Everyone Wants More
Author: Greg Valliere
September 15, 2022
THE WAGE PORTION of a potential railroad deal is essentially finished. It would grant a staggering 14.1% wage increase immediately, bonuses totaling up to $5,000, and a 24% compounded wage increase over the next five years. This will become the template for union demands, as nurses, teachers and factory workers seek new deals — and employers scramble to pass along price increases to customers.
THE DRIVE FOR GREATER COMPENSATION is paramount for senior citizens, who will get a near-record Cost of Living Adjustment (COLA) in their 2023 Social Security benefits. Experts expect a hike of close to 9% for next year.
THE OUTLOOK: More contracts will be for three years or more, and more wages will be linked to the CPI, as unions flex their muscles. The labor market is exceptionally tight — workers will be in short supply until three factors change:
* Dropouts from the workforce return to work; .
* Extremely generous government benefits, which are a disincentive to returning to work, are scaled back;
* Significant immigration reform is enacted, boosting the work force, but that isn’t remotely imminent.
MEANWHILE, OUR HUNCH IS THAT A RAILROAD STRIKE would be brief. Joe Biden is the most pro-union president in recent decades, and he can call in chits. This week’s focus on inflation will hurt Democrats in close House and Senate races, which will prompt the railroad unions to agree to this very generous deal by the weekend, if not sooner.
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