Post #1904387

2026-04-29 10:43 UTC

As is tradition in economics, this is an idea someone had at some point, and has been touted as scientific fact and misapplied ever since (see also supply/demand curves, Jevon's paradox, and so on). It has no basis in reality. https://www.cato.org/commentary/wage-price-spiral-explanation-inflation-dangerous-myth Here is an article from the Cato institute disagreeing with the wage-price spiral myth. This is from a libertarian think tank -- even _they_ don't believe it! Of course the article has the usual economics drawback of basically just guesstimating a theory and never looking at any data. Because as soon as you do that you end up with conclusions like "the living standards of Cuba went up faster than those of comparable nations with a capitalist system, even without correcting for the immense blockade by the US" and no one wants to hear that sort of stuff.

Replies (2)

@rumba@lemmy.zip 2026-04-29 14:02

yeah, it's not like they're keeping prices low enough for the minimum wagers to buy it. It will increase the prices somewhat, but it's just what the market will bear.

Open ##1904408
@ReluctantMuskrat@lemmy.world 2026-04-29 11:16

Interesting article... thanks for sharing. However the article seems to be about explicitly raising the pay of a single class of workers - rail workers or specific union workers - not all low-paid workers like a min wage increase will do. It discusses how the impact of a wage increase is limited as it drives business to other competitors so doesn't result in an inflationary spiral, but it's not so clear that can't happen to some extent with a min wage increase that immediately impacts the entire market and multiple industries. I personally support a min wage increase but this article doesn't seem to make the argument you suggested.

Open ##1904410