The Fed Chooses the Fat Cats
It’s not just wealthy developers undermining construction unions. The central bank is fighting its own war to keep workers down.
In his fight against inflation, Federal Chairman Jerome Powell has chosen the side of corporate bigwigs over workers. -- The New York Times
The Federal Reserve bank is the most powerful economic force on earth, and it is currently at war with American workers. In a recent statement, Fed chairman Jerome Powell said the quiet part out loud when he stated the Fed’s main goal is “to get wages down.” What does getting wages down entail? Mass layoffs, drained savings and retirement accounts, and skyrocketing economic insecurity among the working people.
This is a union-buster’s favorite argument. When workers are desperate they won’t fight for higher wages.
This may sound cynical, but is nothing new. Former Fed chairman Alan Greenspan elevated worker insecurity to Fed policy when he infamously bragged to congress that the economic success under his tenure was due to the “growing economic precarity” of workers. When workers are too worried about keeping their jobs, he mused out loud, it keeps costs down for businesses. No one in the room even blinked.
But why would the Fed make it their policy to undermine workers? They are commonly understood to be a dispassionate, apolitical organization, dedicated to maximizing employment and stabilizing prices. It starts to make sense when you realize the Fed isn’t actually independent. In fact, they are under constant and intense pressure from lobbyists. In 2022 alone they took millions in donations from large corporations and special interests groups, including commercial real estate and development interests.
This pressure explains why Powell’s solutions squeeze the working man and woman rather than his corporate benefactors, who are the real cause of inflation, according to Robert Reich, former US secretary of labor and professor of public policy at the University of California at Berkeley. In his editorial in the Guardian Reich says the current inflation is “caused by corporations raising their prices above their increasing costs. Corporations are using those increasing costs – of materials, components and labor – as excuses to increase their prices even higher, resulting in bigger profits. This is why corporate profits are close to levels not seen in over half a century.”
The Fed isn’t actually independent. In fact, they are under constant and intense pressure from lobbyists. In 2022 alone they took millions in donations from large corporations.
Former Secretary of Labor Robert Reich explains that corporations taking huge profits is the biggest cause of current inflation, yet the Fed wants the working man and woman to pay the price for the correction. Watch his explainer video here: https://youtu.be/Zi4KMCQuQYE
Meanwhile, on the other side of the ledger, worker wage gains have not matched the rate of inflation. Things are getting harder, not easier for workers. Yes, inflation must be tempered. But choosing to solve it by causing pain in the working class rather than forcing fat cats to scale back their profit-taking, is just that: A choice. Chairman Powell has chosen to put the burden of inflation correction on the backs of the struggling working class, not on the corporations that are making more money than ever.
There’s a fight going on in the country, and it’s most evident in New York’s construction industry. Workers argue for fair wages, benefits, and access to the middle class. And as big developers seek higher and higher revenues, they see those worker benefits as siphoning off their profits. The Fed has chosen the wrong side in this fight. We need unions to strike the balance. This is why unions are more popular than they’ve been in over sixty-years.
Mark Colangelo is a writer and blogger.
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