Jobs are back, so workers have a target on their backs. The Labor Department reports the economy produced 263,000 jobs in September. After losing an unimaginable 22 million jobs in the first two months of COVID as the economy shut down under Donald Trump, we’ve now gained all those jobs back and then some. Wages have even begun to inch upwards. That’s the good news. The bad news is the Federal Reserve is determined to stop the growth, cost millions of workers their jobs and strangle any hope for higher wages.
That’s not a prediction; it’s a promise made by Jerome Powell, the chair of the Federal Reserve.
The Fed has raised interest rates at its last three meetings and promises to keep raising them for the rest of the year. “We will keep at it until we are confident the job is done,” says Powell. That will produce, he admits, “some softening of labor market conditions,” admitting that there will be “some pain” in what he hopes will be a “softish landing” for the economy.
This is bankers talk for hiking interest rates to slow growth, throw workers out of work and squelch any talk of wage hikes. The Fed forecasts that the unemployment rate will rise from 3.65 percent today to 4.4 percent next year, implying that an additional 1.2 million people will lose their jobs. That’s if – and it’s a big and unlikely if – the Fed manages the slowdown perfectly. The far greater likelihood is that the Fed’s rapid and repeated interest rate hikes will produce a deep recession here, a massive debt and hunger crisis across the world, and much worse.
Why would the Fed throw millions of workers out of work – disproportionately African Americans and Latinos – and stomp out wage hikes after years of stagnant wages that have produced obscene levels of inequality?
It does so because it is freaked out about rising prices – inflation – and will continue to torture the economy to lower demand – that is throw people out of work to reduce their ability to buy food, gas, housing and other goods.
Now inflation is real. We’ve all been hit by the rising price of gas and food, particularly, lower wage workers for whom rising prices means it’s harder to put food on the table, to pay for gas to get to work, to find affordable housing, to pay for school supplies and children’s clothes.
But the Fed’s policy doesn’t make much sense. It can’t be that the only answer to inflation is to throw people out of work. It particularly doesn’t make sense because the primary causes of the inflation aren’t rising wages, as even the Fed chair admits. The primary causes are the rapid Covid recovery, which led to supply chain snaggles, the Ukraine war and sanctions on Russia (on top of those on Iran and Venezuela), which hit oil and food prices directly, and of course, the ability of companies like the drug companies in concentrated industries to raise prices no matter what.
Nothing that the Fed will do will address these problems of supply. So instead, it sets out to cause some “pain” for working families to reduce their ability to support themselves. Not surprisingly, this pain is not inflicted on Wall Street, on the bankers or felt much by the wealthy.
When what the FBI called an “epidemic of fraud” by the banks blew up the economy in 2008, the Fed threw literally trillions into saving the banks. The banks got bailed out from the calamity they created. Now working families get hurt from rising prices that they didn’t cause.
It’s time to call out this tilted playing field. The Fed shouldn’t get a pass. It’s policies – and its biases – should be challenged. And it’s time for a real program to address today’s inflation that will help keep the economy going and people working. It may be too late to stop the recession that the Fed is already cooking – but we shouldn’t come out of that without demanding a new deal.
You can write to the Rev. Jesse Jackson in care of this newspaper or by email at jjackson@rainbowpush.org. Follow him on Twitter @RevJJackson.
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