"According to the law of supply and demand this would result in wages rising rapidly and without bound"
No it doesn't. Having to poach employees to increase your labor pool doesn't mean that you are willing to raise wages without and bound. A food crisis is where an inelastic demand meets a hard supply limit, so prices can go up dramatically, but they don't go up infinitely, not even in a famine.
Supply and demand does not allow for unbounded rises in prices because demand is never infinite. Rather, prices go up to the highest amount demand will allow for. For things like food for which demand is inelastic, prices can go up pretty high and people will eat into their savings if they have to, but labor will more likely be limited by the marginal productivity of individual workers.
> Supply and demand does not allow for unbounded rises in prices because demand is never infinite. Rather, prices go up to the highest amount demand will allow for.
Generally, yes, but it's not an absolute.
Each time an employee is poached for more money, that person has more money to spend; done frequently enough, this will increase the velocity of money and cause general inflation or even hyper-inflation.
I'm only speaking hypothetically because folks are talking about 0% unemployment.
No it doesn't. Having to poach employees to increase your labor pool doesn't mean that you are willing to raise wages without and bound. A food crisis is where an inelastic demand meets a hard supply limit, so prices can go up dramatically, but they don't go up infinitely, not even in a famine.
Supply and demand does not allow for unbounded rises in prices because demand is never infinite. Rather, prices go up to the highest amount demand will allow for. For things like food for which demand is inelastic, prices can go up pretty high and people will eat into their savings if they have to, but labor will more likely be limited by the marginal productivity of individual workers.