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Bank of America Memo: “We Hope” Conditions for American Workers Will Get Worse

33 points by mikece 4y ago

boeingUH60 4y ago
Actual quote - “By the end of next year, we hope the ratio of job openings to unemployed is down to the more normal highs of the last business cycle.”
avalys 4y ago
This is garbage. They quoted only the words "we hope", disingenuously made up the rest of the quote, and then try to pass it off as a mere paraphrase. The actual quote is "By the end of next year, we hope the ratio of job openings to unemployed is down to the more normal highs of the last business cycle."
- dragonwriter 4y ago
  That is, literally and exactly, hoping that conditions for labor get worse, so while you assert that it is disingenuous and not an accurate paraphrase, that doesn't seem to be the case.
  - frumper 4y ago
    Or they could be hoping more people join the labor pool. If you listened to Powell speak, you'd have heard him say they had hoped the labor participation rate would have started to go up by this point. People re-entering the job market would fill the open jobs without increasing unemployment
    - dragonwriter 4y ago
      > Or they could be hoping more people join the labor pool. That’s not an “or” to “things get worse for labor”, that’s a cause (more competitors for the same set of openings) for the effect of “things get worse for labor”.
      - frumper 4y ago
        The system is out of whack. Price stability needs to happen. If you only look at the issue from how easy of a time does labor have getting a job, then sure. Going from stupidly fantastic to great is worse. The world is more complex and these workers are all seeing the economic value of their labor shrink even as they earn more money. The economy needs some semblance of balance. They'll feel better off if potatoes don't cost twice as much next year.
        dragonwriter 4y ago
        > The system is out of whack. Price stability needs to happen. Yes, that’s an argument for why one might wish conditions to become more adverse to labor (and its fairly expressly the argument underlying current monetary policy, and that adversity to labor may sometimes be desirable in setting monetary policy is central to the Fed’s dual mandate.) That doesn’t change that it is wishing conditions to become more adverse to labor.
    - throwaway_75369 4y ago
      To be fair, it could still be argued that this is "worse for labor", because there would be more competition among laborers for those job openings. They'd have less negotiating power since more of them would be available to apply for the same position. I do agree the headline is unecessarily inflammatory, though.
      - frumper 4y ago
        That's a very reasonable way to look at it.
        theknocker 4y ago
  - legitster 4y ago
    > That is, literally and exactly, hoping that conditions for labor get worse No it's not. If I say "I hope I can find some cheap veggies at the market today", you wouldn't be accusing me of trying to rip off a farmer. It's a bizarre and bad faith conclusion to jump to.
    - ryandrake 4y ago
      A higher than usual “ratio of job openings to unemployed” means workers have higher than usual power. By “hoping” for the reverse, they are hoping for workers to have lower power.
      - legitster 4y ago
        But it also leads to inflation - which is good for corporations and bad for workers. You're jumping to conclusions on other people's behalf, but only picking the conclusions you have pre-decided.
metadat 4y ago
> “High profits tend much more to raise the price of work than high wages,” Smith argued. “Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price. … They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.” > “If you did see continually accelerating wage-growth, it would be a problem,” Dean Baker, senior economist at the Center for Economic and Policy Research, a liberal Washington, D.C., think tank, told The Intercept in an email. “That would almost certainly mean a wage-price spiral with ever higher inflation. However, [nominal] wage growth has slowed sharply from around a 6.0 percent annual rate to just over 4.0 percent in recent months. … So, [Bank of America wants] the Fed to raise rates (and unemployment) to attack a problem (accelerating wage growth) that doesn’t exist in the world.”
quantified 4y ago
Profit-making companies need their employees to be less well off to make more profit. This isn't news, but it bears repeating so that everyone understands.
xt00 4y ago
It would be great if the Bureau of Labor Statistics would do some analysis of which industries would be considered low margin and worker-wage dominated industries that if the wages for the workers increased, would cause a knock-on effect into other industries (to serve as a counter example to companies just generally hoping that workers get paid less -- in some industries it should not matter much). Like if making steel or concrete were dominated by worker wages, then increases in worker wages would increase the cost of basic construction materials across the entire economy. While other industries that might have tons of workers, but the material costs, and profit margins are actually the dominant part of the final price -- then if the worker wage went up 5%, then the impact on the final consumer price should be small. Having that kind of information should help understand better where wage inflation comes from rather than just generically saying yea people need to get paid less...
legitster 4y ago
Actual quote: > "By the end of next year, we hope the ratio of job openings to unemployed is down to the more normal highs of the last business cycle." The Intercept might as well as accuse anyone complaining about inflation to be anti-labor as well.
- legitster 4y ago
  I'm not sure if what the Intercept is expecting them to say: "We hope to perennially be understaffed forever so that existing employees are miserable enough to demand things?"
  - jfengel 4y ago
    I think they were hoping for "Wow, we're really understaffed. Instead of making employees miserable now and hope that future conditions will make them happy just to have jobs, maybe we should spend some of the $6 billion profit we made last quarter to raise wages and hire people now."

