The Federal Reserve Wants To Lower Your Wages
Federal Reserve Chairman Jerome Powell took aim at American laborers during a press conference early last month, announcing he wants “to get wages down.” Powell cited better pay as the culprit behind soaring inflation rates across the country, saying the Federal Reserve is about to raise interest rates by half a percentage, ostensibly to slow inflation, but economist and professor Dr. Michael Hudson says this is the wrong way to go.
“Inflation is basically the excuse that right-wing governments have for trying to lower wage levels by blaming the inflation on rising wages,” Dr. Hudson said on a discussion panel the following week. “What economists like to blame it on is labor, on rising wages, on government social spending, and of course on Russia trying to break away from America’s unipolar international order.”
Professor of Economics at the University of Missouri–Kansas City, Dr. Hudson was a mentee of Mr. Paul Volcker, who served as Federal Reserve chairman under the Carter and Reagan administrations. According to Hudson, Volcker often said that “the big concern of finance is, wage gains will mean that the purchasing power of all of our investors, who have bank accounts and stocks and bonds, will have less power over wages. And our class interest is in increasing our power over wages, so we’ve got to keep wages down, even if it causes a recession. That’s basically the Federal Reserve’s policy.”
Powell wants to regain that economic stranglehold on the working class by reducing wages. “There’s a path by which we would be able to [get] demand moderate in the labor market and have—therefore have vacancies come down without unemployment going up, because vacancies are at such an extraordinarily high level. There are 1.9 vacancies for every unemployed person. 11½ million vacancies, six million unemployed people.”
The legacy of this chokehold policy is palpable in Chairman Powell’s attitude: “By moderating demand, we could see vacancies come down, and as a result—and they could come down fairly significantly and, I think, put supply-and-demand at least closer together than they are, and that would give us a chance to have lower—to get inflation—to get wages down and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially. So there’s a path to that.”
That “path” Chairman Powell keeps talking about isn’t a path. It’s a plan to punish the already-working population of the United States by reducing their earnings. In this historic moment where job openings outnumber the unemployed, the scramble to suppress the working class, embodied by Chairman Powell’s reactionism, is suspect.
Biden in support of Chairman Powell’s decision
“Chairman Jay Powell came right out and announced that the Biden administration/Democratic Party policy is, ‘to get wages down and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially,’” said Dr. Hudson. What would this mean for California citizens struggling to pay rent in Los Angeles and San Francisco? How about rural Central Valley families already scraping by on the bare minimum?
“In other words, you want to keep the finance, insurance, and the stock market/real estate sector going; you just want to squeeze down wages somehow. So the objective of all this is that, if labor wants to get a job, and the health insurance that goes with it, then labor will have to lower its wage levels. That’s the current US government policy.”
Health insurance is a hostage situation, and these policies continue under Biden’s presidency. Chairman Powell is serving his second term as Fed chair. He was nominated and retained by President Joe Biden, having been installed by former president Donald J. Trump.
“The United States and NATO are trying to blame inflation on Putin and Russia not exporting oil and gas to Europe, as a result of the NATO sanctions against it, but gas hasn’t stopped yet,” continues Dr. Hudson, “and the US oil companies have said that, looking forward, they see a supply problem, and they’re raising prices now even though the supply of oil hasn’t really changed at all.”
Inflation is a worldwide phenomenon that has been made to look US-centric. “So you have supply being fairly constant, but prices going way up, because the oil companies say, ‘We anticipate they’ll go up, therefore we’re raising oil prices, because we can.’ Well, the same thing is happening in agriculture.”
“Today’s inflation throughout the world, not only in the United States but now in Europe, is led by pure monopoly powers, headed … by energy and food prices. You’re also having rent rising as a result of the plunge in home ownership rates, that started with President Obama’s mass evictions of the victims of junk mortgage lending.”
“And the private capital investors that are taking over all of the houses, the owner-occupied houses that have defaulted, they’re being sold off, and you’ve had home ownership rates falling by about 10 percent in the United States since 2008.”
This comes after a Fortune report that “U.S. corporate profits have surged 25%, which is the biggest annual increase in close to 50 years.”
“Now you have companies like Blackstone very sharply rising rents. In New York they’ve been jumping by about one-third in the last year. So again, and with the same amount of real estate, prices are going way up.”
“So none of this can be blamed on labor,” Hudson stressed.
Scarcity is an invention.
Government on-track to suppress working-class recuperation
Powell’s overt classism is a public display of a private anxiety. He seeks to force social progress into retreat, believing higher wages have dissuaded workers from accepting low-paying jobs with few or no benefits, which begs the question: what exactly are they so “essential” to? Who does it benefit to keep people poor?
“Labor demand is very strong,” said Chairman Powell, “and while labor-force participation has increased somewhat, labor supply remains subdued. Employers are having difficulties filling job openings, and wages are rising at the fastest pace in many years.”
In his panic, Chairman Powell exposes the elite’s Achilles heel, inflamed by the collective realization of the working class’ own self-worth. We have seen, at the cost of over one million lives and counting, what happens when the labor force dries up. Whole industries grind to a halt.
“Employers are having difficulties filling job openings, and wages are rising at the fastest pace in many years,” he worried.
So keep firmly asking for that raise. Keep sharing your salary with your colleagues to uncover workplace inequalities. Keep a tab of your every marketable skill and sell them to the highest bidder. Don’t forget that control issues like insurance benefits and retirement accounts create an artificial dependence on the elite to distract us from the knowledge of their very real dependence on us.
“In terms of speaking to the American people,” said Chairman Powell, “I feel like sometimes—I just—I want to remind us, really, that that’s who we work for.”