Because if everyone raises their prices, the wage increase then effectively makes no difference.
If everyone raises wages, they have to raise prices. For the restaurant, this means they have to charge more for the same service, and they have to pay more for their supply chain (because they also increased their prices).
For the worker, that means they will pay more for things and services they need/want, because every other business will suffer from the same issues and be forced to raise their prices.
All this to say, the worker's purchasing power decreases if everyone raises wages, and that is the definition of inflation.
Citation needed. I can find plenty of studies that show it doesn’t. [0] Raising wages at the bottom doesn’t increase prices across the board, and so this benefits folks at the lower end more than it hurts.
> Higher prices for goods and services—stemming from the higher wages of workers paid at or near the minimum wage, such as those providing long-term health care—would contribute to increases in federal spending.
>Because if everyone raises their prices, the wage increase then effectively makes no difference.
Not really. The relative elasticity of various goods and services (including labour) will determine which parties ultimately shoulder the cost. The additional costs could cut through margins or they could be passed on.
> Because if everyone raises their prices, the wage increase then effectively makes no difference.
That’s only if everyone makes about the same, which is less and less true due to rising wealth inequality. As it stands now, there are people making $200k/year and people making $30k/year, raising prepared food prices isn’t going to chip off everyone’s income the same way.
A rise in interest rates would have much more effect on upper income buying power than a $5 increase in the cost of lunch.
> Because if everyone raises their prices, the wage increase then effectively makes no difference.
Depends heavily on specifics. Like, which goods and services? How much of someone's purchases do they represent? Are they substitutable? Restaurants deal in the substitutable and minority part.
The relationship between per-unit price and labor cost per unit also matters quite a bit. If labor costs per unit are small, it may not take a big per-unit price bump in order to give labor a substantial raise.
It's interesting that nearly everything that might benefit the lower and lower-middle classes seems to lead, inexorably, to inflation: UBI, a living wage, decent benefits, the list goes on. One might almost conclude that inflation has become a lazy boogie man, to be trotted out for propagandist purposes whenever change is suggested.
If everyone raises wages, they have to raise prices. For the restaurant, this means they have to charge more for the same service, and they have to pay more for their supply chain (because they also increased their prices).
For the worker, that means they will pay more for things and services they need/want, because every other business will suffer from the same issues and be forced to raise their prices.
All this to say, the worker's purchasing power decreases if everyone raises wages, and that is the definition of inflation.