The Inflation-Wage Disconnect: Why Wages Lag Behind Rising Costs

For a particular job at a particular place and time, wages are always determined by the intersection of the supply and demand curves for labor. This intersection, known in economics as the equilibrium point or the market rate, reflects the balance between employers' demand for workers and employees' supply, based on their productivity and skills.

Currently, the excessive Bidenflation is placing upward pressure on wages, while an open southern border is putting downward pressure. This tug-of-war on the market rate of wages is being orchestrated by the Biden Administration, introducing a complex and often contradictory dynamic in the labor market.

Despite this, the core issue is the disconnect between wages and inflation. Prices continue to rise, yet wages do not keep pace, particularly given the impact of recent months' massive price hikes in essential commodities. This mismatch is a significant economic challenge that deserves attention.

The Historical Context of Wage-Price Disparity

After the Great Recession of 2006-2008, under former President George W. Bush, inflation was relatively under control. Though wages remained inadequate due to decades of anti-worker legislation, they generally kept pace with inflation. However, in the past few months, the most powerful corporate entities, including oil companies and other basic necessities suppliers, have hiked their prices by up to 20-30%, or even more. These hikes outstrip the rate at which wages are increasing, creating a significant economic disparity.

For instance, when the author first started their job, they were earning $1.60 per hour, while the price of gasoline was 19.9 cents per gallon. At the time, they were earning 8 times the cost of a gallon of gas per hour. Today, using a representative price of $2.50 per gallon of gas, their hourly pay should be 20.00 times the transportation cost per hour, or approximately $20.00 minimum wage. Over a 40-hour workweek, this amounts to $800.00 per week, a significant change from their initial wages.

The Impact on Workers and Society

Wage stagnation, coupled with rising costs of living, poses a significant challenge to workers and society. Basic necessities such as food, housing, and healthcare have become increasingly unaffordable, making it difficult for many to meet their basic needs. This has led to a call for workers to demand fair wages.

Addressing the Disparity and Economic Inequality

It is crucial to recognize the root causes of this wage-price disparity, including:

Anti-worker legislation that hinders wage negotiations The concentration of market power among corporate entities The impact of globalization and economic policies

Addressing this issue requires a multifaceted approach:

Implementing policies that protect workers' rights and promote fair wage negotiations Encouraging competition and preventing monopolistic practices Providing social safety nets to support those most impacted by rising costs

Ultimately, the goal is to ensure that wages rise in tandem with the cost of living, allowing workers to maintain their purchasing power and live comfortably.

Wake up America, and demand what you deserve – a fair wage. The disparity between the lowest and highest paid workers in the same companies has never been this large. It is incumbent upon us to address this issue and work towards a fairer economic system.

Conclusion

The connection between inflation and wages is complex and multifaceted. While the market rate of wages is influenced by various factors, the current trends suggest a significant disparity that warrants attention. By understanding the causes and effects of this disconnect, we can begin to address the underlying issues and work towards a fairer economic system.