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To me the headline says it all. Those workers, being in demand, asking for higher wages. What about our profits! We need a level of desperation in our work f

To me the headline says it all. Those workers, being in demand, asking for higher wages. What about our profits! We need a level of desperation in our work force, at least that caused by 4% unemployment, if we can expect to maintain the wealth gap that has been built up over the last years! (If it's not clear from the above, personally I am in favor of low unemployment and higher income equality.)

deleted 4y ago
[deleted]
zdragnar 4y ago
You should have read the article. The fear is that we are going to see yet another round of interest rate hikes to slow down inflation. Unemployment (according to the article) is also closer to 3% than 4 at the moment.
- fassssst 4y ago
  Low unemployment leads to inflation > fed raises rates to counteract inflation > stocks are less appealing Therefore the stock market hates workers.
- Ericson2314 4y ago
  Why are we fixing inflation that doesn't exist? Sounds to me like a scapegoat. https://delong.typepad.com/kalecki43.pdf https://delong.typepad.com/kalecki43.pdf oh wait, the O.G. wrote about this 80 years ago.
- horsawlarway 4y ago
  You seem to be saying essentially the same thing. The fed has been pretty clear that it sees wage growth as a serious inflation problem (because it's sticky) and they're intentionally raising rates to force cuts to wages and employment. Personally - I'm a little mixed, since I believe rates were far too low and have created a very strange economy where you have companies that never actually make money become household names (ex: WeWork, Carvana, Uber, Zillow, Pinterest, etc...) because they gobble up debt banking on some mythical future profits once they capture the market. But on the other hand, I feel like the current stance of the fed - "raise the rates to stop hot employment and wage growth" - is a cop out. Inflation control is the second of their two mandates, employment is the first. They could have been raising rates during good years before this to curtail some of the bubbles we're seeing, but instead they only chose to do it to protect businesses from wage growth. Which... feels a bit scummy, and much like they're protecting the wealthy at the expense of increasing wage equality. --- Now, on the other hand - the market's reaction is not at all surprising, I agree that given what the fed is saying, this will likely push the balance back towards a larger rate hike, and the market is predicting that as well, and dropping to account.
  - mastax 4y ago
    The Fed did raise rates during the good years before this. And that was with a certain president threatening to fire the Fed chair for raising rates.
    - horsawlarway 4y ago
      raised 225 points in the years between 2015 & 2018 (very slow return to some sanity after the cuts in 2008 down to nearly 0) Immediately dropped by 75 points in 2019 due to trade war concerns (pre covid), then dropped another 150 points in 2020 due to covid. So back to 2008 levels. Raised by 450 points at the threat of "wage growth" and hot employment causing inflation over the last 11 months. --- So yes, they were ever so slowly hiking rates back up, but I think the current approach definitely hints at what their priorities are. To be fair - I don't really believe the fed is entirely responsible - they don't have many good levers to pull to influence the things they've been tasked with influencing. But I think the timing shows the priorities pretty well. The existence of huge zombie companies hollowing out real markets, only alive because of incredibly cheap cash, was not a serious problem. Wage growth - now that's a thing to be feared.
      - mastax 4y ago
        I'm no economist, but I think it's fair to raise rates slowly after a long slow economic recovery where you're barely seeing any inflation even when markets and jobs are hot. I also think it's fair to raise rates quickly when there's a huge spike in inflation due to at least partly to excess money supply,which does not go away after waiting a few months.
        horsawlarway 4y ago
        And that's why I'm mixed... I don't really disagree with you either. It's one of the few levers that the fed actually has, and it's a BIG lever with lots of consequences and fallout. Moving it is tricky (and hindsight is always an unfair place to judge from). But it does feel a bit systemically unfair that we're structuring our financial regulations in a manner that seems nearly hellbent on increasing inequality across the population. That's not really the fed's fault though... I would absolutely lay blame on congress.
- tootie 4y ago
  As much as it's biased take, OP isn't wrong. Yes, the proximate motivating factor is interest rates, but it does show how economic incentives have gotten misaligned. So long as investors fear something that is a positive for workers, there will be conflict. An educated observer will know this is an emergent conflict and not a conspiracy, but it's still a problem.
lr4444lr 4y ago
People employed can afford to buy stuff though, which also increases profit. The simpler reason is that it means that people believe Fed will read this as a license to not have to slow down rate increases, which will hurt stocks.
