Larry Kudlow: ‘Bidenflation’ is the root cause of these wage increases

Hours before the deadline, the much-awaited railroad strike was finally resolved. Now, that is a good thing as it would have wreaked even more havoc on an already falling economy. Supply shortage may have prompted inflation even higher. As far as the settlement, I don’t know every detail yet, but the title sounded reasonably appropriate.

Basically, it’s a 24% pay increase over five years, retroactive to mid-2020 and extends to 2024, depending on your job. Annual growth is projected to grow at 3 to 7%. There is a retrospective back-pay bonus of $11,000. The union originally wanted a 31% profit, but they settled for less. Notable in all of this, the Atlanta Fed Pay Tracker is up 6.7% over the past year. The CPI, of course, is 8.3%.

Now, in some conservative circles, it’s always fashionable (no pun intended) to rail against union pay increases, but, you know, the reality is that they’re trying to keep up with inflation.

Bidenflation is really at the center of all this. This is the root cause of these increments. It’s not really the fault of the workforce that in recent years, federal increased inflation And the Federal Reserve, until recently, has adjusted it. Unions do not control the purse strings of Congress or the country’s money supply. They may want to, but so far, they don’t.

World Bank warns of rising global recession risks as interest rates rise

President Joe Biden addresses the 76th session of the United Nations General Assembly on September 21, 2021 at the United Nations Headquarters in New York City. (Photo by Timothy A. Clary-Pool/Getty Images) ((Photo by Timothy A. Cleary-Pool/Getty Images)/Getty Images)

Real wages have fallen by 3.4% in the last one year, a drastic cut in the wages of working people. So, in this case, I can’t blame normal working families for trying to buy groceries or keep refrigerators running or heating their homes or buying a new car. They’re just trying to keep the lights on and move on. The government is the bigger problem – not the workforce – and in this case, not the union.

Now, if we had a reasonably strong King Dollar and a balanced budget and supply-side development policies that would reduce taxes and regulations, we wouldn’t have this sustained inflation. Therefore, I am with the workers and with the union in this matter. By the way, these are private sector union employees, not government employees. Call me sympathetic to the former, but I am not sympathetic to the latter.

Now, though, I want to note that the Biden administration has thrown everything but the kitchen sink at its union supporters. This is a different point. I must say union leadership, as the leadership is far from most rank-and-file workers.

For example, the National Labor Relations Board has promoted some of the most aggressive pro-union policies in half a century. they have cooperated Union leader Do all they can to prevent employers from telling their side of the story in union elections. He has also called for an election do-over in a number of cases, including the Amazon episode in Alabama.

The NLRB favors so-called card checks, which bypass fair secret-voting elections. They try to prevent employers from holding private meetings with employees. Most seriously, the Biden administration is imposing Davis-Bacon wage rates on all kinds of new construction.

Davis-Bacon, which goes all the way back to the 1930s, required contractors to pay erroneous, bloated government-set wages and benefits on taxpayer-funded construction projects. In other words, not competitively determined market wage rates, but government-set wage rates, which of course are always higher.

For example, in the recent CHIPS Act for the semiconductor industry, it requires the Davis-Bacon prevailing wage for any building that benefits from a federal tax credit. No Davis-Bacon wages – no tax credits.

The so-called “Inflation Reduction Act” allows for a Davis-Bacon wage bonus for all Green New Deal spending union shops on heavy tax credits and subsidies. No union shop – no Davis-Bacon bonus.

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Such rules will increase the cost of construction. They will hinder job creation and will certainly discourage competition from small businesses and discourage competition in labor markets. Minority workers are usually the first to suffer.

I don’t mind the higher wages paid to people working to compensate for high inflation, but I do despise the Biden administration’s costly efforts to favor unions over basic market competition. All this is one of the major causes of inflation.

This article is adapted from Larry Kudlow’s opening remarks on the September 15, 2022 edition of “Kudlow.”

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