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Wage increases for union workers don’t signal a coming resurgence of inflation, Goldman Sachs said.
Recent strikes and reports of unions gaining more pay mark “the final echo of last year’s inflation surge.”
Wage gains for unions come amid a tight labor market and sticky inflation.
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Recent wage gains for unionized workers signal a lagging indicator for inflation that comes as the labor market is still tight and prices remain sticky, according to Goldman Sachs. In a Thursday note, strategists led by Jan Hatzius pointed to concerns around recent pay increases that unions like the Writers Guild have secured, and whether they could potentially spark a rebound in inflation. “We instead see the recent wage gains for union workers as a lagging indicator — the final echo of last year’s inflation surge,” the strategists said.Unions have bargaining power in withholding labor, which can make it seem like union employees hold significant sway in the wage-price feedback loop.
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That hasn’t proven to be true in the 1960s and 1970s, the bank said, when high inflation and a tight labor market boosted wage growth about the same amount for union and non-union workers.
Unions have recently won their largest wage increases in decades.
Goldman Sachs
It’s possible that recent wage gains could push overall wage growth slightly higher, but the ultimate impact will remain small, in Goldman’s view. The share of unionized employees in the workforce is modest, the firm said, at about 10%, and the annualized wage gains that have been agreed to have not been as large as media coverage suggests. Gold …
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