This is an adapted excerpt from the Oct. 4 episode of “Morning Joe.”
The Biden administration woke up to some good news on Friday. The U.S. economy added 254,000 jobs in September, blowing past the 150,000 expected. Not only did September’s numbers beat economists’ expectations, but data from previous months were also revised upward and the unemployment rate fell from 4.2% in August to 4.1%.
When wages go up, prices likely do as well.
This is good news. By almost all measures, we’ve got a strong economy, except for one thing that matters an awful lot: how Americans feel about it. It’s a reason why Donald Trump continues to poll better among likely voters on handling the economy.
That feeling is largely frustration that prices are still too high. I’m not talking about the pace of inflation — just the fact that everything seems to cost more.
Now, the administration and the Harris campaign point to all the recent positive economic news, but they don’t always connect the dots to one reason behind those prices: the rise in wages.
Yes, price increases can be due to “greedflation.” Corporations have held wages low for years while raising prices and pocketing big profits. Many businesses could increase wages and benefits without higher prices. That’s why many politicians, including Vice President Kamala Harris, want to investigate and go after those engaging in price gouging.
However, a lot of workers — especially lower-wage earners — have gotten a raise in recent years. And when wages go up, prices likely do as well. We want lower-wage earners to be able to support their families, but if you’re paying people who work at fast-food joints or pizzerias $20 an hour, then you’re not likely going to get $1 menu items anymore, and you’re not going to get a pizza that costs less than $20.
Here’s an example: My son works at a deli and takes home $20 an hour for making sandwiches. When my mother rolls in to pick him up from work, she can’t understand why the sandwiches are $22.
When my mother rolls in to pick him up from work, she can’t understand why the sandwiches are $22.
But it’s not just about “greedflation” and price gouging. Employers are paying people more and it’s going to impact all kinds of companies. And if employers pay their workers more, especially small business owners, it has to come from somewhere, and often that means raising prices for consumers.
Let’s not forget, this increase in wages is also good news. Wage growth has been rising fastest for the lowest-wage workers. That’s a good thing, even if it means we might have to pay a little more for fast food, pizza and sandwiches.
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