In his Friday, June 3 Alternative Visions Show, Dr. Rasmus concludes the analysis of ‘Anatomy of Inflation (Pt2)’ and dissects the US Labor Dept’s latest monthly Jobs Report, showing the growing indications within the Report that jobs markets are actually weakening. As a lagging indicator (at least 6 mos.) of US economy’s general direction, coming jobs reports will show labor market further weakening and even decline as well, Rasmus argues. The radio show concludes with general comments on the global economic war launched by US imperialism on its major challengers, Russia & China, as US neocons restored and continue under Biden their control of US foreign policy in the post-Trump era. (Next week’s show will focus on the US sanctions–costs & consequences–on Russia as the current centerpiece of the emerging global economic war to restore US empire’s global economic hegemony).
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SHOW ANNOUNCEMENT
Dr. Rasmus picks up where last week’s show, continuing the discussion of the Anatomy of Inflation in the US and why inflation will continue chronically for months more. Why falling productivity, rising unit labor costs, inflationary expectations, further intensification of sanctions and war in Ukraine will all add to inflationary pressures. Biden’s various failed initiatives to dampen inflation, and rejected alternatives that could address inflation, are discussed. The show next considers today’s just released jobs report, and looks behind the numbers to show the jobs trend is slowing and hiring freezes appearing that will change the direction of this lagging indicator in coming months. Meanwhile wage gains are falling further behind prices and for most workers are much less than the official reported ‘average’ of 5.2% which is skewed by 18% gains for professionals and managers at the top end of the wage structure and for minimum wage hikes needed to attract workers to service jobs again at the low end. The show concludes with a preliminary discussion of the nature of War in general, and economic war in particular, today. (Next week’s show: ‘Russian Sanctions and their consequences’ for EU, US, and global economy’)
Dr. Jack Rasmus @drjackrasmus
Jack Rasmus 
Could you explain why worker productivity is decreasing?
Productivity is a ‘function’ (cause) of changes in two variables: wage costs and business investment. If business investment stagnates while business hires more workers (raising total wage bill) then productivity falls. Productivity is just output per worker (or per workers’ total hours worked, a better variable). So if business investment stagnates while more are hired, then productivity falls; if investment rises and fewer are employed, then productivity rises. What we have going on now in 2Q22 US economy is most businesses in real economy have halted investment expansion out of growing economic uncertainty of the future. That’s especially true for small and medium size businesses. At same time they’re bringing workers back so their total wage costs (not wage rates rise) rising as investment stagnating. That results in productivity falling. In turn falling productivity results in rising business unit labor costs (from investment stagnation not wage hikes much in this current case). Rising unit labor costs are then ‘passed on’ in large part to consumers. That translates into inflation. So in short: lack of business investment is generating falling productivity which is causing rise in unit labor costs which translates into inflation. (Note: the culprit here is not wage increases per, which US labor dept. indicate is moderate, and mostly concentrated to high end paid workers like professionals ‘job hopping’ and to some extent lowest paid refusing to return to work at $7.25/hr. minimum wage. Hope that explains the actual relationships of economic variables and their relationship to productivity.
Thanks for the clear explanation.