Rob Reich Says Fighting Inflation By Putting People Out Of Work Is Cruel: 'Especially When America's Safety Nets... Are In Tatters'

Former Secretary of Labor Robert Reich has expressed his concerns about the Federal Reserve’s fight against inflation in the context of employment. 

Reich noted that the central bank’s attempt to rein in inflation by putting people out of work is ‘cruel.’

"Putting people out of work is the Fed’s means of reducing workers’ bargaining power and the 'upward pressures on prices.' But fighting inflation by putting people out of work is cruel, especially when America’s safety nets — including unemployment insurance — are in tatters,” Reich tweeted.

Also Read: Best Penny Stocks

Employment data released on Friday showed December payrolls rose more than expected. The U.S. added 223,000 jobs last month, above an average estimate of 200,000 jobs. The unemployment rate stood at 3.5%, below estimates of 3.7%.

However, what also stands out in current times is the massive layoffs announced by tech companies to counter any potential recession this year.

Wage Inflation: Friday’s data also indicated wage increases slowed and services activity contracted reducing concerns about the Federal Reserve's interest rate hiking path. The SPDR S&P 500 ETF Trust SPY closed 2.29% higher while the Vanguard Total Bond Market Index Fund ETF BND gained 1.10%.

Experts have been highlighting the importance of bringing wage inflation down to control price rises. Former Treasury Secretary Lawrence Summers said wage inflation can't be substantially reduced without "meaningful slack in the labor market," which is currently not there.

Reich also said many Americans are still living under tough conditions. Citing a CNBC article that quoted billionaire Charlie Munger saying "everybody’s five times better off than they used to be," Reich tweeted, "Reminder: 60 percent of Americans live paycheck to paycheck."

Read Next: Obama-Era Economic Adviser Christina Romer Thinks Policymakers Will Face Difficult Decision Over Rate Path

Illustration by wan wei on Shutterstock