To understand the problem, I want to introduce a concept: the scalable worker — a worker whose output can be scaled easily and economically. For scalable workers, their income doesn’t increase because the price of their product or service goes up. One example is the software industry. Once Windows is developed, Microsoft does not need to spend the same cost to produce each additional copy.

By contrast, non-scalable workers have productivity that is inherently limited, and any increase in their income will generally lead directly to an increase in the price of the product or service they provide. Examples include the food industry: a waitress can only serve a certain number of tables and a certain number of customers. A doctor can only see a certain number of patients each day. Therefore, if their income rises, the cost of their service or product tends to rise as well.

Sometimes, given market development, the role of scalable and non-scalable workers can shift. For instance, artificial intelligence could increase the productivity of doctors and make their work more scalable, while an e-commerce platform could saturate its market share and cease to scale further.

The problem in the USA: in recent decades, with the globalization, the USA has exported a lot of scalable jobs. Domestically, a larger share of the workforce is in non-scalable work, then income increases are more likely to be tied to price increases, which in turn push up inflation.

There is no easy way out. Generating more scalable jobs appears to be the only viable solution. Without structural-level change, the cost of living in the USA will only continue its upward trajectory.

This is basically my theory and I would like to hear feedback to it. Thanks.