Just hours before the deadline, the much-feared rail strike was settled. Now, that’s a good thing because it would have wreaked more havoc on an already deteriorating economy. The lack of supply could have been the motive inflation So it’s higher. Regarding the settlement, I don’t know all the details yet, but the title sounded reasonably well.
Basically, it’s a 24% pay increase over five years, retroactive to mid-2020 and extending through 2024, depending on your job. Annual increases are estimated to be between 3 and 7% increments. There is a retroactive bonus for late payment of $11,000. The unions originally wanted a 31% profit, but were content with less. It’s worth noting in all of this that the Atlanta Fed’s wage tracker is 6.7% over the past year. The consumer price index, of course, is 8.3%.
Now, in some conservative circles, it’s always fashionable to protest union wage increases (no pun intended), but, you know, the truth is that they’re trying to keep up with inflation.
Biden’s hypertrophy is at the heart of all of this. It is the root cause of these wage increases. It’s really not the workforce’s fault that in recent years, FEMA Spending drives up inflation The Federal Reserve absorbed it until recently. Unions do not control Congress’ money chains or the nation’s money supply. They may want to, but they don’t yet.
Real wages last year fell by 3.4%, which is a significant reduction in workers’ salaries. So, in this case, I can’t blame the typical working families for trying to buy groceries, keep a fridge, heat their homes, or buy a new car. They’re just trying to keep the lights on and move on. The government is the big problem – not the workforce – and in this case, not the union.
Now, if we had a strong, reliable dollar, a balanced budget, and supply-side growth policies that would reduce taxes and regulations, we wouldn’t have this unrelenting inflation. So, I support the workers and, in this case, the union side. These, by the way, are union workers in the private sector, not government workers. Call me sympathetic to the former, but I am not sympathetic to the latter.
Now, I would point out, however, that the Biden administration threw everything but the kitchen sink at their union supporters. This is a different point. I must say in union leadership, because leadership is a long way off for most ordinary workers.
For example, the National Labor Relations Board has adopted the most aggressive pro-union policy in half a century. They have cooperated with Union leaders in union elections by doing everything they can to prevent employers from telling their side of the story. They’ve even called election operations in several instances, including the Amazon ring in Alabama.
The NLRB has supported so-called card checking, which goes beyond fair secret ballot elections. They try to prevent employers from holding private meetings with employees. Most egregiously, the Biden administration is charging Davis-Bacon wage rates on all kinds of new construction.
The Davis-Bacon Corporation, dating back to the 1930s, requires contractors to pay inaccurate and inflated government-set wages and benefits on taxpayer-funded construction projects. In other words, market wage rates are not set competitively, but government-set wage rates, which of course are always higher.
For example, in the recent CHIPS law for the semiconductor industry, it required prevailing Davis-Bacon wages for any building that benefits from federal tax credits. No Davis-Bacon Wages – No Tax Credit.
All of the Green New Deal spending on massive tax breaks and subsidies in the so-called “Inflation Cut Act” allows for a Davis-Bacon pay bonus to union shops. No Syndicate Shop – No Davis-Bacon Bonus.
These types of regulations will raise construction costs. They will stifle job creation and certainly discourage competition from small businesses and discourage competition in labor markets. Minority workers are usually the first to suffer.
I don’t mind workers being paid higher to offset higher inflation, but I do mind the Biden administration’s extravagant attempts to favor unions over core market competition. All this is one of the main causes of inflation.
This article is excerpted from Larry Kudlow’s opening comment on the September 15, 2022, edition of “Kudlow”.