A neighborhood restaurant (my wife demoted them to dive bar after a fruit fly drowned in her drink) increased the cost of their drinks, with my double Jameson’s going from $9.00 to $14.00.
I asked the waitress if she had gotten a raise. Her punch to my shoulder told me “no.”
So, we come to the holiday to celebrate those who work for a living with skyrocketing prices. As usual, those prices bear little relationship to wages. And, some jobs may soon be killed to moderate inflation.
Unfortunately, for working people, the current Federal Reserve chair seems destined to again sacrifice jobs and pay raises to protect Wall Street.
That was the approach taken during the Reagan years and the fed response to the 2008 meltdown caused by reckless companies “too big to fail.”
Current Federal Reserve chair Jerome Powell (called Wall Street’s Head of State by Bloomberg) got his job during Donald Trump’s reign. President Joe Biden felt compelled to give Powell the customary second term due to pressure from the well moneyed.
Yet, while Powell obediently opened the sluice gates flooding the economy with money during Trump’s bungling of COVID, he now raises interest rates to choke off the supply of capital – at the expense of jobs and small businesses – over concerns about the 8.5% inflation rate [July 2021 to July 2022], a surge due in part to Trump’s and Powell’s actions during the pandemic.
The latest report from the Bureau of Labor Statistics, for this August, [ https://www.bls.gov/news.release/pdf/empsit.pdf ] found the overall unemployment rate still below 3.8%: in other words lower than what economists call ‘full employment.’ Alas, the total employed includes 4.1 million Americans who are involuntarily part-time workers who want (and need) full time jobs. Plus 5.5 million people not in the labor force who want a job. Still the nation has a ton of unfilled jobs, especially in the service industry. Most don’t pay enough to support a family, nor do the skills of many unemployed match what’s needed.
Yes, average hourly wages keep creeping upwards, due to the worker shortage, some reflection of inflation and local increasers in minimum wage above the federal $7.25 an hour. Still, effective purchasing power declined in the past year as it has in recent years. People work hard but get less benefit. [ https://www.statista.com/statistics/216259/monthly-real-average-hourly-earnings-for-all-employees-in-the-us/] For example, this year most Missouri state employees received a 5% raise. But with inflation at 8.5% that bump merely slowed their fall.
Back to my waitress…
Restaurants are notoriously crappy employers. Remember, the Missouri Restaurant Association backed Medicaid Expansion not out of a sense of morality but for the practical reason that their employees could get health care with taxpayers (not restaurateurs) paying for it. And, restaurants still get to pay tipped employees less than the minimum wage. (Missouri today’s special is $5.58 an hour, against $11.15 for regular employees.)
Wait staff have told me that price increases have a very predictable effect: lower tips. Diners have a set amount available for their night out. Take $5.00 more for a drink and, well, something has to give.
This Labor Day, then, workers are again getting the short end of the stick. Pawns in Wall Street’s chess game, they risk being sacrificed by Federal Reserve policy. Those with jobs keep losing ground to inflation. And, many a waitress or waiter can expect to go home with less in their pocket.
A great set of reasons to celebrate.
Glenn Koenen
Photo by Pixabay