[cudgy]

No. I am suggesting that laborers get more of the profits and prices do not rise. Business owners actually get less profit. You keep assuming that business owners can and will just raise prices and the markets will bear it, but this is not always the case.

[typest]

Let's say there is a masseuse. They use their labor to give massages. They are also self employed, so they own their own business. If the cost of labor rises, the masseuse makes more money from giving massages, but this necessarily means that the price of their massages is going up (the cost of labor and the price of the massage are the same thing). Okay, let's take this one step further.

Let's assume that there is a massage parlor, with masseuses who do not own the business, and that the owner of the business has some profit. Cost of labor goes up, and now the business owner no longer has any profit, and it is earned by the masseuses. Yay! However, what happens if/when cost of labor goes up further, and there is no more profit? Prices will rise.

> You keep assuming that business owners can and will just raise prices and the markets will bear it, but this is not always the case.

I think this is my point actually. Markets won't always bear it. Sometimes they will raise their prices and the markets won't bear it, and then the business will no longer exist, and society won't be able to pay for it. E.g., the business of a hotel that makes everyones beds every day, or the business that builds a beautiful NYC building adorned with hand carved stone across the entire facade.

[cudgy]

> Cost of labor goes up, and now the business owner no longer has any profit, and it is earned by the masseuses.

This assumes the incremental cost of labor has eaten up all the profit, which is rarely the case. When it does happen and increases in prices are not supported, the viability of this business model is suspect. Basically, the market does not value the “middleman” business owner that does nothing more than rent space to a masseuse. Are they really even a masseuse business or are they an office space rental company?

[gameman144]

> When it does happen and increases in prices are not supported, the viability of this business model is suspect.

I think you and the parent poster are agreeing here. Clearly there are degrees to which profit can be reduced, but if a business isn't growing its own profits at the same time as rising labor costs, then at a certain point the business will be just breaking even. Past that point, there is no alternative besides raising prices or shuttering the business.

This is the OP's point about certain businesses maybe not being viable, but society being worse for it. For instance, maybe hotels in all but the busiest cities aren't supported by the market at higher labor costs. Good in terms of workers not being paid peanuts, but bad for anyone trying to drive across the country (and society as a whole).