Rising fuel prices and corporate profits — not wages — are chiefly to blame for inflation
With U.S. inflation surging at the fastest pace in 40 years, many companies are blaming higher prices on having to hike wages for their workers, including Amazon, Starbucks and Chipotle.
Consumers are getting the message. As one reader of the Fort Worth Star-Telegram wrote to the editor: "You wanted higher wages, products made in America? Then you better accept inflation," she said. "You asked for an increase in minimum wages. Which led to an overall increase in pay. That increase has been passed on to consumers."
But while corporations may point fingers at rising pay, economic data show wages are far from the main driver of inflation. The prices growing fastest today — cars, fuel, housing and furniture — point away from wages and toward other explanations, such as goods shortages or companies padding their profit margins. More broadly, it has long been clear that the relationship between what workers earn and what consumers pay has been tenuous at best.
If higher worker pay was truly the main driver of prices, it follows that more labor-intensive service sectors of the economy would be seeing the largest jump in consumer prices. Yet the inflation picture today shows the exact opposite: Price increases for goods are outstripping services by a factor of three.