The US Bureau of Labor Statistics (BLS) reported Friday morning that just 263,000 new jobs were added in September, compared to 315,000 in August. Total new jobs hit the previous low in April 2021 for monthly job creation over the last 20 months.
President Joe Biden tours Volvo Group Powertrain Operations with Martin Weissburg, Chairman of Volvo Group North America and President of Mack Trucks, in Hagerstown, Md., Friday, October 7, 2022 [AP Photo/Manuel Balce Ceneta]
Although the BLS reported that the unemployment rate fell to 3.5 percent in September from 3.7 percent in August, the labor force participation rate also fell to 62.3 percent from 62.4 percent in the previous month. The drop in the official unemployment rate was caused by an increase in workers exiting the labor market, continuing a trend that began in 2020 with the outbreak of the coronavirus pandemic.
This dashed ruling class hopes that the string of sharp interest rate hikes imposed by the US Federal Reserve in recent months had begun to reduce job availability to such an extent that workers were forced to take low-paying positions to make ends meet to make ends meet. Further interest rate hikes of 0.75 percentage points and more were therefore imminent, which put additional pressure on heavily indebted banks, corporations and financial speculators and fueled further price declines.
Wage growth slowed in September, with hourly wages rising just 5 per cent, compared with 5.2 per cent in August, the slowest annual rate since December 2021. With the latest August inflation rates of 8.263 per cent, September wage increases translate to continued reductions in the workforce real wages for workers.
But that, too, has been a disappointment to the corporate elite, who are demanding faster and deeper pay cuts.
For the working class, September’s BLS data means that macroeconomic conditions are deteriorating and the Federal Reserve’s deliberate policy of raising interest rates to increase unemployment and attack workers’ wages is having an impact. For the ruling class, the slaughter is still too little and too slow.
Class warfare policy was bluntly explained by Fed Chair Jerome Powell on September 21 when he responded to a question about how long Americans would have to endure the “economic pain” wrought by the central bank. He replied it would depend on “how long it takes for wages to come down”.
Stocks fell sharply on Friday, with the Dow Jones Industrial Average falling 630.15 points, or 2.1 percent, the S&P 500 Index down 2.8 percent and the NASDAQ down 3.8 percent.
Financial markets are looking to break the back of a growing movement of workers for wage increases amid record corporate profits and decades-long assault on living standards, benefits and workers’ rights by driving up unemployment.
The ruling establishment’s position on the jobs report was summed up by Northern Trust chief economist Carl Tannenbaum, who told the New York Times: “If I had just woken up after a really long nap and seen these numbers, I would conclude that we still have one one of the strongest job markets we’ve ever had.”
The Federal Reserve’s next meeting is scheduled for November 2nd and it is closely monitoring the employment data. All indications are that rates will hike another 75 basis points, an unprecedented fourth straight rise of 0.75 percentage points, eclipsing a similar recessionary attack by Fed Chairman Paul Volker in the early 1980s.
Speaking on Thursday, Federal Reserve Governor Christopher Waller said, “I expect that at our next meeting we will have a very thoughtful discussion about the pace of the tightening.” Little progress had been made against inflation, adding: “Until this progress is both meaningful and sustained, I support continued rate hikes along with ongoing Fed balance sheet trimming to contain aggregate demand.”
Sarah House, senior economist at Wells Fargo, the fourth largest bank in the US, told the Wall Street Journal: “We are seeing a slowdown in labor demand. But we still have a long way to go to restore the balance between labor supply and demand.”
Responding to September’s BLS payroll data, which came in more than 3 percent behind inflation, House said, “That’s still too strong for a 2 percent inflation target, but it’s a step in the right direction.”
According to the Journal, many companies have slowed hiring or firing in industries sensitive to interest rate increases, such as automotive. B. Technology and real estate. Some companies that saw demand surge early in the pandemic are trimming as consumer spending is hit by rate hikes.
The Journal report added, “Peloton Interactive Inc. announced Thursday that it plans to cut about 500 jobs, about 12 percent of its remaining workforce, in the exercise equipment maker’s fourth round of layoffs this year. Other companies, from Facebook owner Meta Platforms Inc. to Snap Inc. and Stanley Black & Decker Inc., are cutting jobs, while others, including Amazon.com Inc. and Alphabet Inc.’s Google, have announced they would freeze or unplug it again.”
CNN Business said that labor force participation is an area of concern for the Fed. “Getting a larger proportion of humans into the workforce may help slow wage growth, one of several factors Fed officials fear could keep inflation high,” she wrote.
Speaking Friday afternoon at the Volvo Group’s Powertrain Operations Facility in Hagerstown, Maryland, President Biden attempted to cover up the reality of events and presented September’s job creation data as a follow-up to his administration’s “historic progress” in the “Post-pandemic” economic recovery.
Rather than discussing the Fed’s deliberate incitement of a recession, Biden referred to an “economic transition” from a “historically strong economic recovery to a steadier, more resilient recovery.”
Biden toured the plant with Martin Weissburg, chairman of Volvo Group North America and president of Mack Trucks, along with UAW Region 8 director Mitchell Smith and US Rep. David Trone. In 2021, the UAW sold out a three-month struggle by Volvo Truck workers in Dublin, Virginia that included two separate strikes and the grassroots rejection of three pro-business interim contracts.
Biden continued to portray the deepening attack on workers as pro-worker policies, stating, “Wage growth for workers remains solid, from historic peaks months ago, but is still growing for workers who deserve a raise.” And that is the progress we need to see.”
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