With unemployment getting low, This Tequila Tastes Like I’m Not Going To Work Tomorrow Vintage Shirt can demand wage increases. This increases cost and cuts into the employers excess profits, also known as economic rents. To the extent that the employer has monopoly power, they will raise prices in response to the wage increases, in order to preserve those excess profits. Then, if unemployment remains low, workers, when they see the buying power of their higher wages decrease, will be in a position to demand even higher wages, Then, employers will again compensate by raising prices, etc, causing prices to spiral upwards.
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