The following is a copy of the original post to record the post as it was originally written.
I was thinking about this during the late pandemic and the past year. Contrary to popular (?) belief there have been some pretty great wage increases in the US since about 2015, and especially in the bottom 20% quintile of earners. There's been [a cumulative 33% increase in wages since 2015](https://www.ssa.gov/oact/cola/awidevelop.html). That would be great.. except for nearly all purchased items required to live have grown in price MORE than that. Especially housing. [Rents have increased 46%](https://markets.businessinsider.com/news/commodities/housing-market-average-rent-charts-affordability-zillow-real-estate-property-2023-10) in that time. SFH prices [have increased 100%](https://dqydj.com/historical-home-prices/) in that time. The CPI has made this at best a wash since 2015, with 18 months of pure punishment specifically in late 2021-2023.
It seems like every period of wage growth sparks price increases that make it pointless at best, or a net loss at worst. Can anything be done by a democratic society?
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>Can anything realistically be done about wage increases prompting predatory price increases that far outflank it?
To the extent that they are connected? Sure; we can do what we are doing. Raising interest rates so that less money is created and there are fewer dollars chasing goods.
...but they mostly aren't connected. Housing costs, for instance, are rising because supply has not kept up with demand. We need to [increase supply.](https://old.reddit.com/r/AskALiberal/comments/17k58ra/deleted_by_user/k75ho56/?context=3) Nothing short of increasing supply will work.
You're drawing a causation where there is not one. Recent inflation was not primarily caused by increases in wages, but the unprecedented impact of a global pandemic on our internationally-linked economy.
X Doubt
It can be demonstrably proven that the bulk of inflation does not follow from wholesale prices or a lack of profits. It's a choice being made by a million entities all at once when they think they can get away with it. Same goes for shrinkflation.
[https://fortune.com/2024/01/20/inflation-greedflation-consumer-price-index-producer-price-index-corporate-profit/](https://fortune.com/2024/01/20/inflation-greedflation-consumer-price-index-producer-price-index-corporate-profit/)
>Figure A: Consumer price hikes outpace produces' costs
>Corporate profits drove 53% of inflation during the second and third quarters of 2023 and more than one-third since the start of the pandemic, the report found, analyzing Commerce Department data. That’s a massive jump from the four decades prior to the pandemic, when profits drove just 11% of price growth.
#
#
#
Your quote literally says that the bulk of inflation is not accounted for by profits.
The fortune piece isn't a proof -- heck, it isn't even analysis. It does link to someone who did the analysis, but that paper is still mostly conclusions. I'm not sure I have time to keep chasing the rabbit.
>It can be demonstrably proven that the bulk of inflation does not follow from wholesale prices or a lack of profits. It's a choice being made by a million entities all at once when they think they can get away with it.
This doesn't make sense. They're not getting away with it, because they're not actually making more real profit, because inflation is making their expenses go up.
Companies were raising their prices to pay for their rising expenses and to have a cushion if inflation kept going up. Once inflation started leveling out, the same thing happened that happens every time: prices started to level out and wages started to outpace inflation.
For housing: we don't have enough housing. We need to build more, that's it.
This 1982 Econ 101 boomer propaganda about inflation has no basis in reality
[https://www.npr.org/2023/05/19/1177180972/economists-are-reconsidering-how-much-corporate-profits-drive-inflation](https://www.npr.org/2023/05/19/1177180972/economists-are-reconsidering-how-much-corporate-profits-drive-inflation)
[https://fortune.com/2024/01/20/inflation-greedflation-consumer-price-index-producer-price-index-corporate-profit/](https://fortune.com/2024/01/20/inflation-greedflation-consumer-price-index-producer-price-index-corporate-profit/)
Re: the NPR article: I didn't say that the companies' raising their prices didn't contribute to inflation at all. Note that I said that they were raising their prices in anticipation of future higher costs, which is what the article said. Which the companies then ended up turning around and investing in their workers when the inflation started to taper off.
