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The Hot Labor Summer

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Insights and Market Perspectives

The Hot Labor Summer

Author: Greg Valliere

July 7, 2023

THE BIGGEST STRIKE THREAT this summer obviously is the growing likelihood of a walkout by 340,000 UPS workers, as management and Teamsters have left the bargaining table.

BUT HERE’S ANOTHER HOT SPOT — in southern California, where workers have strong political support for their argument that surging housing costs warrant significant salary increases.

UNION LEADERS IN THE REGION have labeled this as the “hot labor summer,” as workers strike at hotels — in tony locations like Laguna Beach and Beverly Hills. Some of the workers returned to work earlier this week, but said they would continue to picket and strike “in waves” at the hotels.

THIS CONTINUES A PATTERN OF MILITANCE on the part of school employees, Hollywood writers, and others — even employees at Dodger Stadium, who recently won a major new wage hike. These workers say they they can barely pay their rent, as costs of gasoline, groceries and other basics have not kept pace with their pay in this high-tax state.

SO THEY HAVE STRUCK AT HOTELS as the summer high season begins. The union covering most housekeepers wants wages, now $20 to $25 per hour, to immediately rise by $5, followed by a $3 increase in each subsequent year of a three-year contract. A settlement in that range undoubtedly would prompt hotels to raise their rates significantly.

OUR BOTTOM LINE ON LABOR UNREST is that there are two likely scenarios. First, a generous resolution would encourage other workers to make similar demands, an inflationary threat. Or second, strikes — especially at UPS — could eventually become a headwind for supply chains as the holiday season approaches.

NEITHER SCENARIO WOULD BE WELCOME at the Federal Reserve, which has not been able to extinguish inflation, and faces a likely economic slowdown as surging interest rates lead to a softer economy in the second half.

AND NEITHER OPTION WOULD BE WELCOME by the Biden Administration, which is rolling out a new argument — “Bidenomics” has produced a red-hot economy. That has not been persuasive with voters, who say they cannot keep pace with with high prices without pay increases.


The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.

AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

For further information, please visit AGF.com.

©2023 AGF Management Limited. All rights reserved.

Written by

Greg Valliere

Greg Valliere

Chief U.S. Policy Strategist

AGF Investments

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