What is the relationship between wages and inflation? does those two go together? The rate of wage change as the two rise and fall together over the business cycle. Do rising wages push up prices or do rising prices pull up wages? often times it is not easy to tell as wages and prices chase each other.
The growth in real wages over time. The real wage measures the actual amount of goods and services that the money wage can buy, the growth in the real wages is the difference between the percentage change in money wage and the level of prices.
Real wages grow an average 2 percent a year, it will need 50 years to doubling the real income whereas the prices double in a mere 30 days, so we can see on the other hand the growth rate of real wages are slowing significantly and wages are actually declining.
Inflation is defined as a sustained rise in the overall level of prices in the economy. An analysis of price changes in an individual market such as wheat or automobiles. Has the inflation pattern been broken? no we have been under mild or low inflation with prices rising? when was the last time in a span of five years that the prices of goods have been at standstill? never.
It is clear that inflation usually has its origins outside the labor market, however when management claims that that rising wages and the role of unions and collective bargaining is causing the inflation, it is rhetoric without empirical evidence.
I may be wrong but the way to counteract inflation after wages have been set is through Cost of Living increases (COLA) I think TWU had such a thing as late as the 1980s. It would however be very costly to haggle this now. But that being said perhaps a small wage increase tied to COLA would be the way to go. Maybe.
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