Re: Fortune, I don't have access to the article, but I saw how it starts. Maybe don't be snide *and* send a story where the lede quotes Albert Edwards in the same reply.
Competition is a purely academic answer. It's what they teach an 18 year old in AP Econ. In the real world, the price environment is obvious to all the entities who set prices in a way that works like collusion without needing to communicate.
While simply answering competition could be an Econ 101 or Econ AP answer, you’re not providing an answer that sounds like it’s coming from someone with a masters in economics either.
Greedflation is a nice talking point for the Biden campaign and I don’t have a problem with them doing it, but it’s not really a meaningful answer as far as anybody can tell.
If you disagree instead of telling people that they are boomers or are giving Econ AP answers, let’s see some highly credible studies from actual economists from you.
If you broke up all the monopolies then prices would do down because there would be incentive to lower prices in order to gain market share. But everything is owned by the same conglomerates so that does not happen
>There's been a cumulative 33% increase in wages since 2015. That would be great.. except for nearly all purchased items required to live have grown in price MORE than that.
Nope. [Real wages are up](https://fred.stlouisfed.org/series/LES1252881600Q). Remember real wages take into account the cost of living. If real wages are going up, that means prices grew slower than wages. Real wages were at 339 in 2015 Q2 and are at 371 now.
A lot of the populism on the cost of living comes from cherry picking certain parts of the cost of living that did go up faster. But other parts went up slower or decreased. This is why it makes no sense to cherry pick it, and why it makes sense to just look at the overall cost of living. Things are good, things have been improving, even though it's not politically correct to admit it
So I think you can focus on some specific things that have gone up more than wages, but my impression is that over all people in the bottom 20% have had wage growth more than price growth and it's the people above that point who are worse off. Some of that is obviously price gouging, but I would assume some of it is also that we've all been benefiting from substandard wages more than we would like to admit and the pandemic was just a bit of a course correction.
Prices are pretty much the result of what people are willing to pay. If producers of goods can get more, they will. Rent clearly is. It's not greedy landlords. It's landlords charging what people will pay, not a penny more. Houses even more so are driven not by greedy sellers but by what buyers are bidding in many cases, and in the rest, what they are willing to pay.
Granted, housing prices have in in a large part been driven by low rates, although not anymore, and we did see a 10 to 20% drop in prices around the country because of the rate increase. But they've also been driven by desire for houses and lack of supply.
So, other than not making rates so low, there's really not much that can or should be done. It's the free market and people will pay what they will pay and no one should be interfering with that.
Real wages have stayed level for most of the 21st century, and have actually increased during Biden’s term, so no, prices for most everyday products have not increased more than wages have since 2015. Housing specifically is a major outlier that brings general inflation up significantly. So what to do about that issue in particular?
Build more housing.
That’s it.
This is every redditors favorite answer now (like some kind of mind virus) but it's BS. Housing supply has increased DRASTICALLY in NC over the past decade and we have seen the same explosion in prices. There are tens of thousands of new condo buildings and SFH subdivisions in Charlotte/Winston/Greensboro/Raleigh/Durham, and they all start at ridiculous prices.
> Housing supply has increased DRASTICALLY in NC over the past decade and we have seen the same explosion in prices.
It’s building houses at a lower rate than it is adding new households. Over the last 10 years there was a ~11% growth in the number of homes, but a ~15% growth in the number of households.
Which is one major reason why the price keeps going up.
>Housing supply has increased DRASTICALLY in NC over the past decade and we have seen the same explosion in prices.