- lapcat 4y ago
  > The simpler reason is that it means that people believe Fed will read this as a license to not have to slow down rate increases But there's a direct relation, because the Fed has been very explicit that they're worried about employment and wage growth, and they're raising interest rates in order to depress those. The Fed operates according to the interests of the wealthy.
  - toomuchtodo 4y ago
    Good luck to them. 10K boomers retire a day, there are less workers than jobs, and no benchmark rate will change that. https://news.ycombinator.com/item?id=34601350 https://news.ycombinator.com/item?id=34601350
    - Loughla 4y ago
      Not interest rates, but tanking stocks and investments absolutely will change that. If my retirement investments lose 50% of their value, I'll have to go back to work.
      - netfortius 4y ago
        I can't believe how fewer people see that side! It's good for the working folks to get competitive wages, but what are you doing with the troves of people who had to embark in the 401k/IRA/etc. "trains"? Are they expected to get back to work in their 60s/70s/80s, to make up for inflation and purchasing power
        lapcat 4y ago
andsoitis 4y ago
The reason you cite is not why stock prices are lower. The reason is in the 3rd bullet: > US stock futures were lower Friday as Wall Street feared a still-hot economy could give the Fed more room to hike rates. And more detail on this further down the article.
looping__lui 4y ago
Did you read the article? It’s the anticipation of higher interest rates by the stock markets that send stocks down. And the Fed may do so because they want to raise them “just so much to counter inflation without drifting into a recession”. For Tech that may mean that the focus will shift towards profitability which may increase pressure on the workforce. What do you mean by “higher income equality”? E.g., people earning the same irrespective of their capability, effort, working hours and “value creation contribution in the economy”? Isn’t income equality (government interventions in some aspects aside) a mere reflection of people’s contribution to a economy and their ability to negotiate? So, are you assuming/applying everyone more or less has the same contribution or do you want everyone to be paid the same irrespective?
- pjc50 4y ago
  > Isn’t income equality (government interventions in some aspects aside) a mere reflection of people’s contribution to a economy and their ability to negotiate? Watch the elision between this and the next sentence: > So, are you assuming/applying everyone more or less has the same contribution or do you want everyone to be paid the same irrespective? The bit that's gone is "their ability to negotiate", which depends to a great extent on how wealthy you are already. BATNA, and so on. Also, conflating income from labour with income from capital confuses the issue further.
  - looping__lui 4y ago
    Income from capital is generally lower in low-interest regimes. We probably saw inflation in asset classes such as housing and stock as a result of monetary oversupply and cheap access to capital. Not factoring in such things into inflation is a question the Fed would have to address. With a sufficient social net and minimum wages, even poorly qualified have good negotiation power. No offense, but I’m also not sure how paying 30 USD/h to somebody who doesn’t speak the language and is performing low complexity work is doing society any good. I live in Europe and there is no way anybody would come for house cleaning, shopping or whatnot below that - because they are just better off with free housing, free healthcare, free schooling and money on top.
cscurmudgeon 4y ago
> (If it's not clear from the above, personally I am in favor of low unemployment and higher income equality.) So is everyone but it is easier to wish for something good publicly than have a logical way to get that. The investors are not the ones that will cause loss of jobs it is the Fed that will soon.
adam_arthur 4y ago
Wages rising due to inflation does not lead to income equality. Higher rates will lead to lower wealth disparity though. Asset values over the past decade have been largely driven by ZIRP Buying power in real terms is mostly driven by productivity and technological advancement driving deflation of goods
refurb 4y ago
Your take is not off base. If the economy hasnt slowed because of the hike in rates, that means inflation could easily spike again (as it did in the 70’s). That means more hikes, potentially pushing future profits down. The stock market isnt priced for what happening today, its priced for what the market thinks will happen.
BurningFrog 4y ago
You're anthropomorphizing the stock market into some club of mustache twirling billionaire villains. In reality it's mostly just math in action. And, of course, headline writing doing its job of making you engaged (angry).
insane_dreamer 4y ago
it feels like no one even cares about the elites anymore; sad, just sad.
deleted 4y ago
[deleted]

deleted 4y ago

[deleted]

zdragnar 4y ago

You should have read the article. The fear is that we are going to see yet another round of interest rate hikes to slow down inflation. Unemployment (according to the article) is also closer to 3% than 4 at the moment.

