The company claimed that the higher wages the strikers had won were forcing it to increase prices. But then followed “a struggle to obtain another rise of prices” to pay the higher wages, spurring a further increase in the cost of living, “and so the ball rolls on.”Īn early appearance of the term “wage-price spiral” was in a 1937 Times article, “The Wage-Price Spiral,” about the repercussions of a strike settlement at U.S. An initial rise in the cost of living pushed workers to “clamor for an increase of wages,” Woolfolk wrote employers obliged. During the Civil War, prices roughly doubled in the North and went up until the Confederate dollar became worthless in the South. An early iteration appeared in “ The World’s Crisis,” an 1868 book by a newspaper editor named L.B. The idea of the wage-price spiral is a perennial story. It would be better if Americans let the Fed do its job, calming down and refusing to buy into these fears. It’s the Federal Reserve’s mandate to keep inflation under control. We are now seeing reports of newly assertive union members demanding higher wages and of greedy corporate price setters charging too much. Her answer lent support to the idea that the United States is about to enter a “wage-price spiral,” an economic theory that posits a greed-enabled vicious feedback loop between consumer price inflation and cost increases: Greedy businesses raise prices to increase profits, which causes greedy unions to demand higher wages, which causes businesses to raise prices again, and so on. 14, when asked about the drivers of the recent inflation, Jen Psaki, President Biden’s press secretary, answered with an example: “The president, the secretary of agriculture have both spoken to what we’ve seen as the greed of meat conglomerates.”
By December, the Consumer Price Index had risen 7 percent from a year earlier, the largest annual increase since the end of the Great Inflation, the period of entrenched inflation from 1965 to 1982. The word “Bidenflation” appeared in the news last summer, politicizing inflation and assigning blame for it.
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