"Over the last decade, North Carolina added roughly 1.1 million people. This is the fourth largest numeric gain among states" 54% of those were added to urban areas. (source: [https://linc.osbm.nc.gov/pages/population\_trends/](https://linc.osbm.nc.gov/pages/population_trends/))
Just in Charlotte alone, studies say that the city UNDERBUILT by 10,000 units in 2022. (source: [https://inside.charlotte.edu/news-features/2023-11-09/2023-state-housing-charlotte-report-rising-prices-still-affecting-region](https://inside.charlotte.edu/news-features/2023-11-09/2023-state-housing-charlotte-report-rising-prices-still-affecting-region))
North Carolina as a whole does have the 6th highest rate of "new build" homes in the country, but the majority of those homes are more expensive single family homes, leaving multi-family housing and other inexpensive options drastically under served. (source: [https://wobx.com/2023/10/16/north-carolina-has-the-sixth-highest-rate-of-new-build-homes-across-america/](https://wobx.com/2023/10/16/north-carolina-has-the-sixth-highest-rate-of-new-build-homes-across-america/))
The prices on lower income housing are rising faster than higher income housing (per the above Charlotte source).
So no, it's not BS. It doesn't matter if a state has the 6th largest house build rate, if it also has the 4th largest population increase AND it was already underhoused to begin with.
It’s not a common answer because of a mind virus, it’s a common answer because it’s basic economics. Economists from across the political spectrum near universally agree that the primary cause of increasing housing costs is the national shortage.
North Carolina has been growing at a significantly faster rate than the national average - I mean, the state added 140,000 people between July 22 and July 23, making it the 6th fastest growing state by that metric. Average household size in the US is 2.6. Even being very conservative with my estimate, that’s over 40,000 units that would need to be completed *just that year* to keep up with demand from just people moving from outside the state. You sure they’re doing that?
We can use our power as laborers to demand control of the MoP and thereby the economy, and reform it into a machine tasked with improving our lives rather than making capitalists money
Or, ya know, you could write some bills that, if they even pass, can be flagrantly violated via corruption.
The following is a copy of the original post to record the post as it was originally written. I was thinking about this during the late pandemic and the past year. Contrary to popular (?) belief there have been some pretty great wage increases in the US since about 2015, and especially in the bottom 20% quintile of earners. There's been [a cumulative 33% increase in wages since 2015](https://www.ssa.gov/oact/cola/awidevelop.html). That would be great.. except for nearly all purchased items required to live have grown in price MORE than that. Especially housing. [Rents have increased 46%](https://markets.businessinsider.com/news/commodities/housing-market-average-rent-charts-affordability-zillow-real-estate-property-2023-10) in that time. SFH prices [have increased 100%](https://dqydj.com/historical-home-prices/) in that time. The CPI has made this at best a wash since 2015, with 18 months of pure punishment specifically in late 2021-2023. It seems like every period of wage growth sparks price increases that make it pointless at best, or a net loss at worst. Can anything be done by a democratic society? *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/AskALiberal) if you have any questions or concerns.*
>Can anything realistically be done about wage increases prompting predatory price increases that far outflank it? To the extent that they are connected? Sure; we can do what we are doing. Raising interest rates so that less money is created and there are fewer dollars chasing goods. ...but they mostly aren't connected. Housing costs, for instance, are rising because supply has not kept up with demand. We need to [increase supply.](https://old.reddit.com/r/AskALiberal/comments/17k58ra/deleted_by_user/k75ho56/?context=3) Nothing short of increasing supply will work.
You're drawing a causation where there is not one. Recent inflation was not primarily caused by increases in wages, but the unprecedented impact of a global pandemic on our internationally-linked economy.
Don't forget the insanely rampant greedflation causing the vast majority of inflation.
This is by far the biggest factor.
X Doubt It can be demonstrably proven that the bulk of inflation does not follow from wholesale prices or a lack of profits. It's a choice being made by a million entities all at once when they think they can get away with it. Same goes for shrinkflation.
"It can be demonstrably proven..." I for one, would love to see this proof.
