A Sort of "I Told You So" Moment: Inflation

We talked about this.

Well, not you and I. In this forum I choose not to talk much about politics. But it does not mean I will never bring up certain things that have a political slant to them. Why? Because as uncomfortable as political discussions can sometimes be, they are important ones to have from time to time. Even if they are unpleasant to some people.

Few things affect our lives like political issues do.

But certainly in other places where I do talk about political issues, when the issue of higher wages and the push for a $15 minimum wage was the highlight of conversations, I had much to say about it.

Why? Because I did not support it.

Now, don't get me wrong here. It is not that I do not support higher wages. That's an important thing to be clear about. I am not in support of artificial wages. What I do support is a fair wage, and trust me. There is a difference.

The fact is that regardless of whether or not one believes that corporations are nothing more than money mills, with greed driving the whole organization, and deep pockets as far as the eye can see—the fact is that this is largely false.

What I talked about was that no matter what wage a company pays, there is a cost associated with it. Someone has to pay that cost. The money for wages does not just come out of thin air. It's not a pretend number that a board of directors comes up with. It is a number based on industry standards, balance sheets, productivity, and a variety of other factors.

I say this not as a conservative. I say this not as a republican. I say this as someone who has been in and around business practically my entire life. I see those balance sheets and those profit and loss statements. I know what a company's margins are and what they can afford to pay for certain things.

I see where the money is, and where it is not.

So, when someone sits before me and says, "We demand $15 an hour and they can afford to pay it," I dig deeper and see if they actually can. And the answer is no they cannot.

I am talking about this now because right now we are dealing with runaway inflation that is probably only going to get worse before it gets better. And while there are many things causing the inflation, labor is without question a big part of it.

Company after company is announcing price hikes. And among the things they cite as a reason?

• Supply chain issues

• Labor shortages

• Rising cost of raw materials

• Rising cost of transport

All of these things have a strong labor component to them, of course of which wages are a large part.

Lack of available labor means companies have to offer more incentives to attract employees to come and work for them. Better benefits (which cost money), better wages (which cost money), sign on bonuses (which cost money) and on the list goes.

Raw materials costs rise as well for all of the same reasons. And of course you add in the supply chain issues and this only exacerbates the problem because having supply that cannot meet demand inherently makes the cost of the goods more.

And then there is the transport component. And major trucker shortages. Which again just means you are going to have to offer more benefits, sign on bonuses, continued work incentives, and higher wages to get driver's behind the wheel to bring goods to the marketplace.

I say it all the time, something that our parents said to us many times when we were kids. "Money does not grow on trees."

As such, company's do not have printing machines where they can just produce whatever dollar amount they need to cover whatever expense it is they have, including the cost of labor.

Again, someone has to pay for it all. And that someone is you. It's me. It's us. It's all of us.

I said all along that anyone can clamor as much as they want for higher wages. They can shout from the hilltops and demand it. They might just get it if they shout loud enough or demand it hard enough that finally someone breaks and says, "Okay. Here you go."

Now we have what was begged for. But guess what? It doesn't mean anything. Because inflation is now eating away at any new dollars someone might be getting in their paychecks.

I tried to say to people when the discussion was hot and heavy, "Slow and steady wins the race. If we artificially inflate wages it will have a negative ripple effect. You won't get higher wages actually because you will simply have to pay more for everything."

In other words, you will be right back where you started. And you may even be worse off than you were before.

As I have always said, higher wages are not a bad thing. But if there is nothing behind the higher wage to actually be able to pay for it, then nobody wins. Nobody gets anything. All you get is a higher number on your check stub.

Nothing is free in this world. Everything costs money. And there is only ever one person who pays for it. You. Me. Us.

What's that old saying? Be careful what you wish for, you might just get it. And here we are. But guess what, it isn't better because of it. It changed nothing. It helps no one.

Your food costs more, your gas costs more, your utilities cost more, your household needs cost more, everything costs more.

Because, not to sound like a broken record, someone has to pay for it. And that's you. It's me. It's us.

Congratulations, folks, on your pay raise. It appears you will need it to pay for it.

Lead image courtesy of Pixabay, user Foto-Rabe. Money Burn Dollar - Free photo on Pixabay