Following Amazon’s workers’ union victory, the Fed must stop overturning the weight of bosses | Robert Reich

On Friday, Amazon – the richest, most powerful and toughest anti-union company in the United States, with the second largest workforce in the nation (the trade unionist Walmart is the largest), lost to a group of warehouse workers in New York who voted to form a union.

If anyone was in doubt about Amazon’s willingness to prevent this from ever happening, its burnt land anti-union campaign last fall in its Bessemer, Alabama, warehouse should have calmed that doubt.

In New York, Amazon used every tool it had used in Alabama. Many of them are illegal under the National Labor Relations Act, but Amazon could not care less. It’s rich enough to pay a fine or carry any PR hit.

The company has repeatedly fired workers who comment on precarious working conditions or who even suggest that workers need a voice.

As its corporate coffers abound in profits – and its founder and CEO practices a conspicuous consumption on a scale not seen since the robber barons of the late 19th century – Amazon has become the poster child of 21st-century corporate capitalism that has run amok.

Much of the credit for Friday’s victory over Amazon goes to Christian Smalls, who Amazon fired in the spring of 2020 to comment on the company’s failure to protect its warehouse workers from Covid. Smalls refused to withdraw. He went back and organized a union with extraordinary skill and perseverance.

Smalls had something else working in his favor, which brings me to Friday’s excellent job report from the Bureau of Labor Statistics. The report showed that the economy continues to roar back to life after the Covid recession.

With consumer demand soaring, employers are desperate to hire. This has given American workers more bargaining power than they have had for decades. Wages have risen 5.6% over the past year.

The acute demand for workers has strengthened workers’ courage to demand better wages and working conditions from even the most fiercely anti-union companies in America, such as Amazon and Starbucks.

Is this something to worry about? Not at all. American workers have not had much of an increase in over four decades. Most of the gains in the economy have gone to the top.

In addition, inflation is so high that even a wage increase of 5.6% in the past year is minimal measured in real purchasing power.

But corporate America believes that these wage increases are contributing to inflation. Like the New York Times solemnly reported that wage increases “could warm up price increases”.

This is pure nonsense. Unfortunately, the chairman of the Federal Reserve Board, Jerome Powell, believes in that. He worries that “the labor market is extremely tight” and to “an unhealthy level”.

As a result, the Fed is on track to raise interest rates repeatedly to slow the economy and reduce the bargaining power of American workers.

Take a break here to consider this: the trade department reported on Wednesday that corporate profits are at their highest in 70 years. You read that right. Not since 1952 have companies done as well as they do now.

Amazon’s profits are in the stratosphere, but it’s not just Amazon. Across the board, U.S. companies are floating with cash.

Even though they pay higher costs (including higher wages), they have still managed to increase their profits. How? They have enough pricing power to pass on these higher costs to the consumers and even add some more to themselves.

When American companies overflow with money like this, why then pay gains heat up price increases as Times reports? In a healthy economy, companies would not pass on higher costs – including higher wages – to their consumers. They would pay the higher salary out of their profits.

But it does not happen. Companies instead use their record-breaking profits to buy back huge amounts of their own shares to keep their stock prices high.

The labor market is not “unhealthy” tight, as Jerome Powell claims; companies are unhealthily obese. Workers do not have too much power; companies do.

The extraordinary victory for the workers at Amazon’s Staten Island warehouse is cause for celebration. Let us hope that it marks the beginning of a renewal of the labor force in America.

Yet the reality is that corporate America does not want to give up any of its record profits to its workers. If it can not fight unions directly, it will do so indirectly by blaming inflation for wage increases, and then cheering on the Fed while slowing the economy just enough to eliminate the new bargaining power of American workers.

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