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Reply #11: There is no blanket answer. [View All]

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DefenseLawyer Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-06-10 12:34 PM
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11. There is no blanket answer.
Costs can only be "passed on to the consumer" when the consumer will continue to consume the product at the higher price. Generally speaking most businesses already sell their products for the highest price the market will bear. Thus, in those cases rising labor costs will come from profits rather than being passed on. The cool thing is that higher wages lead to more spending, more demand and ultimately high prices for goods and more profits. That requires taking a long term, big picture look at the economy. Most people in business are only focused on profits next quarter for their own company, not the big picture. So we see companies moving jobs to Mexico in order to immediately see dramatic cuts in labor costs, only to see in the long run higher unemployment and stagnant wages at home means there are fewer consumers who can afford to buy new cars and refrigerators coming back from Mexico.
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