Share on email won by union workers in recent months are a sign the labor market is still hot, Federal Reserve Bank of Minneapolis president Neel Kashkari tells Axios.
"A lot of this is probably just catching up, given that inflation has climbed and their wages have not caught up," he added. "But it's somewhat of an indicator on where the labor market is today: Is it tight? Is it loose? I think it says it still leans toward tight."with the United Auto Workers that included a 25% pay bump over the next four and a half years and revived a cost-of-living adjustment for the first time in nearly 15 years.
If the central bank reacts too forcefully to tamp down any sign of wage growth in the name of fighting inflation, it would, in effect, be tilting the scales in favor of capital. Kashkari seemed attuned to that risk. "It's not a healthy thing that labor's share of income has been declining steadily in the last 40 years. If there's a rebalancing of the labor market, that's probably good for our country," Kashkari said."most businesses I speak with tell me that the labor market is softening relative to an exceptionally tight labor market a year ago, but it's still considered to be a healthy competitive labor market," Kashkari added.
"The real economy, the labor market — it seems like it is softening slowly, but it is still quite robust surprisingly. That makes me at least raise the question: Is policy as tight as we otherwise would think it is?"The Fed could raise interest rates at its policy meeting in December, after keeping policy unchanged for two consecutive meetings. The decision rests on whether data between now and then show cooler economic conditions.