33 points by mikece 4y ago

Actual quote - “By the end of next year, we hope the ratio of job openings to unemployed is down to the more normal highs of the last business cycle.”

avalys 4y ago

This is garbage. They quoted only the words "we hope", disingenuously made up the rest of the quote, and then try to pass it off as a mere paraphrase. The actual quote is "By the end of next year, we hope the ratio of job openings to unemployed is down to the more normal highs of the last business cycle."

dragonwriter 4y ago
That is, literally and exactly, hoping that conditions for labor get worse, so while you assert that it is disingenuous and not an accurate paraphrase, that doesn't seem to be the case.
- frumper 4y ago
  Or they could be hoping more people join the labor pool. If you listened to Powell speak, you'd have heard him say they had hoped the labor participation rate would have started to go up by this point. People re-entering the job market would fill the open jobs without increasing unemployment
  - dragonwriter 4y ago
    > Or they could be hoping more people join the labor pool. That’s not an “or” to “things get worse for labor”, that’s a cause (more competitors for the same set of openings) for the effect of “things get worse for labor”.
    - frumper 4y ago
      The system is out of whack. Price stability needs to happen. If you only look at the issue from how easy of a time does labor have getting a job, then sure. Going from stupidly fantastic to great is worse. The world is more complex and these workers are all seeing the economic value of their labor shrink even as they earn more money. The economy needs some semblance of balance. They'll feel better off if potatoes don't cost twice as much next year.
      - dragonwriter 4y ago
        > The system is out of whack. Price stability needs to happen. Yes, that’s an argument for why one might wish conditions to become more adverse to labor (and its fairly expressly the argument underlying current monetary policy, and that adversity to labor may sometimes be desirable in setting monetary policy is central to the Fed’s dual mandate.) That doesn’t change that it is wishing conditions to become more adverse to labor.
  - throwaway_75369 4y ago
    To be fair, it could still be argued that this is "worse for labor", because there would be more competition among laborers for those job openings. They'd have less negotiating power since more of them would be available to apply for the same position. I do agree the headline is unecessarily inflammatory, though.
    - frumper 4y ago
      That's a very reasonable way to look at it.
      - theknocker 4y ago
- legitster 4y ago
  > That is, literally and exactly, hoping that conditions for labor get worse No it's not. If I say "I hope I can find some cheap veggies at the market today", you wouldn't be accusing me of trying to rip off a farmer. It's a bizarre and bad faith conclusion to jump to.
  - ryandrake 4y ago
    A higher than usual “ratio of job openings to unemployed” means workers have higher than usual power. By “hoping” for the reverse, they are hoping for workers to have lower power.
    - legitster 4y ago
      But it also leads to inflation - which is good for corporations and bad for workers. You're jumping to conclusions on other people's behalf, but only picking the conclusions you have pre-decided.

metadat 4y ago

> “High profits tend much more to raise the price of work than high wages,” Smith argued. “Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price. … They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.” > “If you did see continually accelerating wage-growth, it would be a problem,” Dean Baker, senior economist at the Center for Economic and Policy Research, a liberal Washington, D.C., think tank, told The Intercept in an email. “That would almost certainly mean a wage-price spiral with ever higher inflation. However, [nominal] wage growth has slowed sharply from around a 6.0 percent annual rate to just over 4.0 percent in recent months. … So, [Bank of America wants] the Fed to raise rates (and unemployment) to attack a problem (accelerating wage growth) that doesn’t exist in the world.”

quantified 4y ago

Profit-making companies need their employees to be less well off to make more profit. This isn't news, but it bears repeating so that everyone understands.

xt00 4y ago

It would be great if the Bureau of Labor Statistics would do some analysis of which industries would be considered low margin and worker-wage dominated industries that if the wages for the workers increased, would cause a knock-on effect into other industries (to serve as a counter example to companies just generally hoping that workers get paid less -- in some industries it should not matter much). Like if making steel or concrete were dominated by worker wages, then increases in worker wages would increase the cost of basic construction materials across the entire economy. While other industries that might have tons of workers, but the material costs, and profit margins are actually the dominant part of the final price -- then if the worker wage went up 5%, then the impact on the final consumer price should be small. Having that kind of information should help understand better where wage inflation comes from rather than just generically saying yea people need to get paid less...

legitster 4y ago

Actual quote: > "By the end of next year, we hope the ratio of job openings to unemployed is down to the more normal highs of the last business cycle." The Intercept might as well as accuse anyone complaining about inflation to be anti-labor as well.

legitster 4y ago
I'm not sure if what the Intercept is expecting them to say: "We hope to perennially be understaffed forever so that existing employees are miserable enough to demand things?"
- jfengel 4y ago
  I think they were hoping for "Wow, we're really understaffed. Instead of making employees miserable now and hope that future conditions will make them happy just to have jobs, maybe we should spend some of the $6 billion profit we made last quarter to raise wages and hire people now."