[Puffer Fish]

Some economists point out that the problem with trying to increase wages is that it will increase prices and cause inflation.

It is true that higher wages lead to higher prices. However, when this happens usually wages increase by a percentage greater than that of the price increases.
This is especially true if we are talking about adding to wages within the country's economy that otherwise would have not been spent there, and spent in another country.

This is one of the reasons why rising wages is a little bit of a problematic way to deal with inflation. What I mean is if you have a certain amount of inflation, caused by something else, and then wage levels rise to be equal with that level of inflation, then that will end up causing some more inflation, and then wages will have to rise even a little more to meet it.
This of course doesn't go on forever, but will establish some equilibrium point after a short period of time.

You can try to look at this mathematically and that may help understand the concept of what is going on here.

first inflation + inflation caused by wages = final inflation
final inflation (x) a certain constant = inflation caused by wages

Then you can use some linear algebra and substitution

The phenomena of what is going on is also similar to the infinite sum theorem, where wage increases keep leading to price increases, which keep leading to more wage increases, but incrementally less and less, until they establish themselves moving towards some final stable point.

Let's say that for every $2 in wage increases it leads to $1 in price increases.

If you start inflation off at 4%, then the additional inflation caused by wage increases would also be 4%, leading to a final 8% total inflation rate with an 8% increase in wages.

(1/2 + 1/4 + 1/8 + 1/16 etc) times the original 4% will be the additional increase

[Potemkin]

In other words, an infinite sum can still converge to a finite limit.

Meanwhile, back in the real world, workers' representatives will demand the maximum pay rise they can hope to obtain, and employers' will offer the minimum pay rise they think they can get away with. Once each term in the infinite sum becomes smaller than a certain amount, then it's not worth negotiating over. And, judging by the history of British industrial relations in the 1970s, workers will always demand wage increases significantly above the rate of inflation.

[AFAIK]

Raises should always be measured against inflation otherwise you risk being short changed and left behind. Industrialist have figured out a way to cheat on inflation metrics though; by ignoring the cost of housing and transport. These are just the two biggest expenses workers face after all.

[Steve_American]

Raises should always be measured against inflation otherwise you risk being short changed and left behind. Industrialist have figured out a way to cheat on inflation metrics though; by ignoring the cost of housing and transport. These are just the two biggest expenses workers face after all.

Is this where the normally calculated CPI goes wrong.\?
There some other areas of price rises that need to be included.
Education, college, etc., fees in public schools.
Health care and health insur.
Childcare.

[Rugoz]

And, judging by the history of British industrial relations in the 1970s, workers will always demand wage increases significantly above the rate of inflation.

Right, and inflation will accelerate if they can get it and productivity doesn't increase correspondingly.

[Steve_American]

@Puffer Fish,
When I was growing up, things were just fine [except black's rights, women's rights, and other minority rights].
OTOH, perhaps there was a problem that capitalists were not getting enough reward for what they spent to increase worker productivity.
That is, we have seen the superimposed graphs of worker's productivity vs time; and wages vs time. From 1946 until the mid-70s these 2 graphs could be seen to track each other almost exactly. Then in the late 70s the graphs diverged with productivity rising faster than linearly while real wages [calc. with the flawed CPI] were flat. IMO, with a proper CPI real wages were going down.
What happened? Clearly, the economic system was changed as neo-liberalism took hold of America.
Now on that graph I can see that the capitalists were being screwed, just like since 1977 the workers have been screwed.

IMO, what should have happened was that the system should have been changed so that the 2 groups [workers & owners] were getting the proper share of the productivity growth.
OK, now, what is that proper share each gets? This is a political question. IMO, something between 60-40 and 40-60 seems right. Maybe between 70-30 & 30-70. However, I think the workers should get more than half, but I'm no expert.

In my opinion, one of the key features of the system in the 50s & 60s was the high taxes on corps and the rich. This made it not as useful to screw the workers if the Gov. would take the savings (now higher profits) away anyway. This one reason I have suggested here and other places that corp. profits taxes be graduated with a top rate of 90% or even 99%.
. . . The USSC has said that corps are to be more like people. I hate this; for example, should corps be allowed to vote in all elections? Anyway, if corps are more like people than they can suffer a progressive income=profits tax.
. . . And remember, I want many changes locked into the Constitution with amendments. It'll never happen, but it is my opinion that it would end the endless chipping away at rights by the rich.
. . . We think we have solved a problem, and next thing we know the rich have un-solved it. See Glass-Segal law.