Inflation Cuts Workers' Real Wages With No End in Sight

Inflation that was supposed to be "transitory" has been cutting away at workers’ real wages for more than a year now. The September inflation report from the US Bureau of Labor Statistics revealed that inflation has predictably continued to rise. Consumer prices increased 0.4% over September, and are 8.2% more expensive than this point last year. Food and shelter continue to get further out of reach for workers in the US; food is 11.2% more expensive than 12 months ago, and prices for shelter increased 6.6% over the same time frame. While energy prices fell overall, energy services prices increased, with electricity and utility gas increasing 0.4% and 2.9% over the last month (15.5% and 33.1% over the last year), respectively. Combined with wages that stay the same or don’t keep pace with inflation, we’re suffering real pay cuts.

Despite being hailed as a "progressive" and a "new FDR" by ruling class apologists in the media, Biden's administration has been nothing but austerity for workers. He came in on promises of raising our wages and expanding access to social welfare programs, promises that he and the rest of the Democratic Party knew that they wouldn't (and couldn't) keep. But instead he and the Democrats went right along with the Republicans in kicking workers off of unemployment benefits over 2021 so that workers, and not the bosses, would pay for "re-opening" of the economy. Proposals like a federal $15 minimum wage were allowed by Biden and the Democrats to die early on in his administration to teach workers not to expect much. This when it's impossible to afford renting two-bedroom housing on the current $7.25 federal minimum wage in any state in the US. Meanwhile the child tax credit, which distributed $250-$300 to families in poverty over 2021, was allowed to expire by both parties in 2022. Biden and the Democrats with few (purely symbolic) exceptions didn't lift a finger to revive it (to say nothing of the Republican Party which, like the Democratic Party, only uses the "working class" as a cheap rhetorical prop); its expiration immediately thrust millions of children into poverty.

Biden's austerity isn't anything new. In fact, it's been the go-to method for the capitalist class in the US and all over the world for half a century. Faced with diminishing returns of profits from their system, world capitalism has resorted to ever more vicious methods of breaking the backs of workers through forcing us to work longer hours while our wages are cut or devalued through inflation. For a while the ruling class was able to offload the crisis onto workers in Africa, Asia, and Latin America, the "peripheries" of world capitalism. They moved industry from places like the US and Europe to the peripheries, killing two birds with one stone: breaking centers of working class resistance in the West, while creating regimes of extreme exploitation in the periphery. But now, the chickens are finally coming home to roost, and workers in the US and other centers of imperialism once again have their living standards under direct attack by capitalism.

Beyond the economic (systemic) crisis, life has also gotten worse for us with capitalism's pandemic and climate change. Covid continues killing around 500 people a day in the US, adding up to over 3,000 per week. However most of these deaths are amongst the working class, and so neither Democrats nor Republicans continue to make any pretense about caring about fighting the virus. In fact at the beginning of the year the Biden administration cut all funding for Covid prevention. After more than 2 and a half years of the virus, healthcare remains a lucrative business that charges us exorbitantly, while funding for public health continues to take a backseat to missiles for Ukraine.

Funding for fighting against climate change also takes a backseat. Biden made modest promises at COP26 in Glasgow last year but even these were too large for capitalism to follow through on. US oil drilling permits have continued apace while the Biden adminstration demands that OPEC also increase oil production (a result of inter-imperialist conflict between Russia and NATO). The acolytes of the Democratic Party parade the token climate measures in the Inflation Reduction Act as proof that the system can act on climate change, but the only thing it proves is that they don't understand the seriousness of the issue and the billions of lives at stake this century.

If you listen to the mouthpieces of Biden and the Democratic Party on MSNBC and elsewhere, the reason that workers in the US are having it so rough lately is because of Russia's war in Ukraine. True, the war in Ukraine has intensified capitalism's global crisis, in particular driving up prices of energy and food due to oil and natural gas exported from Russia and grain exported from both countries having a harder time reaching the global market. But this doesn't explain why oil, gas and food prices were rising in the US and world since well before the invasion. And rather than being the central cause of inflation, the war in Ukraine was an outgrowth of the system's crisis (including inflation), which inevitably leads to inter-imperialist war as states have less and less room for compromise with each other. For the bourgeois mass media aligned with the Democratic Party, blaming Russia is just an easy way to deflect blame ahead of the midterms, while more importantly garnering support for funding the US' proxy war in Ukraine with tens of billions of dollars.

For the Republican Party on the other hand, soaring inflation and worsening living standards for workers under Biden presents them with an opportunity. They get to blame it all on the current man in the Oval Office, promising workers that if Trump or some other right-wing clown were in office, that these problems would magically disappear. But they also don't have any actual solution for workers, and so rely on demonizing trans people and other oppressed groups to distract from that inconvenient fact.

For Biden and the rest of the ruling class, their solutions are twofold; make us pay for the crisis, and make it harder for us to fight back. Biden’s Federal Reserve chair Jerome Powell has led the agency in hiking interest rates five times over the last eight months, for a combined total of 3.75%. Their stated aim is engineering a recession, slowing economic growth and raising unemployment, to tame inflation. Workers are going to be even more saddled with debt, lose their jobs, and suffer more cuts in real wages, all in a vane attempt by the capitalist class to resuscitate their decadent system’s profit rates. Meanwhile, police budgets are larger than ever under Biden, despite the bourgeois mass media narrative that they’ve been defunded. And the bosses aren’t hesitant to have them deployed any time workers refuse to pay for the bosses’ crisis.

Let’s call this what it is; class war! And it’s time that our class won this war once and for all. The working class has got to struggle for our own self-organization, forming strike committees, mass assemblies and workers’ councils, and fight back.

Internationalist Workers’ Group
Sunday, November 6, 2022