If you raise the price of Official I Wear Pink For My Daughter Shirt labor, that’s passed on as the cost of goods as a raise to consumer prices. The rise in prices offsets the wage increase, and just leads to inflation, with no change in wage stratification. Wage increases tie to employee value. Specialized skills, experience, and productivity. Some jobs more than others – that’s why “entry-level” positions pay low – they’re “entry-level” and not meant to be stayed at for the term of a career lifetime. You’re not paid what you’re worth, you’re paid what it costs to replace you, your skills, and your experience. You’re conflating two different things: COGS and regional variations in wages as a percentage of the cost of living.
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In your example, the video game price is Official I Wear Pink For My Daughter Shirt the same across the country. Because it represents the price needed to recoup COGS plus profits. That’s the same for the producer regardless of where it sells. But will change for the distributor and retailer based on their costs for rent, advertising, etc. That’s different from someone doing the same job for different wages in places where the cost of living is different. In the end, the one paying higher wages will either charge a higher price or earn a lower margin on their service, meaning. HCOL areas are actually less profitable, overall, relative to the market.
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