outsourcing strikes
[The full text of a research note from Merrill Lynch chief investment
strategist Richard Bernstein]
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.