With inflation running hot in the US and Europe, labor unions are preparing massive strikes not seen in decades.
US railroad employees are set to strike next month, though the federal government will likely step in and impose labor terms, as it has the right to do in order to prevent the economy from grinding to a halt (40% of all goods move by rail and many commuter trains use private railroad tracks). In the UK rail workers are also set to strike in December, joined by university professors, teachers nurses and mail workers.
Can you blame them? In the US consumer inflation is rising much faster than pay raises, resulting in negative real wage growth (see chart below).
Real Average Hourly Earnings - Annual Percent Change
Lower/middle income workers feel the pinch much more, since a greater portion of their earnings go to buy essentials like food and transport where prices are rising faster than overall inflation: Food and beverages are up 10.6% and transport up 11.6%, while overall CPI inflation is up "only" 7.8%. For them, wage erosion is closer to minus 5% - 6% instead of 3%.
Service workers in Amazon or Twitter may be laid off in droves without immediately causing an economic upheaval, but essential workers are a different matter altogether. Expect more labor actions to surface in the immediate future.
fun history... one of the strikes that did not work. =)
ReplyDeletehttps://en.wikipedia.org/wiki/Irish_bank_strikes_(1966%E2%80%931976)
Which makes us financial industry types non-essential :) Rail though... good luck getting food on the table without it.
Deletefrom a global perspective, the "low" end U.S. workers make too much; however, they think they make too little...
DeleteIf both of the above statements are true, the only economic solution would be to increase their dollar denominated wages, while devaluing the dollar faster than the increase in their wages...
over the long term, I think that is exactly what will happen...
btw, commendable self depreciation. =)
DeleteHigh debt, low real wages, a currency valued much higher than is sustainable given the large trade deficit... where have I seen all this before?
DeleteYup, the 2008-12 PIIGS - and Greece in particular, which handled the whole situation horribly. It could not/would not devalue its currency (euro, it would have had to exit the eurozone to do so), so it chose bankruptcy and internal devaluation via a 12 year Depression of plunging wages and asset prices.
Is this in store for the US??? I give it a non-zero possibility, probably 5% - and that is 10x higher than implied by current Credit Default Swaps which put default risk at 0.50%.
I share your feeling... while the possibility of catastrophic collapse is there.. it will more likely be a slow fade... sort of like the U.K... have to hand it to you Westerners... you are adaptable.... =)
Deletebtw, I thought this was beautifully written.
https://www.nytimes.com/2022/11/24/climate/sugar-maple-pennsylvania-farm.html?unlocked_article_code=KjlfsuTYLXzgd3RpwoHR0Q477G41WbDcmTisla8vB1XgGzUKg--7a6sIXCrQr9G5_UtV3cQ6xYB5yfLBlXvQYPgCwe8GC-mIlA6lkKMsPhAmw0kY3K7bXVpcz6Dy0w4Jxsybp_S3k98uVHSsLmR38OKdVwfsSPmH4aAGmCmBpKbX9tj4t8Ggq1el0AUsXWq2HLSxAX4kl3j3Icd55bGtuLz0haYqqjO-QZYuvtukCxo6S49AFp2JV0dQXX9SfLq5K4_uxk0yapvDrL_HBJsyyf3g0HfAxMJBGKWA8kWOdV0pjU7Sh9gP1aNMERkWy9ElMjpAo2_ufh5Gf5xKJGru74NJDUwdPYFH&smid=share-url
Thank you for the NYT article - very ecocative and eloquent, indeed. It brings the whole discussion about climate change down to the personal level.
ReplyDelete=)
Delete