With businesses across the country posting signs declaring they can't hire enough workers to reopen, wages are on the rise. Chipotle Mexican Grill
Unfortunately, that added cost to businesses is now being passed off onto consumers in the form of higher prices: Chipotle raised its prices by roughly 4%. Meanwhile, restaurant meals saw the largest month-to-month increase in price in over forty years.
Prices certainly didn't need another reason to rise. Bottlenecks in global shipping were already being caused by the rush that occurred when consumers began what they thought would be post-pandemic spending.
In June, inflation rates hit a 13-year record high, and that jump was matched by another 5.4% increase in July. Among the sectors that saw the highest price hikes are new and used cars, housing, food, and energy.
The jam in the auto industry has been in large part caused by a global shortage of the chips used to make new cars. That shortage cut new car production, which in turn drove up the cost of used cars.
The effect of rising prices hasn't been totally negligible; demand for carnitas or guacamole has dipped in Chipotle locations. So far, however, rising prices on restaurant menus haven't driven customers away.
"We saw very little resistance to the price increase," Chipotle CEO Brian Niccol said during a quarterly earnings call.
While demand for a few items might suffer, overall, companies have been able to avoid any major impacts on their bottom lines thanks to the continued strong demand for dining out.
"People are tired of cooking their own meals," Lyle Margolis, a senior director at Fitch Ratings, told NPR. "They're tired of cleaning up after themselves. They want to be waited on and they want to be social. And restaurants are a great place to do that."
Other companies have announced plans similar to Chipotle's duel increase in both wages and prices. Tyson Foods says it hopes to raise wages while offsetting the cost through increased prices on pork and chicken.
"Some of these lower-paying sectors are seeing higher wages, which in turn, hopefully, will bring more workers back to the labor force," Wells Fargo economist Shannon Seery told NPR. "But it does suggest that this inflationary environment is broadening out beyond the supply constraints that we were initially seeing from the re-opening."
Obviously, the rising price of housing as well as goods has made the increases in wages less impactful for workers. Businesses have to balance their concern for their bottom line with their desire to attract and retain workers.
"We have raised our wages and have increased the use of incentives to hire people,"
Brian Olsavsky, Amazon's
Moving forward, Federal Reserve Chairman Jerome Powell expects wages to level off as employees return to work and businesses adapt to rising labor costs.