Still Another Economic Concern — Labor Strikes

by Greg Valliere, AGF Management Ltd.

AFTER YEARS OF LOSING CLOUT — AND MEMBERS — organized labor is flexing its muscles. The worker shortage has given unions some clout, and the result is a looming wave of strikes that could give pro-labor President Joe Biden another headache, as still another inflationary hot spot emerges.

WORKERS SOON MAY HIT THE PICKET LINES at John Deere, Kaiser Permanente, and even on Hollywood film lots. According to a piece this morning in The, thousands are already on strike, including 2,000 New York hospital workers, 700 Massachusetts nurses and 1,400 Kellogg plant workers in Michigan, Nebraska, Pennsylvania and Tennessee.

THE POTENTIAL STRIKE TO WATCH is at Kaiser Permanente, where 38,000 workers, mostly overworked nurses, are demanding 4% annual pay increases; the company is offering 1%. A similar gap is plaguing John Deere, where workers want an immediate 5% to 6% wage hike. And TV shows and movies may be shut down as 60,000 crew workers threaten to go on strike early next week.

WORKERS HAVE LEVERAGE, knowing that if there are walkouts, employers will struggle to find replacements because of the nationwide labor shortage, The Hill concludes. The U.S. had 10.4 million unfilled job openings as of August; as we noted yesterday in our piece on workers who are quitting.

IN A RECENT INTERVIEW with The Hill, AFL-CIO President Liz Shuler said workers are “fed up” with harsh working conditions and stagnant pay amid a pandemic that has worsened income inequality, leading them to demand better contracts.

THE LABOR RALLYING CRY: “This is the capitalist system that has driven us to the brink,” she added. “Inequality is just getting worse and worse.” Prepare to hear more rhetoric like this; organized labor, down to nearly 10% of the workforce, has a rallying cry.

EVERYONE WANTS THEIRS: The scramble for better compensation and more federal benefits is likely to increase, as workers grapple with higher energy and food prices; real hourly earnings have decreased in recent months. We have consistently warned that the most serious inflation threat is rising labor costs, which are not “transitory.”

THE FEDERAL RESERVE SHOULD BAN THE WORD “TRANSITORY” — it certainly doesn’t apply to labor, because salary hikes and sign-up bonuses will not be reversed. Maybe lumber or copper or gasoline prices can be reversed, but wage hikes will not be lowered; they’re on the rise, as the looming strikes will show.




The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

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This post was first published at the AGF Perspectives Blog.

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