“Concern about inflation was most glaring on Friday, when stocks tanked after the January jobs report revealed the strongest wage gains since 2009,” reported CNN Money. “The immediate catalyst was the jobs report, which showed the strong United States economy might finally be translating into rising wages for American workers — a sign that higher inflation could be around the corner,” offered The New York Times.
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And if inflation is coming, then the Federal Reserve is likely to raise interest rates to slow down the economy and cool off the inflation. When the Fed raises interest rates, bonds become more attractive, so people move money from stocks to bonds — and the stock market dives. It becomes harder to borrow, so businesses and homeowners have less capital to throw around. Profits get squeezed by high-interest payments. And as interest rates rise, the value of older bonds, which pay out a lower interest rate, goes down. So people are losing money all over the place. All because wages started to go up.
Everything in the structure of the economy, then, is geared toward making sure that wages never rise. And for nearly half a century, this task has been accomplished. Wages haven’t budged since the 1970s.
Capitalism’s reserve army has its ranks bolstered by a mechanism known as the “inflation target” or the “inflation objective.” The Fed currently sets the target at 2 percent, meaning that it doesn’t want to see inflation higher or lower than that. What it really means is that it doesn’t want to see inflation higher than that, as the economy hasn’t hit the 2 percent target in years.
But the target itself has meaning, since any little sign of wage growth is taken to mean that inflation is around the bend, so the Fed taps the brakes to keep everything under that target. When the Fed hits the brakes, people lose their jobs. That’s not an unfortunate side effect of tighter monetary policy — it is the intended effect. But the 2 percent target, argue people who want to see real full employment, is too low. The Fed is throwing people out of work unnecessarily — or, at least, for no sound economic reason.
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That’s where the Fed comes in, he added, to “protect businesses from their own worst impulses of giving workers higher wages.”
It’s also what we’re likely to see the Federal Open Market Committee — the Fed’s policymaking body — do over the next several weeks as it moves to raise interest rates. For the first time since the late 1990s, the share of corporate profits being devoted to wages and benefits appears to be rising consistently. It’s still not high, comparable to where it was just before the recession. But it’s enough to make shareholders nervous. “It’s not irrational if you’re somebody that receives profits to feel concerned that profits are going to workers instead. That really is happening,” Mason told The Intercept.
The response from the Fed, to “cool down” the economy by raising interest rates, could be disastrous for workers. By disincentivizing investment, higher interest rates make it less likely for firms to hire more workers. That’ll mean more people out of work overall, creating a feedback loop whereby people spend less money because their paychecks are less certain, in turn leading companies to make less stuff and hire fewer people. That all serves to give bosses the upper hand. In a tight labor market, workers can demand more since it may well be easier for them to find a new job than for their boss to find a new employee. A looser labor market flips that dynamic, raising the risks for employees of getting fired — especially so given the 40 years’ running assault on organized labor.
Rand Paul was the only senator with enough stones to object to the spending increase and he demurred shortly after. 
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