AGF Management Limited

09/15/2022 | News release | Distributed by Public on 09/15/2022 03:44

Everyone Wants More

THE DESIRE TO KEEP PACE WITH INFLATION has workers demanding that they get increased salaries and benefits, which of course will lead to more inflation. Railroad workers are leading the way but everyone wants more.

THE WAGE PORTION of a potential railroad deal is essentially finished. It would grant a staggering 14.1% wage increase immediately, bonuses totaling up to $5,000, and a 24% compounded wage increase over the next five years. This will become the template for union demands, as nurses, teachers and factory workers seek new deals - and employers scramble to pass along price increases to customers.

THE DRIVE FOR GREATER COMPENSATION is paramount for senior citizens, who will get a near-record Cost of Living Adjustment (COLA) in their 2023 Social Security benefits. Experts expect a hike of close to 9% for next year.

THE OUTLOOK: More contracts will be for three years or more, and more wages will be linked to the CPI, as unions flex their muscles. The labor market is exceptionally tight - workers will be in short supply until three factors change:

* Dropouts from the workforce return to work; .

* Extremely generous government benefits, which are a disincentive to returning to work, are scaled back;

* Significant immigration reform is enacted, boosting the work force, but that isn't remotely imminent.

MEANWHILE, OUR HUNCH IS THAT A RAILROAD STRIKE would be brief. Joe Biden is the most pro-union president in recent decades, and he can call in chits. This week's focus on inflation will hurt Democrats in close House and Senate races, which will prompt the railroad unions to agree to this very generous deal by the weekend, if not sooner.

The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.

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