I think the best way to increase your income is to increase the value and or the amount of your labor. When you increase cost without increasing value it's just inflation
I completely agree. Reasonable people will always pay for value. Agreeing on what's valuable and to what extent is another matter entirely.
Have you ever worked with someone and thought, "until meeting this person I never considered that annual pay decreases might make sense for some people"?
Most people have worked with someone who doesn't pull their weight but manages to stick around. Over time, this drag on productivity needs to be accounted for.
Other than getting fired, most people expect that wages only go up over time. So, to compensate for wage inflation (e.g. wages increasing without a commensurate increase in value provided), we have price inflation (same thing).
As with most economics concepts, there's a chicken and egg problem here. However, in my mind it doesn't really matter which came first. The concept just helps describe the forces that drive the cycle.