Larry Kudlow: 'Bidenflation' is behind these wage increases

Larry Kudlow: ‘Bidenflation’ is behind these wage increases

Hours before the deadline, the dreaded railway strike was finally settled. Now that’s a good thing because it would have wreaked even more havoc on an already declining economy. Supply shortages would have resulted in inflation even higher. As for the settlement, I don’t know all the details yet, but the title seemed reasonably reasonable.

Basically, it’s a 24% salary increase over five years, retroactive to mid-2020 and extending through 2024, depending on your job. Annual increases are estimated at increases of 3-7%. There is a retroactive bonus of $11,000. The unions initially wanted a 31% gain, but settled for less. Of note in all of this, the Atlanta Fed’s wage tracker is 6.7% over the past year. The CPI, of course, is 8.3%.

Now, in some conservative circles, it’s still fashionable to oppose union wage increases (no pun intended), but, you know, the reality is that they’re trying to keep up with inflation.

Bidenflation is really at the heart of it all. This is the root cause of these wage increases. It’s really not the fault of the labor force if, in recent years, the federal government spending has inflated inflation and the Federal Reserve, until recently, welcomed it. Unions do not control the purse strings of Congress or the nation’s money supply. They might want to, but so far they don’t.

WORLD BANK WARNS GLOBAL RECESSION RISK IS INCREASING AS INTEREST RATES RISE

President Joe Biden addresses the 76th session of the United Nations General Assembly on September 21, 2021 at United Nations Headquarters in New York. (Photo by Timothy A. Clary-Pool/Getty Images) ((Photo by Timothy A. Clary-Pool/Getty Images)/Getty Images)

Real wages over the past year have fallen 3.4%, representing a huge wage cut for workers. So in this case, I just can’t blame typical working-class families for trying to buy groceries or keep the fridge on or heat their house or buy a new car. They’re just trying to keep the lights on and get by. The government is the big issue – not the workforce – and in this case, not the union.

Now, if we had a strong, reliable king dollar and a balanced budget and supply-side growth policies that minimized taxes and regulations, we wouldn’t have this relentless inflation. So I’m on the side of the workers and, in this case, the union. These are, by the way, unionized workers in the private sector, not civil servants. Call me sympathetic at first, but I’m not sympathetic at second.

Now, I want to note, though, that the Biden administration threw everything but the kitchen sink at its union supporters. That’s a different point. I should say to the union leadership, because the management is very to the left of most rank and file workers.

For example, the National Labor Relations Board has promoted the most aggressive pro-union policies in half a century. They cooperated with union leaders union elections by doing everything they can to prevent the employers from giving their version of the facts. They even called for elections in several cases, including the Amazon episode in Alabama.

The NLRB has backed so-called card checks, which circumvent fair elections by secret ballot. They try to prevent employers from holding private meetings with employees. Most blatantly, the Biden administration is imposing Davis-Bacon wage rates on all manner of new construction.

Davis-Bacon, which dates back to the 1930s, forces contractors to pay inaccurate and inflated government-determined wages and benefits on taxpayer-funded construction projects. In other words, these are not market wage rates determined by competition, but wage rates set by the government, which are of course always higher.

For example, in this recent CHIPS act for the semiconductor industry, it required prevailing Davis-Bacon wages for any building receiving federal tax credits. No Davis-Bacon salary – no tax credit.

All of the Green New Deal spending on huge tax credits and subsidies in the so-called “Inflation Reduction Act” allows for a Davis-Bacon wage premium for unionized stores. No union shop – no Davis-Bacon bonus.

CLICK HERE TO GET THE FOX NEWS APP

These types of regulations will increase construction costs. They will stifle job creation and will surely discourage competition from small businesses and discourage competition in labor markets. Minority workers are usually the first to suffer.

I don’t mind workers getting higher wages to offset higher inflation, but I do mind the Biden administration’s costly attempts to favor unions over grassroots competition in the marketplace. All this is one of the main causes of inflation.

This article is adapted from Larry Kudlow’s opening comment in the September 15, 2022 edition of “Kudlow”.

#Larry #Kudlow #Bidenflation #wage #increases

Leave a Comment

Your email address will not be published.