The Intercept obtained a leaked private memo in which a Bank of America executive stated, “We hope” working Americans will lose leverage in the labor market.
The memo also noted that changes in the percentage of Americans seeking jobs “should help push up the unemployment rate.”
Ethan Harris, the head of global economics research for the corporation’s investment banking arm, Bank of America Securities, wrote the “Mid-year review.”
The Intercept writes:
The memo comes amid a push by the Federal Reserve to “cool down” the economy, informed by much of the same rationale — that high wages are driving inflation. This year, the Fed has increased interest rates for the first time since 2018. Historically, this has often caused recessions, and that is exactly what appears to be happening now: The Commerce Department reported Thursday that the gross domestic product has fallen for the second quarter in a row, indicating that a recession may have already begun.
Parts of the mid-year review, in particular its emphasis on a looming recession, received press coverage at the time of the memo’s release to clients. This is the first publication of the document in full.
What the memo calls “the ratio of job openings to unemployed” is generally calculated the other way around — i.e., the ratio of unemployed people to job openings. The more widely used ratio offers one measurement of the balance of power between workers and employers. The lower this number, the more options unemployed people have when searching for work and the greater opportunities employed people have to switch to jobs with better pay and conditions. According to the Bureau of Labor Statistics, this ratio stood at 0.5 as of May, meaning that there were then two job openings per unemployed person.
The Intercept continues (emphasis ours):
Instead, the memo is focused on the enticing prospect of the Federal Reserve raising interest rates, slowing the economy, and bludgeoning workers back into line.
The perspective of working Americans would, generally, be exactly the opposite. For most of us, it’s fantastic to have lots of jobs available, with employers competing for you. A tight labor market is wonderful. Wage pressures are great. From this viewpoint, the key issue right now would be how to lower inflation while keeping employment and worker power high. Such a tack would include full-bore attempts to lessen supply chain issues and reduce the pricing power of big corporations.
Most interesting of all is that in Bank of America’s enthusiasm for the Fed going on the attack against working people, it gets the basic facts wrong: Wage pressures have turned out not to be, as its memo claims, “hard to reverse.”
Read the leaked Bank of America memo Here.
