Workers haven't sacrified enough: Federal Reserve

At press time, Wall Street showed big gains after government jobs data reported workers’ wage growth slowing and job gains holding steady, and the Federal Reserve signaled that its long string of interest-rate hikes will remain necessary to fight inflation.

In other words, workers haven’t sacrificed enough on behalf of their employers.

When the stock market celebrates and prospers at the misfortunes of regular Americans, you know something’s screwy.

WAGES

The average hourly pay growth slipped to its slowest pace in 16 months, the Bureau of Labor Statistics said.

Wages for U.S. workers were up 4.6% in December from a year earlier – the smallest raise for workers since two summers ago. That also compares with a recent peak of 5.6% last March.

But such weaker pay improvement hurts workers, obviously – especially when they’re already not keeping up with inflation.

President Biden economic adviser Jared Bernstein said the administration hopes for growth in inflation-adjusted wages.

“What’s important to us is that families have the buying power through their paychecks to get ahead,” he said.

Hoping may not be enough with Feb Chair Jerome Powell.

UNEMPLOYMENT

The jobless rate has fallen slightly, from 3.6% to 3.5%, matching a 53-year low, the Labor Department said. Common sense might conclude fewer folks unable to work is bad news. But not the Fed.

JOBS

Employers added 223,000 jobs last month – 2022's monthly average was 375,000 – so many consider that a demonstration that the economy remains healthy. However, the Fed sees strong job growth as troublesome because it lowers the jobless rate, which could keep pay gains high.

Powell in recent remarks blamed inflation on strong job growth, which can force employers to raise pay to recruit and retain workers, and tempt them to raise prices to pass on higher labor costs to their customers without sacrificing profits..

Of course, as Economic Policy Institute analyst Elise Gould told Press Associates Union News Service this month, the Federal Reserve is so concerned about inflation that its interest rate hikes, intended to curb that, could hold back workers’ pay instead.

When that happens workers-as-consumers cut their spending or go into debt, neither of which is good news for the economy.

In October, I reported a comment from Roosevelt Institute economist Josh Mason, who said, “If you endorse today’s rate hikes, and the further tightening it implies, you are endorsing the reasoning behind it: ‘Labor markets are too tight, wages are rising too quickly, workers have too many options, and we need to shift bargaining power back toward the bosses’.”

Such a one-sided approach is “an objectively anti-worker policy,” according to City University of New York teacher Samir Sonti. “This approach is also plain wrong-headed.”

The result is making workers accept less compensation so business can continue to rack up record profits,

If you think that’s irrational bordering on malicious, you’re not alone. As Sonali Kolkaytkar of Free Speech TV said, “If more money in poor people’s pockets is supposedly the reason for inflation, why is more money in rich people’s pockets not an incriminating factor?”