fassssst 4y ago
Low unemployment leads to inflation > fed raises rates to counteract inflation > stocks are less appealing Therefore the stock market hates workers.
Ericson2314 4y ago
Why are we fixing inflation that doesn't exist? Sounds to me like a scapegoat. https://delong.typepad.com/kalecki43.pdf https://delong.typepad.com/kalecki43.pdf oh wait, the O.G. wrote about this 80 years ago.
horsawlarway 4y ago
You seem to be saying essentially the same thing. The fed has been pretty clear that it sees wage growth as a serious inflation problem (because it's sticky) and they're intentionally raising rates to force cuts to wages and employment. Personally - I'm a little mixed, since I believe rates were far too low and have created a very strange economy where you have companies that never actually make money become household names (ex: WeWork, Carvana, Uber, Zillow, Pinterest, etc...) because they gobble up debt banking on some mythical future profits once they capture the market. But on the other hand, I feel like the current stance of the fed - "raise the rates to stop hot employment and wage growth" - is a cop out. Inflation control is the second of their two mandates, employment is the first. They could have been raising rates during good years before this to curtail some of the bubbles we're seeing, but instead they only chose to do it to protect businesses from wage growth. Which... feels a bit scummy, and much like they're protecting the wealthy at the expense of increasing wage equality. --- Now, on the other hand - the market's reaction is not at all surprising, I agree that given what the fed is saying, this will likely push the balance back towards a larger rate hike, and the market is predicting that as well, and dropping to account.
- mastax 4y ago
  The Fed did raise rates during the good years before this. And that was with a certain president threatening to fire the Fed chair for raising rates.
  - horsawlarway 4y ago
    raised 225 points in the years between 2015 & 2018 (very slow return to some sanity after the cuts in 2008 down to nearly 0) Immediately dropped by 75 points in 2019 due to trade war concerns (pre covid), then dropped another 150 points in 2020 due to covid. So back to 2008 levels. Raised by 450 points at the threat of "wage growth" and hot employment causing inflation over the last 11 months. --- So yes, they were ever so slowly hiking rates back up, but I think the current approach definitely hints at what their priorities are. To be fair - I don't really believe the fed is entirely responsible - they don't have many good levers to pull to influence the things they've been tasked with influencing. But I think the timing shows the priorities pretty well. The existence of huge zombie companies hollowing out real markets, only alive because of incredibly cheap cash, was not a serious problem. Wage growth - now that's a thing to be feared.
    - mastax 4y ago
      I'm no economist, but I think it's fair to raise rates slowly after a long slow economic recovery where you're barely seeing any inflation even when markets and jobs are hot. I also think it's fair to raise rates quickly when there's a huge spike in inflation due to at least partly to excess money supply,which does not go away after waiting a few months.
      - horsawlarway 4y ago
        And that's why I'm mixed... I don't really disagree with you either. It's one of the few levers that the fed actually has, and it's a BIG lever with lots of consequences and fallout. Moving it is tricky (and hindsight is always an unfair place to judge from). But it does feel a bit systemically unfair that we're structuring our financial regulations in a manner that seems nearly hellbent on increasing inequality across the population. That's not really the fed's fault though... I would absolutely lay blame on congress.
tootie 4y ago
As much as it's biased take, OP isn't wrong. Yes, the proximate motivating factor is interest rates, but it does show how economic incentives have gotten misaligned. So long as investors fear something that is a positive for workers, there will be conflict. An educated observer will know this is an emergent conflict and not a conspiracy, but it's still a problem.

lr4444lr 4y ago

People employed can afford to buy stuff though, which also increases profit. The simpler reason is that it means that people believe Fed will read this as a license to not have to slow down rate increases, which will hurt stocks.

