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I imagine the CEO's renumeration is partly based on profits and share price. If that's correct then there's no incentive to cut profits or do anything to cause the share price to go down, even if temporarily.

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I wasn't being super clear: The profits might go down compared to the past due to changes in the labor market, but paying more wages might also be the best way to maximize profits for the future.

I agree you certainly wouldn't want to lower your expected profits just to have more employees.

If a company doesn't have enough employees to generate revenue then net income will decline regardless of the profit margin.

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