Justin Wolfers
Professor of economics and public policy at the University of Michigan, a non-resident senior fellow at the Brookings Institution, and author of a widely used i...
“I get a wage rise and I think I earned it. And then prices rise and I think those bastards stole my wage.”
Platypus Economics with Justin Wolfers · Money & Markets · August 2026
Wolfers is working through why people feel poorer when the data says wages keep pace with prices. The answer he credits to Betsy Stevenson is that most of the wage gain comes from switching jobs rather than from a boss handing out a raise, so the increase feels earned while the price rise feels done to you. That asymmetry, he argues, is most of why inflation stings the way it does.
Transcript
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…are competing for workers. If your boss doesn't offer you a raise, there's a good chance that you might lead for greener pastures. What do we know of anything about job switching right now? Is that something we measure? And if it is, do we know what's going on with it? What it's telling us? Yeah.
…often doesn't give them a raise. Market forces, though, means there are a bunch of other people willing to give them a raise. So therefore, they look around and they get a higher wage. So then the economists are right. The higher price did lead to a higher wage, but it took looking for a job in between. Now, two more things matter here. I know I'm going on, but I'm so excited by this question. I get a wage rise and I think I earned it. And then prices rise and I think those bastards stole my wage. Well, if the only way I got the wage rise was not just by continuing to do my work, but actually I had to change jobs. I had to search. I had to find the right employer. I interviewed them. They interviewed me. I brought my best to the interview. I'm even more likely now to believe that wage rise is not just compensation for inflation or market forces. It's about me. I actually had to do…
Yes. And it actually relates to my next question. So I wanted to also put this into conversation with an earlier episode you released about labor's share of income, which is declining. Could that mean that the fear people have about their boss keeping the gains, like, does it, could it actually…
Really great question. So if every time there's inflation, your boss gets to charge higher prices and doesn't pay you anymore, that would basically be equivalent to the boss taking a bigger slice of the company pie. More it goes to their profit, less of it goes to your wages. And so, yeah, I tried…
Yeah, it wasn't a super clear question. I just wanted to get a sense of how, yeah, how you see these as related to each other.
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