Labor market mystery: Why higher-income workers are hurting the most
Wall Street and Silicon Valley have been slammed by the Fed's inflation fight.
Goldman Sachs, Amazon and Facebook are among the firms that have announced plans to shed thousands of workers, while there have been comparatively few layoffs at the lower-wage end of the labor market. What’s more, many lower-income workers’ wages are actually beating inflation, which is at a four-decade high.
Yet this could all quickly change next year if the kind of recession that economists are predicting arrives — and the hard times for workers could come just as President Joe Biden launches an expected reelection campaign.
“Tech and finance are taking the impact of rate hikes the hardest because they gorged the most on low rates,” said David Kotok, chief investment officer at Cumberland Advisors. “But if you are a carpenter or a retail worker right now you can still quit your job whenever you want and instantly go somewhere else and get paid more. This won’t continue to be true if we go into a real recession.”
The numbers tell the story of the higher-end pain, lower-end gain phenomenon.
Read the full story at the Politico website: https://www.politico.com/news/2022/12/31/labor-market-high-income-workers-inflation-00075446
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