“When it becomes so hard to make ends meet on the wages that they have, some people are seeing, maybe there’s a better way.”
Gould attributes several factors to the rise of “quiet fleecing” over the past decades — including stagnant minimum wages, the decline of unions, and the growing pay gap between CEOs and their employees.
“Smaller and smaller pieces of the pie are coming to the vast majority of workers and their families in this country,” she said.
She also points to the Federal Reserve’s past prioritization of low inflation and its allowance of excess unemployment, both of which have hurt workers’ bargaining power. As the Federal Reserve raises interest rates to combat today’s surge in inflation, she’s concerned that a resulting economic slowdown would ultimately have the same effect.
“One of the threats of allowing the unemployment rate to rise is that not only you could have millions of people lose their jobs, but also workers — even who have their jobs — lose some of that leverage to be able to build up their wages, because they’re less scarce,” she said.
While many low income workers have received pay bumps over the past few years, they could be disproportionately impacted by a weakened labor market. These workers are not only the most likely to see job losses when unemployment ticks up, Gould says, but the most likely to “require a very tight labor market” to see wage growth.
While the Federal Reserve is aware of these risks, it may think some of this “pain” is needed to slow inflation. But Gould thinks directing this pain at the labor market would be counterproductive.
“I think that it’s really important to know where the inflation is coming from. It’s not coming from the labor market,” she said. “Wage growth has not been beating inflation. So if anything, wage growth is actually pulling down on inflation.”