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August 18, 2021

Workers’ bargaining power to lift US businesses – leading macroeconomic influencers

Covid-19 has led to an increase in workers’ bargaining power to demand higher real wages in the US.

Economists speculate that if workers systematically make greater demands of their employers than before, it will be a paradigm shift in balance of power in the workplace. However, the Bidenomics experiment is looking to increase employment, wages, and productivity at the same time while containing a higher inflation.

Martin Sandbu

Martin Sandbu, economics leader writer for the Financial Times and former senior research fellow at the Zicklin Center for Business Ethics Research at the Wharton School, University of Pennsylvania, retweeted an article shared by Italian fund manager Alberto Gallo on class conflict returning to the core of economics, particularly felt in richer nations such as the US and Europe.

US President Joe Biden summed up the most surprising outcome of the pandemic in three words stating that workers should be paid more. Consequently, the US administration is exploring a third novel idea where strengthening workers’ bargaining chips can encourage employers to increase employee productivity and output if they expect the demand to be strong.

Economists have argued in the past that business interests are more likely to oppose a full-employment policy, including entrepreneurs who stand to gain more in scenarios of high demand growth. Additionally, businesses will dislike public investment or government activism because it will reduce their scope for private profitmaking, as they will lose the advantage of controlling workers’ dependence on business confidence.

Harry A Patrinos

Harry A Patrinos, an education economist and practice manager for the Europe and Central Asia region of the World Bank’s education global practice, shared an article on how the return to classrooms may become a prominent source of Covid-19 infections, as children worldwide are looking to return to in-person learning after the summer break.

School closures has been one of the most contentious but important policies adopted to curb the spread of the Covid-19 virus. According to the United Nations Educational, Scientific and Cultural Organization (UNESCO), schools have been wholly or partly closed for two-thirds of an academic year on average since the start of the Covid-19 outbreak in March 2020, with many children dependent on limited remote learning. About eight countries, including Cambodia, Venezuela, and Sri Lanka, for instance, have yet to reopen their schools.

Although the Centres for Disease Control and Prevention (CDC) and studies from other countries reveal that the increase in cases in school-aged children or school reopenings have not increased transmission in general populations, experts believe that the emergence of new variants and higher adult vaccination rates can change that.

Jim Stanford

Jim Stanford, economist and director of the Centre for Future Work, based at the Australia Institute, shared an article on full economic recovery from Covid-19 not being possible without the full labour force participation of women in Canada.

According to Heather Scoffield, the economics columnist for the Star, what Erin O’Toole, the leader of the Conservative Party of Canada did not understand about day care was that giving parents money for childcare would help with affordability but not in creating new day care spots.

The Conservatives are looking to not only boost economic growth to more than three per cent a year, but are also cancelling the Liberal child-care plan, along with plans to have women back at the workplace, creating new day care spots, and providing better pay to childcare workers, she writes. However, the Conservative replacement for the $30bn Liberal plan is a tax credit and similar to shooting oneself in the foot.

Liberals, meanwhile, believe that the allocation of $30bn towards increasing childcare capacity and boosting wages of childcare workers can pull women back into the workforce who had been neglected during the Covid-19 pandemic.

 

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