This is not a concept limited to those fond of chanting and drum circles. Connectivity underpins economics and always has. A change in wages or prices will ripple through the upstream economy as well as downstream and we are all familiar with the process. An input like steel or labor goes up and the manufacturer is compelled to hike the price of what they produce. Their consumer now has to either raise their prices to pay for it or demand higher wages. It is not called an inflation chase for nothing.
The push to increase the minimum wage will have ripple effects as well. The Congressional Budget Office released a report that indicated that some 900,000 people would benefit from hiking the minimum to $15 an hour but at the same time there will be a loss of 1.3 million of these jobs. The fast-food place that employs 20 to 25 people would be looking at an increase in annual labor costs of around $300,000. That kind of money could be used to import technology that replaces labor (touch screens rather than counter help). The other alternative is to raise prices but that is only feasible if there is consumer tolerance and often there isn’t.
The other factor that illustrates connectivity is the reaction of the other workers. The person with experience and skills that was making $15 now sees the inexperienced and untrained person making $15 and demands a raise to $20. The $20 an hour worker wants $25 and so on. The hike at one level doesn’t stop there.
Inflation feeds on itself and soon separates people into categories—those who can ask for and get wages to handle the inflated prices and those who can’t. The very people that a hike in minimum wages is supposed to help are the ones that will be least able to adapt to the higher prices.