Beyond Inflation: Unseen Damages to Workers Being Overlooked by Progressive Leaders
The harm inflicted to U.S. working people is being missed. That damage is described below, but what is striking is who is missing it happening. It’s not just big business or institutions you might expect to be too captured by that upper-echelon view, which might include the Federal Reserve depending on your impression of them, but it’s also many of the advocates who generally champion working people and progressive policies.
Part of the problem is the economic indicators we choose to measure and pay attention to, and there are some possible solutions to that, but that still doesn’t explain the many key players who are missing the damage being done.
The nature of the damage I expanded on in a previous piece on Dec. 19, 2023, The Harms From Fighting Inflation, which I’ll summarize here. The intention for reducing inflation is to dampen the economy so that sellers will feel less confident that price increases will be tolerated, and they will also be doing less hiring, which in turn, will mean fewer job hunters finding jobs or finding the wage offers they had hoped to gain. To put that another way, working people will have less leverage. But having less leverage reverberates through much more of their working lives than just initial wage offers. It affects whether they’re even out looking at all.
If your current job gives low pay, or treats you poorly, or jerks around your schedule, do you feel confident to think, “The heck with this” and go hunt for something better? Or just hunker down and feel lucky to have any job? Do you feel you can negotiate for a raise? How much?
In the last couple of years, unions have had much success negotiating. Would they have had that much success with less leverage? Plus, what pay level an employee is at now probably ripples on through to what they’re making at retirement. After the 2008 Great Recession, there were studies estimating how much less college grads would make in their careers because they had to start off in a poor economy.
How does all of that damage compare to the price difference in goods if the Fed continues to fight inflation down to 2% rather than being less of a wet blanket now at closer to 3%? Who is calculating how much worse that damage might be than the inflation? No one that I’ve seen.
None of that damage is a miracle of insight — it’s all pretty obvious if the dynamics are considered. The precise trade-off would take some study, but those studies would already be in process, or done, if these issues were already on everyone’s mind. The reason that these issues are not being studied and championed is because, even for the neutral press, and even for progressive advocates, we are nearly all too captured by looking at things from the institutional perspective rather than the working perspective. It’s not that these two sides need to be treated as enemies in a zero-sum struggle, but both sides need to get equal examination to come to best overall policies. But we have become so accustomed to the blinders that define our perspective that we’re not even aware that there is a whole other dimension to take in.
Mark Zandi, an influential voice and chief economist of Moody’s Analytics — someone who champions a greatly revised and progressive version of capitalism in a current book — recently wrote that he believes the Fed is mismeasuring the economic situation and should reduce the federal funds rate now, but still never mentioned anything about these other forms of damage.
On June 10 senators Elizabeth Warren (D-MA) and Jacky Rosen (D-NV) sent a letter to Fed Chair Powell giving a detailed list of why it might be better to reduce the funds rate now, but they still did not touch on any of the types of damage described above.
How can we all, including the champions, be so blind as to have endless coverage and discussion of every aspect of the economy and the inflation fight without ever bringing up the extended damage? Well it’s more of a social issue, the capturing of our thinking, than anything else, but there are some tweaks to what we measure and how we cover them which might help. I’ll get to those in the next piece.
