NEW YORK—For U.S. capitalists, it’s been a rough few years, at least in one sense.
As the COVID-19 pandemic receded, the labor market came roaring back to life, with employees in short supply and wages on the upswing. And once they returned to the plant, warehouse, store, or office, workers didn’t just submit to employer diktats. They knew they had power, and they used it.
Autoworkers squeezed historic givebacks out of the Big Three in Detroit. Actors and screenwriters brought Hollywood to a halt. Amazon fulfillment center associates fought back against unsafe conditions and extreme overtime. Starbucks baristas unionized one coffee shop after another. Teamsters threatened to freeze the nation’s logistical network. Tech workers leveraged their unique skills to demand higher pay.
Bosses’ heads have been spinning in the face of such overwhelming labor militancy.
Don’t feel too sorry for them though, because on the other hand, profits across all industries have hit historic highs lately as supply chain pressures and outright greed and price-gouging drove earnings upward.
Besides their bulging bank accounts, economic elites have also had something else to comfort them: their control over the political system. And with that control, they had a weapon to discipline unruly laborers: Using government to drive up unemployment.
That’s what all the policy talk about “trimming inflation” and “rebalancing supply and demand in the labor market” really means.
Some among the ruling class were honest about what they thought was needed—a crack of the economic whip.
Real estate developer Tim Gurner gave voice to the demands of beleaguered billionaires: “There’s been a systematic change where employees feel the employer is extremely lucky to have them, as opposed to the other way around. We’ve got to kill that attitude…and that has to come through hurting the economy.”
Bank analyst Kokou Agbo-Bloua provided the prescription for the economic illness of an emboldened working class: “The central banks need to trigger a recession to force unemployment to pick up and create enough demand destruction.”
At a press conference last September, Federal Reserve chair Jerome Powell accepted his assignment: “We have to get supply and demand back into alignment and the way we do that is by slowing the economy…and softening labor market conditions.” He—and other central bankers around the world—sent interest rates soaring.
Higher interest rates meant borrowing costs went up—for regular folks and companies alike. That means less money for workers to spend because they had to devote more of their paychecks to debt payments. It meant upward pressure on rents as mortgage rates climbed. It meant fewer new jobs being created because business expansion became more expensive. And it meant a drop in wages as employers tried to cut costs and protect profits.
It was a formula calculated to undercut workers’ bargaining power and restore the labor market advantage to employers. And if the excitement in corporate HQs is any indicator, it looks like the counteroffensive has been working.
CNBC, the top television outlet among the business media, reported this week that “signs are increasing in the nationwide job market that the post-pandemic era of worker control over wage growth and job opportunities is coming to an end.”
In the network’s latest survey of Chief Financial Officers, some 60% say the balance of power is tilting back in their favor. Compared to a year ago, they believe it’s become far easier to find and hire qualified workers—which means, in simple language, that the labor shortage is beginning to vanish and workers no longer have the edge on salary negotiations.
What corporate leaders anticipate is that soon they’ll be able to force workers to compete for jobs again.
Karl Marx, the most methodical analyst of capitalism and the system’s biggest critic, outlined exactly how these things play out. By having a pool of people who are out of work and desperate to take any job or rate of pay, employers have a weapon to discipline employees who ask for too much.
Marx called these workers who are put out on the street the “reserve army of labor,” and it’s the slow growth of that army which is boosting sentiments in C-suites from San Francisco to New York.
The new confidence among the employer class reflects a dramatic change from even just last quarter when only 35% of CFOs thought they had the upper hand. The survey is conducted every three months among the members of the CNBC CFO Council, which includes the top financial officers at many of the biggest corporations in the United States.
The shift shown in the survey results matches up with commentators’ recent claims that the “Great Resignation” is over and that the Federal Reserve’s interest rate hikes are starting to have exactly their desired effect. Job growth has slowed, along with wage growth. Unemployment is starting to tick upward.
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As one might expect, questionnaires of workers looking for jobs show that their optimism about landing a good position and salary is beginning to slide. The ZipRecruiter Job Seeker Confidence Index dropped six points at the midyear mark.
The same phenomenon is apparent among workers who already have a job, too. The Glassdoor Employee Confidence Index plummeted to its lowest level in seven years this fall. Only 46% of workers have a positive six-month outlook when asked about their future at their current employer.
“I think job seekers comparing this environment to 2021 and 2022 do feel worse off,” ZipRecruiter’s chief economist, Julia Pollak, said of the data. “It’s taking more effort to find a job, and jobseekers are searching under greater financial strain now.”
Speaking for employers, Glassdoor’s lead economist Daniel Zhao said: “The labor market that we’re getting today is in a healthier spot, even though for many workers, it isn’t quite as easy to find a job or get a raise.”
Healthier? For bosses, yes. For workers? No.
While declining wages and higher unemployment might be beneficial for capitalism generally, some particular capitalists—especially those who rely on consumer spending to pad their profits, like Walmart, Home Depot, Best Buy, and the like—there is a risk that the Fed might go too far and undercut their customers’ buying power.
It sounds like a contradiction, and that’s because it is. But that’s the nature of capitalism; agencies like the Federal Reserve have to ensure the economy continues to work in the interest of the entire ruling class. (Turning again to Marx: “The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.”)
As for interest rates and unemployment, don’t expect either of them to go down anytime soon. Looking to the wisdom of the CFO Council once more, they’re betting on no rate cuts until late next year or even 2025. So that means higher unemployment is probably coming and stagnant wages for everyone who has to work for a living.
If they want to take the smiles off these corporate bosses’ faces, then workers can’t let up—they have to maintain the militancy that has revived the labor movement over the past two years. Otherwise, capitalists will be the only ones enjoying some good times.
As with all op-eds and news-analytical articles published by People’s World, this article reflects the views of its author.
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