Outsourcing Labor. Outsourcing Strikes?
It is widely known that US labor has been outsourced or threatened with outsourcing. Some believe that this real or perceived threat is limiting wage hikes in the US, limiting the power of US labor unions, and contributing to disinflation/deflation.
We have agreed in the past, but perhaps now this is the wrong story. Maybe investors should be discussing the rising power of non-US unions? Several of our analysts (our metals and steel analyst, Dave Lipschitz being the most vocal) have pointed out the increasing number of strikes occurring outside the US.
The differential cost of labor between the US and many other countries remains quite large. However, it increasingly appears as though investors should be assessing the potential risks of the growing strength of non-US labor unions as a potential contributor to inflation.
The US may have outsourced labor, but it seems the US may have also outsourced it late cycle union pressures.