After a decade of falling pay, US Federal Reserve acts to stop “wage inflation”
28 September 2018
The US Federal Reserve lifted its base interest rate on Wednesday, raising it above two percent for the first time since the US central bank began its low-interest-rate regime after the global financial crash of 2008. Explaining the rate hike, the Fed’s Open Market Committee said it was closely monitoring and would quickly react to “indicators of inflation pressures and expectations.”
The talk about inflationary pressures is a code word in ruling circles for the fear of rising wages. As Financial Times commentator John Authers noted in a recent article, “[W]age inflation is central to the Fed’s reaction function.”
The stupendous run-up on the global stock exchanges and vast increase in the personal fortunes of the financial oligarchy have depended on the relentless downward pressure on workers’ wages and conditions.
Mass unemployment, home foreclosures and the spread of poverty during the Great Recession were used as a hammer to restructure class relations in the United States and around the world and destroy social rights and protections won by workers over generations of class struggle. While governments of every stripe handed out trillions in “economic stimulus” packages to the financial speculators and corporations responsible for the crash, the watchwords for the working class were austerity, “labor flexibility” and the poverty-level wages and precarious employment associated with the so-called Gig Economy.
The Obama administration’s restructuring of the auto industry, carried out with the full support of the United Auto Workers union, slashed the wages of new hires in half, abolished the eight-hour day and vastly expanded the use of temporary…