sure all their employees have green cards.