It's actually the opposite -- if employers raise wages, we can easily get into a wage-price spiral with extreme inflation. The only way to avoid inflation is for employers to just wait until potential employees deplete their savings and extended unemployment benefits, and then hire them at uninflated wages.

This is a crazy concept, it would seem to imply that any attempt to increase wages ever would destroy the economy, but what remains is barbarism and serfdom. There's a market in labor just as there is a market in goods (though the former is a market in human beings). If the supply of labor is low, then (under many economic conditions)* raising wages to increase the number of workers willing to do unpleasant jobs is part of the logic of markets. It's a two way street.

* An example of a condition where it might not apply is if everyone were already perfectly sorted into their preferred jobs and there was no remaining pool to encourage new people to become workers from. Then raising wages wouldn't affect the sorting of the economy other than to transfer money from capital to labor (which is a good thing anyway in our age of inequality). I highly doubt we are there.

Not really. It just means that a plumber makes 1e-30 of the new money in a given economy (some small amount, point is, it is relative to the money supply). If he gets a raise (not one individually, obviously) that needs to be canceled out with the new money increasing.

The problem being if you get into a circle raise -> more new money -> goto 1 it may be hard to slow it down.

In reality nobody wants money. They want houses, food, education, children, ... each of those also represent a relatively constant fraction of the money supply of an economy. So you can only get a raise by actually doing more work, or in the case of the government jobs, having more hostages/threats (if you fire me X will happen, X being somewhere between a fight over who replaces you, to new elections, to I guess revolution in some extreme cases).

This is not very visible because plumber wages DO change, for example with the number of plumbers available. House prices do change, for example with migration. But wages do not change, in real terms, because of inflation. A raise is a necessity, merely for you to maintain whatever position you have in society. It is not nice, in that it improves your position in society. A house, ownership, maybe stocks and of course innovation improves your position. Raises and inflation are a smokescreen.

I use the term "new money" because "parked money" does not matter. Only money that was involved in some transaction in the recent past actually matters. We can argue about what measure is the best for this, and economists constantly do that, but other than that it's not simply total money, it is not necessary to have an answer for this point.

There are other options too. Land reform, for example, would not need to be any more violent than mass evictions.

This is only correct if labor is the largest component of the price of a good. If labor is not a large component, paying more for labor, at the expensive of competitors labor supply, is a good idea, and employers should do it.

Agreed, productivity has been going up faster than wages. Businesses can do less stock buybacks and C-suite bonuses instead of passing all the costs to customers.

Not really. The working class country wide is awakening to the fact the reasons they don’t have a reliable car, decent home in a well funded community to raise their children in, and affordable healthcare is because of systemic rent seeking.

People are saying no to dead end jobs that cannot afford the people working them a reasonable quality of living. The solution for the workers is to demand enough pay to realize a dignified lifestyle. The solution for the employer is to do whatever scummy things are necessary to fill the roles, long term consequences be dammed. The solution for government is to cool the housing market, implement single payer healthcare, and fix the systemic issues facing underserved communities with massive capital investments that also happen to be great jobs programs.

That’s unlikely in 2021. Labor is nowhere nearly as strong as it was in the 1970s when unions negotiated automatic 6% automatic wage increases. Conversely real wages have been stagnate for decades.

The fact that this is happening implies that the inflation story is bogus.

Most potential employees moved on to better jobs. You're not going to force someone who's moved to say Wyoming to be a windmill tech back into being a waiter at your restaurant like ever. This isn't the days of feudalism either so you have no legal leverage over the 'great reshuffling.' You either accept that you'll be working your existing labor pool harder or you will be paying more to get more labor. There's no third option.

There are effects in both directions. Increasing wages increases prices and not having labor available reduces production, which also leads to higher prices.

Maybe in the general economy but not in tech

Or the Fed could just crank up interest rates and stop allowing any schmuck to get a loan to finance everything. I distinctly remember this happening before...twice...

That in itself would require a communist revolution.

As soon as COVID is over immigration will restart and wages will start flatlining again (unfortunately).

When do you think that will be?

How much longer can we keep up the COVID protocols? The Atlantic just did a piece on this: https://www.theatlantic.com/health/archive/2021/11/what-amer...

We're going to have to transition to whatever the new normal is very soon. There is only so much money printing the fed can do to cover up structural problems in the economy. Given the inflation we're seeing, I think we're getting near the end of that rope. We're now, I think, seeing diminishing returns on the helicopter money and artificially suppressed interest rates.