The premise of your question is not a certainty. Whether and how much of a price increase occurs depends on how much of a margin there is, and what price points are being targeted. If a widget costs $3 to make and sells at $10, then increasing the production costs to $5 may only change the profit, and not the final price. If a widget costs $9.50 to make and sells for $10, then the same $2 increase in per-unit production price would increase the price.

Which scenario we're in depends on the industry, but overall I don't trust the rhetoric of costs always being passed down to society as a whole, because it works to undermine any labor gains.

I think the sort answer is: “We don’t know”. We have tonnes of history to go by here. Labor costs have increased and decreased millions of times all over the world since the industrial revolution. If there was a universal pattern such as: Increased labor costs always increase product prices then surely we would know about it by now.

However we don’t have such a pattern. History has shown us that it is not so simple. Workers dissatisfaction actually costs workers productivity so a low payed worker might actually yield worse prices then a high payed worker.

Another thing to consider is that a lot of the companies which have high worker dissatisfaction and high chance of strikes, are multi-million dollar companies with highly payed CEOs and big shareholders that sometimes pay them self dividends and may have an offshore account for tax hiding purposes. Not only is this super frustrating for the workers of these companies, but consumer prices suffer as well. After all they could make the product cheaper to produce if less money was being diverted to the rich.

> After all they could make the product cheaper to produce if less money was being diverted to the rich.

Owning shares in the company means you'll get a share of the profits and dividends. Anyone can buy shares. Many companies go further and provide employee stock purchase plans and stock options.

Microsoft created something like 10,000 millionaires in the Seattle area in the 90's. Amazon has surely done something similar. Microsoft and Amazon millionaires abound around here.

> Microsoft and Amazon millionaires abound around here

Indeed, and Microsoft and Amazon products aren’t actually cheap either. I bet Microsoft could have sold their software somewhat cheaper, and AWS user could be saved a pretty penny if these companies focused less on creating millionaires.

Instead of being unhappy that Microsoft/Amazon aren't sharing the wealth with you, buy some stock and get your share.

That is entirely unfair and loosing the point. First I’m not gonna gamble my money on taking profits away from different companies. Second, even if I had the knowledge and the will to buy correct shares and make money by buying shares, that money probably deserves to stay with the workers that actually produced it. I personally don’t want to be the person getting the money that fellow workers earned but didn’t get.

But this is all besides the point. The point is that money siphoned to shareholders and CEOs is just as costly as money used to pay workers more. Both have the potential of ending up as increased consumer price. If your workers are demanding more pay, and you are a CEO of a multi-million dollar company, you could very well finance the increased pay by cutting bonuses to upper management and canceling dividends, as opposed to raising the price of the products.

> First I’m not gonna gamble my money on taking profits away from different companies.

Now we're getting somewhere! A true story. A friend of mine was offered a job at a startup. He was offered a salary plus a percent of the profits. He said he didn't want to take any risk, and wanted a higher salary instead of the percent. He got it.

The company was successful, and was eventually sold. The employees who opted for profit sharing got a handsome bonuses. He did not. He was incensed.

Do you think his anger was justified?

Yes. The company should never have given this option in the first place. Instead they should have given the workers a fair share of the profits (or hopeful profits in case of a startup), and then increased everyones wages in porportion to how the value of their work increased.

It is not in the interest of the worker to gamble their salaries like this, and it is often used as a tactic to pretend you are paying more then you are... Most options given to workers amount to less then two weeks of traditional salaries but the average worker experiences it as far more.

But again all of this is besides the point. I started out with critiquing multi-million dollar companies (not startups) with paying their shareholders and CEOs so much that it is just as likely to result in higher consumer prices as high worker pay. This critique still stands.

> Yes.

You believe that when a man makes a bargain, he should be angry if he's held to it?

> it is often used as a tactic to pretend you are paying more then you are

Not the point. The point is he wanted more money instead, got it, then was angry because he didn't get a share of the profits on top of that, which he explicitly bargained away. He was not a man of his word.

A market economy depends on people making agreements, and those agreements being enforceable. Anything else is simply unworkable.

> This critique still stands.

I read it as wanting a share of the profits without any risk. Things just don't work that way.

  > Many companies go further and provide employee stock purchase plans and stock options.

those are all really great, but what i really want are the shares with voting rights (^_-)

Shares come with voting rights. Stock options don't until you exercise them, then you get voting rights.

yes usually, but some companies split the shares by class, for example google class c shares are given to employees but have no voting rights

I think it’s kind of a misunderstanding that this is how it works. Increasing wages can save companies money by improved productivity and reduced turnover. Moreover the price of the product is dictated by market demands and owners may simply have to take less profit in order to sell at market price. That is of course if increased productivity doesn’t completely cancel out the wage increase. Finally higher wages means people can afford higher prices to some extent.

True, that is the happy-path scenario. There are a few steps in there that depend on the circumstances. There are other scenarios don't go that way too.

Certainly. But we similarly cannot say as a fact that this will raise prices.

No. For example my Whole Foods is finally installing self-checkout registers. The labor shortage is so acute, that even the cashiers are complaining about how much extra work there is and how customers have bad attitudes for long lines.

This doesn't compute at all!

Wages are a fraction of the final product price - there are material costs, facilities, rent, etc. So even if we double the minimum wage, the cost of goods sold would only increase 30%-40%, so the folks depending on minimum wage have a major increase of their quality of life.

> businesses increase costs to meet the new cost of labor requirements

These strikes, more often than not, are happening at larger firms (e.g., incumbent monopolies like John Deere, Kelloggs, Nabisco, etc.) with much larger profit margins. They would sooner wear the costs and pay lower dividends than hurt their competitive margin. But I do take your point that small-to-medium sized business take the brunt of top-down government policy changes like a minimum wage increase, and this can hurt competition.

You completely misunderstand how pricing works.

This sort of comment, even if true, benefits no one and is better left untyped.

To an extent, yes, but if inflation is high it's a false increase in value anyway.