Rate hikes cut social services and weaken workers’ bargaining power via unemployment

Evidence

Interest rate hikes, thanks to monetary austerity, are good news for creditors but bad news for families who depend on loans for their daily survival and who will find themselves paying higher mortgages and amassing more credit card debt. Working families are not just hit as consumers; they are hit harder as workers. First, the higher cost of money increases government borrowing expenses for social services, which will therefore be cut. Second, monetary austerity directly impacts the labor market. The high cost of money, in fact, slows down the economy: as employers reduce spending, fewer job opportunities and higher unemployment undermine the bargaining power of workers. Monetary austerity determined the US Federal Reserve’s agenda in 2022 and 2023 and cost American workers 1.2 million job openings between May 2023 and May 2024 alone. — Clara E. Mattei, Escape from Capitalism, 153

Interest rate hikes, thanks to monetary austerity, are good news for creditors but bad news for families who depend on loans for their daily survival and who will find themselves paying higher mortgages and amassing more credit card debt. Working families are not just hit as consumers; they are hit harder as workers. First, the higher cost of money increases government borrowing expenses for social services, which will therefore be cut. Second, monetary austerity directly impacts the labor market. The high cost of money, in fact, slows down the economy: as employers reduce spending, fewer job opportunities and higher unemployment undermine the bargaining power of workers. — Clara E. Mattei, Escape from Capitalism, 153

Categorization

• XREF: The monetary half of austerity — completes the two-channel mechanism (fiscal + monetary) that the whole argument runs on. Worker bargaining power as casualty is the key link. — connects to: High interest rates deliberately broke workers’ power to enforce subordination — Clara E. Mattei, Escape from Capitalism, 154; Withholding revenue transfers forces cuts in public-sector wages for Palestinian workers — Clara E. Mattei, Escape from Capitalism, 320
• corroborated: 2 independent passages support this claim — Clara E. Mattei, Escape from Capitalism: An Intervention, 153; Clara E. Mattei, Escape from Capitalism, 153