The Federal Reserve Using the Wrong Rulebook
Two years ago, when the Fed started raising interest rates to fight inflation, I worried.
The professor’s alarm flashed red. Recession-inducing tactics to discipline workers are flawed, costly, and outdated.
workers’ wages Outperformed productivity for decades— The Economic Policy Institute has followed these numbers closely. In 2021, Georgetown economist Sharat Ganapathi will publish the findings. The surplus of workers turned profit.
Employers have the power to set wages. They are not the passive agents you learned in baby economics class operating with a knife blade to minimize prices and force you to pay the market wage. Employers oppress workers and protect their profits by oppressing consumers. Consumers are now feeling price pressure. But inflation is not the workers’ fault. The Federal Reserve operates on the wrong rulebook, thinking that creating unemployment is the best way to solve inflation.
So I can see why you worry that the Federal Reserve thinks the economy is hot on the first Friday of every month. Because more workers are not afraid. And pay a little more.
Nice stable labor market
The unemployment rate is just 3.5% Employment growth – 236,000 roughly in line with labor supply growth.
The slowdown in employment is concentrated in banking, finance and technology, where headlines about layoffs dominated the news last month. Employment is rising in leisure and hospitality as people flock to restaurants and hotels, and wage growth is expected. Unsurprisingly, wages in the information sector of the financial industry have fallen, and so has the turnover rate. Workers twitch in the department.
It’s good for society that minimum wage workers are getting wage increases. Part of the reason is that their turnover rate is among the highest in society. McDonald’s, Hilton may feel a little more loyal as employees threaten to leave. Higher wages help retain and attract workers. Hospitality workers in their spare time are among the lowest paid in our society, earning $20.96 an hour. However, my salary is $0.16 higher than last month. The average retail wage was $23.79, up just 1 cent from last month. The highest-paid workers in society are skilled utility workers and union workers, whose wages rose 46 cents from his $49.02 last month.
That’s it, all workers are a little more worried. The job turnover rate has not increased and the unemployment rate due to job separation continues to decline from 15.3% in January 2022 to 14.2%. (Looking at Table A 11 in Friday’s BLS report)Thursday’s Labor Report – JOLTS – backs up the view that workers are a little nervous. The average turnover rate is unchanged at his 2.6, but hard-hitting financial sector workers are less willing to “take their jobs and shove them away.” Their smoking cessation rate has decreased. (See Table 4 in ) sway.)
Job turnover in low-wage accommodation and food service services is on the rise, which helps explain the peppy wages at the bottom. Bottom line: the labor market is stable but not overheating.
The Federal Reserve should stand still
This morning’s report showed a nice stable and strong market for workers. Not too hot, not too cold. The Federal Reserve should see nothing to induce it to continue raising interest rates. Here there is no indication that unemployment should be used as a disciplinary device to scare workers, so they do not ask for a raise.
The Federal Reserve should delay rate hikes and not rely on outdated 1970s theories to trigger a recession and fight inflation.
We see agreement from the financial sector. Ben Vaske, investment strategist at Orion Portfolio Solutions, said this morning: Pause rate hikes. “
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