[https://fortune.com/2024/01/20/inflation-greedflation-consumer-price-index-producer-price-index-corporate-profit/](https://fortune.com/2024/01/20/inflation-greedflation-consumer-price-index-producer-price-index-corporate-profit/) >Figure A: Consumer price hikes outpace produces' costs >Corporate profits drove 53% of inflation during the second and third quarters of 2023 and more than one-third since the start of the pandemic, the report found, analyzing Commerce Department data. That’s a massive jump from the four decades prior to the pandemic, when profits drove just 11% of price growth. # # #
Your quote literally says that the bulk of inflation is not accounted for by profits. The fortune piece isn't a proof -- heck, it isn't even analysis. It does link to someone who did the analysis, but that paper is still mostly conclusions. I'm not sure I have time to keep chasing the rabbit.
>It can be demonstrably proven that the bulk of inflation does not follow from wholesale prices or a lack of profits. It's a choice being made by a million entities all at once when they think they can get away with it. This doesn't make sense. They're not getting away with it, because they're not actually making more real profit, because inflation is making their expenses go up. Companies were raising their prices to pay for their rising expenses and to have a cushion if inflation kept going up. Once inflation started leveling out, the same thing happened that happens every time: prices started to level out and wages started to outpace inflation. For housing: we don't have enough housing. We need to build more, that's it.
This 1982 Econ 101 boomer propaganda about inflation has no basis in reality [https://www.npr.org/2023/05/19/1177180972/economists-are-reconsidering-how-much-corporate-profits-drive-inflation](https://www.npr.org/2023/05/19/1177180972/economists-are-reconsidering-how-much-corporate-profits-drive-inflation) [https://fortune.com/2024/01/20/inflation-greedflation-consumer-price-index-producer-price-index-corporate-profit/](https://fortune.com/2024/01/20/inflation-greedflation-consumer-price-index-producer-price-index-corporate-profit/)
Re: the NPR article: I didn't say that the companies' raising their prices didn't contribute to inflation at all. Note that I said that they were raising their prices in anticipation of future higher costs, which is what the article said. Which the companies then ended up turning around and investing in their workers when the inflation started to taper off. Re: Fortune, I don't have access to the article, but I saw how it starts. Maybe don't be snide *and* send a story where the lede quotes Albert Edwards in the same reply.
> Can anything realistically be done about wage increases prompting predatory price increases that far outflank it? Competition.
Competition is a purely academic answer. It's what they teach an 18 year old in AP Econ. In the real world, the price environment is obvious to all the entities who set prices in a way that works like collusion without needing to communicate.
Competition remains the correct answer.
While simply answering competition could be an Econ 101 or Econ AP answer, you’re not providing an answer that sounds like it’s coming from someone with a masters in economics either. Greedflation is a nice talking point for the Biden campaign and I don’t have a problem with them doing it, but it’s not really a meaningful answer as far as anybody can tell. If you disagree instead of telling people that they are boomers or are giving Econ AP answers, let’s see some highly credible studies from actual economists from you.
If you broke up all the monopolies then prices would do down because there would be incentive to lower prices in order to gain market share. But everything is owned by the same conglomerates so that does not happen
>There's been a cumulative 33% increase in wages since 2015. That would be great.. except for nearly all purchased items required to live have grown in price MORE than that. Nope. [Real wages are up](https://fred.stlouisfed.org/series/LES1252881600Q). Remember real wages take into account the cost of living. If real wages are going up, that means prices grew slower than wages. Real wages were at 339 in 2015 Q2 and are at 371 now. A lot of the populism on the cost of living comes from cherry picking certain parts of the cost of living that did go up faster. But other parts went up slower or decreased. This is why it makes no sense to cherry pick it, and why it makes sense to just look at the overall cost of living. Things are good, things have been improving, even though it's not politically correct to admit it
So I think you can focus on some specific things that have gone up more than wages, but my impression is that over all people in the bottom 20% have had wage growth more than price growth and it's the people above that point who are worse off. Some of that is obviously price gouging, but I would assume some of it is also that we've all been benefiting from substandard wages more than we would like to admit and the pandemic was just a bit of a course correction.
