In 1914, Henry Ford increased his employees’ wages to $5 per day, which apparently was the equivalent of about $17 per hour in today’s dollars. He did not, however, jack up the price of a Model T. This was done primarily to reduce employee turnover, but it also had the impact of making it easier for his workers to buy a Model T. It created a virtuous cycle.
Today’s businesses are doing their best to keep wages down, but when labor shortages make that impossible, they increase prices (frequently at a rate higher than their cost increases) in order to maintain their profits. This has the effect of increasing inequality and decreasing the size of their consumer base, which makes them more vulnerable to a recession. It is Ford in reverse, and it won’t end well.