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How Capitalism Doesn't Work: "Wages Continue to Grow, Good for Workers but a Worry for the Fed" [1]

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Date: 2023-04-28  

Reflex reporting according to the guidelines of the .1% on what is good for the economy and what is bad.

From The NY Times:

Wage growth remained strong in early 2023 — good news for workers trying to keep up with the rising cost of living, but a likely source of concern for Federal Reserve officials as they try to tamp down inflation without causing a recession. Wages and salaries for private-sector U.S. workers were up 5.1 percent in March from a year earlier, and up 1.2 percent from December, the Labor Department said Friday. That was the same growth rate as in December, and defied forecasters’ expectations of a modest slowdown. A broader measure of compensation growth, which includes the value of benefits as well as pay, actually accelerated slightly in the first quarter. The Fed has been raising interest rates for more than a year in an effort to cool off the economy and bring down inflation. Wages are a big piece of that puzzle: Policymakers believe that the labor market, in which there are far more available jobs than workers to fill them, is pushing up pay at an unsustainable rate, contributing to inflation. They are trying to strike a delicate balance, raising borrowing costs enough to discourage hiring and ease pressure on pay, but not so much that companies begin laying off workers en masse.

emphasis added

No.

Just no.

Workers starting to close the pay gap that has created record inequality since the 1980’s is inflationary and officially a bad thing that government policy must address. Rising inequality that sees the rich getting richer than ever is okay and not inflationary. Record corporate profits driven by price gouging and de facto monopolies are okay and not inflationary.

...But Fed officials worry that if companies need to keep raising pay, they will also need to keep raising prices. That could make it hard for inflation to return to the central bank’s target of 2 percent per year, even as the pandemic-era disruptions that caused the initial pop of inflation recede.

You know what would keep prices down? Actual competition. Real anti-trust policy.

Rising pay because of a demand for workers is supposed to be how supply and demand capitalism works, isn’t it? It’s funny how the people screaming about the heavy hand of government regulation of ‘free markets’ is tyranny and socialism — except when it’s used to keep workers down.

Workers consolidating their power through unions is a bad thing — but corporations merging into ever bigger players is a good thing “because economies of scale and greater efficiencies keep prices low.” Except when they don’t.

SOS-DD.

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[1] Url: https://www.dailykos.com/stories/2023/4/28/2166408/-How-Capitalism-Doesn-t-Work-Wages-Continue-to-Grow-Good-for-Workers-but-a-Worry-for-the-Fed

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