By Robert Reich
The April jobs report, issued by the Bureau of Labor Statistics, showed another solid month of job growth in April, with employers adding 428,000 jobs and the U.S. economy regaining nearly 95 percent of the 22 million jobs lost at the height of COVID-related lockdowns in the spring of 2020. The April survey also showed average hourly earnings 5.5 percent higher than a year earlier, although those gains have been offset by an increase in prices.
The big surprise was that the labor force shrank in April by 363,000 workers, and the participation rate (the share of adults who either have a job or are actively looking for one) fell by two-tenths of a point, the biggest one-month drop since September 2020. Labor force participation also fell among adults in their prime working years. Overall, the demand for workers has been rising faster than the supply. Job openings hit a record in March, the Labor Department said this week.
The most obvious remedy for this is for employers to offer their workers more money in real terms (that is, over inflation). After all, the median wage has barely risen for forty years.
But policymakers at the Federal Reserve are intent on slowing the economy instead. The Fed believes climbing wages are fueling inflation, which is why the central bank on Wednesday raised interest rates half a percentage point, the biggest increase since 2000. Speaking after the announcement, Jerome H. Powell, the Fed chair, cited the labor market, and in particular the record number of job openings relative to the number of unemployed workers, as a reason policymakers had become more aggressive in recent months. “You can see that the labor market is out of balance; you can see that there is a labor shortage,” Mr. Powell said. In April, he described the labor market as “unsustainably hot.”
This, my friends, is bullshit. Prices are being pushed up by corporations enjoying record profits and pricing power. The remedy is a combination of price controls, windfall profits taxes, and vigorous antitrust enforcement.