Wage push inflation

Wage push inflation,

Definition of Wage push inflation:

  1. Economic concept which attributes higher prices to higher labor costs passed on to the consumers by the producers.

  2. Wage push inflation is an overall rise in the cost of goods that results from a rise in wages. To maintain corporate profits after an increase in wages, employers must increase the prices they charge for the goods and services they provide. The overall increased cost of goods and services has a circular effect on the wage increase; eventually, as goods and services in the market overall increase, higher wages will be needed to compensate for the increased prices of consumer goods.

  3. Companies can increase wages for a number of reasons. The most common reason for raising wages is an increase to the minimum wage. The federal and state governments have the power to increase the minimum wage. Consumer goods companies are also known for making incremental wage increases for their workers. These minimum wage increases are a leading factor for wage push inflation. In consumer goods companies especially, wage push inflation is highly prevalent, and its effect is a function of the percentage increase in wages.

Meaning of Wage push inflation & Wage push inflation Definition