Ask Prof Wolff: Wages, Prices & Inflation

A Patron of Economic Update asks: "Econ 101 taught me that some level of unemployment is necessary, in part, to prevent a wage and inflation upward “spiral”. Is it true that an economy with wide spread worker-owned enterprises would not face the same “threat” of wage inflation? Would asking for a raise be akin to decreasing one’s own profits in a co-op economy and act as a check on runaway demand-pull inflation?"

This is Professor Richard Wolff's video response.

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“A magnificent source of hope and insight.” Yanis Varoufakis, Greek economist, academic, philosopher, politician, author of Talking to my daughter about the economy.
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[MatthewLevine]

I love Prof. Wolff - "Let's remember how a price gets raised: the owner raises the price." You have to start with the basics.

[DavidCodyPeppers.]

The reason I love and support you Mr. Wolf - the honestly and sincerity you express with your audience. Even in the most simple of things - such as the respect you give to someone's handle.

[alimohammadpour]

Unfortunetly my english is awful and l am foriegn, and only think I can say with this level of english :
I wish bests for you professor richard wolf .

[joshieecs]

People who claim minimum wage increase would cause prices to go up are denying basic supply and demand. And it's always extremely "pro-capitalist" people making that argument.

[NinaCantHearU]

Since Employers are not required to pay living wage and they don't.
Workers should only pay what they can in rent until wages catch up. Dammit

[meow-pqxc]

Love these shorts from Prof Wolff. He always explains things well! Thanks 👍🏻

[franktee]

Great program professor Wolf...!!..I'm 64 years old born in Transylvania and lived there for 23 years until I managed to escape from Ceaucescu s regime and I understand i really understand the difference between the two systems..!!...In my view both sides have positive and negative impact on the people s lifes and sometimes is hard to balance one against the other..!!!!...I live in Australia for the last 41 one years and I never regret our lives we allways want to be better and better than others and the "competition ".never stops because of the human nature...like selfishesnes greed or any other form of personal mental health issues..!!!..

[scottluthy]

As Marx said the owners of capital will produce where cheaper labor is located to allow for much larger profits going to the capitalists. Reagan started this by making it easy for corporations to ship jobs overseas. Plus, he proposed supply side economics which helped corporations and was horrible for workers.

[ronzundell]

Housing prices are going through the roof and are being bought up in record numbers. Average income earners are being priced out of the market. We bought our place after the housing crash in 2012 and the home has doubled in value since then. We could not afford to buy the same home today.

[gertrudewest]

Why do the wealthy upper middle class business owners think its my responsibility to rebuild their business off my back for poverty wages? No one is rebuilding my job for the pre covid wages and cost of living I lost.

[TheBigGSN]

So many people have zero clue what fiat money is.

[nickvanelzen]

Really digging the sweater, professor. Also good explanation

[youngmoneymahini]

I love that a comrade chimed in to ask a question

[melaniel.s]

A lot of manufacturing jobs went overseas, so that the companies can make more profit off of low wage workers & they don't have to pay benefits.

[davidromney]

Raising wages can mean that more products can be sold. But since the owners keep a portion of the value generated by labor, among other factors impacting the worker, it is not a 1:1 relationship as a rule.

[eccentricaste]

You should make more videos on inflation. So many questions are left unanswered for me. I'm almost at the point where I think inflation is artificial.

[ronedwards]

If this man ruled the world we would all be better off.

[dr.detroit]

I think there is truth here. Business will fight tooth and nail to keep the minimum wage from rising, warning that prices for everything will go up. But the minimum hasn't gone up since 2009, and prices and inflation have gone up 25% since then anyway.

[clarestucki]

Wolff is right on this one. There IS NO direct relationship between wages and prices. It was actually a pretty dumb question. But he's wrong about price inflation being "hard to control". There are two causes of price inflation. The first is the normal working of the law of supply and demand, and that one IS hard to control, But the main one is currency inflation (raising the ration of money in circulation to total output, (aka 'GDP'). That one is easy to control, but politicians hate to do it.

[pcproffy]

I crunched the numbers once for Walmart. They would be able to double the minimum wage from 7.50 to $15 an hour for about a 10% increase in prices. That would make a cheap Vietnamese-made $10 t-shirt now cost $11. That would be a huge benefit to the Walmart employees, but you would still be exploiting the Vietnamese labor.