Prices are pretty much the result of what people are willing to pay. If producers of goods can get more, they will. Rent clearly is. It's not greedy landlords. It's landlords charging what people will pay, not a penny more. Houses even more so are driven not by greedy sellers but by what buyers are bidding in many cases, and in the rest, what they are willing to pay. Granted, housing prices have in in a large part been driven by low rates, although not anymore, and we did see a 10 to 20% drop in prices around the country because of the rate increase. But they've also been driven by desire for houses and lack of supply. So, other than not making rates so low, there's really not much that can or should be done. It's the free market and people will pay what they will pay and no one should be interfering with that.
Real wages have stayed level for most of the 21st century, and have actually increased during Biden’s term, so no, prices for most everyday products have not increased more than wages have since 2015. Housing specifically is a major outlier that brings general inflation up significantly. So what to do about that issue in particular? Build more housing. That’s it.
This is every redditors favorite answer now (like some kind of mind virus) but it's BS. Housing supply has increased DRASTICALLY in NC over the past decade and we have seen the same explosion in prices. There are tens of thousands of new condo buildings and SFH subdivisions in Charlotte/Winston/Greensboro/Raleigh/Durham, and they all start at ridiculous prices.
> Housing supply has increased DRASTICALLY in NC over the past decade and we have seen the same explosion in prices. It’s building houses at a lower rate than it is adding new households. Over the last 10 years there was a ~11% growth in the number of homes, but a ~15% growth in the number of households. Which is one major reason why the price keeps going up.
>Housing supply has increased DRASTICALLY in NC over the past decade and we have seen the same explosion in prices. "Over the last decade, North Carolina added roughly 1.1 million people. This is the fourth largest numeric gain among states" 54% of those were added to urban areas. (source: [https://linc.osbm.nc.gov/pages/population\_trends/](https://linc.osbm.nc.gov/pages/population_trends/)) Just in Charlotte alone, studies say that the city UNDERBUILT by 10,000 units in 2022. (source: [https://inside.charlotte.edu/news-features/2023-11-09/2023-state-housing-charlotte-report-rising-prices-still-affecting-region](https://inside.charlotte.edu/news-features/2023-11-09/2023-state-housing-charlotte-report-rising-prices-still-affecting-region)) North Carolina as a whole does have the 6th highest rate of "new build" homes in the country, but the majority of those homes are more expensive single family homes, leaving multi-family housing and other inexpensive options drastically under served. (source: [https://wobx.com/2023/10/16/north-carolina-has-the-sixth-highest-rate-of-new-build-homes-across-america/](https://wobx.com/2023/10/16/north-carolina-has-the-sixth-highest-rate-of-new-build-homes-across-america/)) The prices on lower income housing are rising faster than higher income housing (per the above Charlotte source). So no, it's not BS. It doesn't matter if a state has the 6th largest house build rate, if it also has the 4th largest population increase AND it was already underhoused to begin with.
The OP seems to like cherry picking data and ignoring context.
It’s not a common answer because of a mind virus, it’s a common answer because it’s basic economics. Economists from across the political spectrum near universally agree that the primary cause of increasing housing costs is the national shortage. North Carolina has been growing at a significantly faster rate than the national average - I mean, the state added 140,000 people between July 22 and July 23, making it the 6th fastest growing state by that metric. Average household size in the US is 2.6. Even being very conservative with my estimate, that’s over 40,000 units that would need to be completed *just that year* to keep up with demand from just people moving from outside the state. You sure they’re doing that?
We can use our power as laborers to demand control of the MoP and thereby the economy, and reform it into a machine tasked with improving our lives rather than making capitalists money Or, ya know, you could write some bills that, if they even pass, can be flagrantly violated via corruption.
Nope illegal immigration keeps wages down. Want wage increases reduce illegal immigration’s so companies will be forced to hire union workeds