lapcat 4y ago
> The simpler reason is that it means that people believe Fed will read this as a license to not have to slow down rate increases But there's a direct relation, because the Fed has been very explicit that they're worried about employment and wage growth, and they're raising interest rates in order to depress those. The Fed operates according to the interests of the wealthy.
- toomuchtodo 4y ago
  Good luck to them. 10K boomers retire a day, there are less workers than jobs, and no benchmark rate will change that. https://news.ycombinator.com/item?id=34601350 https://news.ycombinator.com/item?id=34601350
  - Loughla 4y ago
    Not interest rates, but tanking stocks and investments absolutely will change that. If my retirement investments lose 50% of their value, I'll have to go back to work.
    - netfortius 4y ago
      I can't believe how fewer people see that side! It's good for the working folks to get competitive wages, but what are you doing with the troves of people who had to embark in the 401k/IRA/etc. "trains"? Are they expected to get back to work in their 60s/70s/80s, to make up for inflation and purchasing power
      - lapcat 4y ago

andsoitis 4y ago

The reason you cite is not why stock prices are lower. The reason is in the 3rd bullet: > US stock futures were lower Friday as Wall Street feared a still-hot economy could give the Fed more room to hike rates. And more detail on this further down the article.

looping__lui 4y ago

Did you read the article? It’s the anticipation of higher interest rates by the stock markets that send stocks down. And the Fed may do so because they want to raise them “just so much to counter inflation without drifting into a recession”. For Tech that may mean that the focus will shift towards profitability which may increase pressure on the workforce. What do you mean by “higher income equality”? E.g., people earning the same irrespective of their capability, effort, working hours and “value creation contribution in the economy”? Isn’t income equality (government interventions in some aspects aside) a mere reflection of people’s contribution to a economy and their ability to negotiate? So, are you assuming/applying everyone more or less has the same contribution or do you want everyone to be paid the same irrespective?

pjc50 4y ago
> Isn’t income equality (government interventions in some aspects aside) a mere reflection of people’s contribution to a economy and their ability to negotiate? Watch the elision between this and the next sentence: > So, are you assuming/applying everyone more or less has the same contribution or do you want everyone to be paid the same irrespective? The bit that's gone is "their ability to negotiate", which depends to a great extent on how wealthy you are already. BATNA, and so on. Also, conflating income from labour with income from capital confuses the issue further.
- looping__lui 4y ago
  Income from capital is generally lower in low-interest regimes. We probably saw inflation in asset classes such as housing and stock as a result of monetary oversupply and cheap access to capital. Not factoring in such things into inflation is a question the Fed would have to address. With a sufficient social net and minimum wages, even poorly qualified have good negotiation power. No offense, but I’m also not sure how paying 30 USD/h to somebody who doesn’t speak the language and is performing low complexity work is doing society any good. I live in Europe and there is no way anybody would come for house cleaning, shopping or whatnot below that - because they are just better off with free housing, free healthcare, free schooling and money on top.

cscurmudgeon 4y ago

> (If it's not clear from the above, personally I am in favor of low unemployment and higher income equality.) So is everyone but it is easier to wish for something good publicly than have a logical way to get that. The investors are not the ones that will cause loss of jobs it is the Fed that will soon.

adam_arthur 4y ago

Wages rising due to inflation does not lead to income equality. Higher rates will lead to lower wealth disparity though. Asset values over the past decade have been largely driven by ZIRP Buying power in real terms is mostly driven by productivity and technological advancement driving deflation of goods

refurb 4y ago

Your take is not off base. If the economy hasnt slowed because of the hike in rates, that means inflation could easily spike again (as it did in the 70’s). That means more hikes, potentially pushing future profits down. The stock market isnt priced for what happening today, its priced for what the market thinks will happen.

BurningFrog 4y ago

You're anthropomorphizing the stock market into some club of mustache twirling billionaire villains. In reality it's mostly just math in action. And, of course, headline writing doing its job of making you engaged (angry).

insane_dreamer 4y ago

it feels like no one even cares about the elites anymore; sad, just sad.

deleted 4y ago

[deleted]