I found this account of inflation by Matthew C. Klein at The Overshoot interesting, particularly his conclusion:
As I noted last month, the higher prices are partly a function of higher pay for low-paid line workers. But while we don’t have the wage numbers for domestic workers, the data so far imply that pay gains for restaurant workers have vastly oustripped the price increases imposed on consumers, especially since April.
Average wage gains for nonsupervisory workers since April are running at about 20% annualized, while prices are rising around 8% annualized. Since the start of the pandemic, prices are up 6% at sitdown restaurants and up 10% at fast food restaurants, while average worker pay at both types of establishment has soared by more than 12%.
Prices at restaurants and for rental housing tend to be the best barometers of overall inflation pressure and the state of the economy, so it will be worth watching both categories closely in the months ahead even if other factors temporarily drag the broader index lower.
Imagine a chart with the X axis representing dollars paid and the Y axis representing the number of workers being paid that wage. When I say “payroll” I mean the area under that curve. I wonder what Mr. Klein means?
The link is blocked, so I don’t know what he said or where you are going with this.
But it could be the perfect example of what I talk about frequently. If customers have lowered quantity demanded due to price increases, yet the required wage to attract labor has outstripped employers ability to recover profit, you will get lower total payroll cost, and of course fewer employed. If the government is sending paychecks to those refusing to work or those laid off, everyone is less well off except those collecting a check and enjoying liesure.
I’ve repaired the link; you should be able to reach it now.
Basically, he makes some OK arguments that inflation is decelerating. Those are punctuated with the second derivative observations that CuriousOnlooker mentioned a while back (a decrease in the rate) and an occasional specious conclusion.
For the second month in a row states that did not stop UE payments yet added jobs faster than those who have already stopped them. Will be interesting to see where this goes.
We are giving out huge raises to nursing staff. This clearly has nothing to do with UE payments and I cant think of anyone to blame it on the government though I suspect Drew and co will. Nurses have learned that with our chronic shortages they are in high demand. They can quit and join an agency and come back to work at the same job and make a lot more money. Hospitals are ranking out raises to keep staff form leaving to join those agencies. (Which incidentally are probably bad for pt care for a number of reasons.) So we are paying more for staff while also getting worse quality.
Steve
Prices at both restaurants and housing in my area (rental and for sale) are crazy stupid right now. I have some friends trying to buy a house and are continually outbid by investors. Housing here is starting to feel very much like it did when I lived in Florida in the mid 2000’s.
And there is still not enough staff at all kinds of places. Restaurants, grocery stores, you name it. The school district is desperate for school bus drivers yet they are only offering $16 an hour, which is only buck more than my daughter made cleaning dishes at a fast food place. There’s a teacher shortage too. Gas here is more expensive than diesel for the first time that I can remember.
There’s a lot of really unusual stuff going on, all happening at the same time. It’s very weird and I don’t know what to make of it.
I think that’s the crux of the situation. There are too many things all going on at the same time to attribute causation to any single factor with any great confidence. Yes, the UI payments are probably a factor but they’re not the only factor. Yes, supply chains are a factor but they’re not the only factor, either. And on down the list. Everybody drawing conclusions based on their party affiliation or ideological views.
“Everybody drawing conclusions based on their party affiliation or ideological views.”
But if you say you don’t know, I dont, then you must be a liberal.
Steve
The few liberals still alive are over 80 years old. They have little in common with today’s progressives.