In the United States, to say that worker pay hasn’t kept up with inflation is a gross understatement of the situation.
And Federal Reserve Chair Jerome Powell hopes that fed rate hikes will achieve a weaker labor market – meaning lower wages. Powell said last month, “What we hope to achieve is a period of growth below trend which will cause the labor market to get back into better balance, and that will bring wages back down to levels that are more consistent with 2% inflation over time.”
So that means to fix inflation (not the fault of any American worker), they want wages to be down.
Of course, that doesn’t include wages for the richest of the rich.
Between 2019 and 2021, worker compensation among those who remained employed rose just 3.9%. But CEO wages rose a staggering 30.3%.
Between 1978 and 2021, worker compensation increase is only 18.1% (far below the inflation rate if we’re trying to keep up), whereas CEO compensation has increased by – wait for it – 1,460%.
The fed has neglected to address this gross inequity and tamp down on skyrocketing paychecks for the CEOs who rub elbows with fed policymakers, even as American workers are told to accept less, work harder, pay more – and do their part to fix inflation.
Perhaps we should start with a top-down approach instead of a bottom-up one and implement a corporate tax rate and marginal income tax rate at the top, which discourages behaviors like rent-seeking and gross overcompensation of those at the top. At the same time, those at the bottom keep getting asked for more sacrifices.
Independent Senator from Vermont Bernie Sanders proposed that the government” … set corporate tax rates higher for firms that have higher ratios of CEO-to-work compensation.”
It’s certainly a better idea than continuing to bleed the middle and low-wage earners to fix a problem they didn’t create.