On Wednesday’s broadcast of Bloomberg’s “The Open,” White House National Economic Council Director Brian Deese responded to concerns by the Federal Reserve about growing wages putting pressure on inflation and Fed officials saying that unemployment needs to rise by stating that “we’re living through an unprecedented moment. And so, there isn’t an exact historic analog to the moment that we’re in.” And due to the number of job openings, “there are ways in which this transition can ease some of the labor market pressure in a way that doesn’t have to mean that working people have to bear the brunt of that impact.”
Host Lisa Abramowicz asked, “Real wages are still deeply negative, and even though they’re less negative than they were in the prior month, still, -3.6%, a historic figure. How much do you want to see the employee have pricing power at a time when so many people are worried about a wage spiral?”
Deese responded, “Well, we did see real wage growth month-over-month this month. I think you have to step back and answer that question in the broader perspective. We have seen one of the strongest labor market recoveries ever in American history and we’re seeing that labor market strength continue. That means that, with jobs plentiful, people have opportunities to move into better-paying jobs and better-paying opportunities. That’s a positive thing for the American economy. And what we’re trying to do here is to take the steps that we need to take to bring prices down without giving up all of those labor market gains. That’s absolutely our objective, and over the longer term, we think that we are well on our way to moving toward an economy that actually works better for typical working people and where they do have more job opportunities and more leverage in the workplace. We think that’s a positive thing and we can get to that kind of sustainable wage growth, sustainable job growth through this transition. So, we have to make the right policy choices. And obviously, there are serious global uncertainties, but I think that the data points that we’re seeing at least are hopeful data points that we’re moving in that direction.”
Abramowicz then asked, “But Brian, even the Federal Reserve has cited wage growth as a possible negative when it comes to combatting inflation, and we’ve seen this as, especially Fed officials say that even they would like to see — not like to see, but that they need to see the unemployment rate increase and the labor market tighten significantly, taking away power from the employees. How do you deal with that, given that your view very much is trying to give people a living wage and bring up the individual employee?”
Deese answered, “Look, we’re living through an unprecedented moment. And so, there isn’t an exact historic analog to the moment that we’re in. So, you have to go back more than 50 years to find a moment where the Fed began a tightening cycle when unemployment was as low as it is. And we’ve never had a situation with as many job openings in the economy during this cycle. So, there are ways in which this transition can ease some of the labor market pressure in a way that doesn’t have to mean that working people have to bear the brunt of that impact. And, again, if you step back from a broader perspective, President Biden’s view is that we had economic challenges that were putting working families in a negative position long before this pandemic happened and that we are committed to building the foundations of an economy that will work better for working people going forward, even as we navigate through this transition. So, that’s why you see, on the legislative front, even as we’re working to provide some immediate cost relief for families, we’re trying to do things like reform the way that prescription drugs are negotiated here in the United States. We haven’t done that for decades. If we do that, over time, that’s going to provide sustained relief to families. That’s the kind of longer-term reform we’re working on even as we address immediate challenges.”
Follow Ian Hanchett on Twitter @IanHanchett
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