Labor strife hits the heart of the Federal Reserve: the cafeteria

The Federal Reserve has been focusing a lot on American workers’ battle for higher wages in its campaign to curb inflation. Now, the fight has landed right on its doorstep.

Cafeteria workers at the New York Fed this week voted to authorize a strike over pay, a move that comes as the central bank is under pressure to avoid punishing workers with interest rate hikes.

The workers — among the employees of food services giant Sodexo who took the vote — are pressing for higher wages after not seeing any increase since March 2021. Since that time, the consumer price index has surged more than 13 percent.

“The food service workers, candidly, have been really whacked,” said D. Taylor, head of UNITE HERE, a union that represents food, hotel and casino workers. “People are tired of low-wage jobs that they view as dead end.”

So far, the workers' effort seems to be working: Sodexo and the union jointly announced on Thursday that they agreed to return to the bargaining table on March 17.

The strike authorization vote underscores a dynamic that the Fed has been watching nationwide: Labor shortages have given workers more clout to push for bigger paychecks, something central bank policymakers are worried could keep inflation elevated as wage costs rise. The release of the latest monthly jobs number on Friday will show whether demand for labor is cooling. A hotter-than-expected report could lead the Fed to raise rates even higher and faster.

Said Taylor: “My only advice to the Fed would be, before you contemplate very big macro issues, you should make sure the workers who serve the food and provide the kind of food and comfort people in that building enjoy, that those workers enjoy the benefits of the economy."

Fed Chair Jerome Powell faced attacks from lawmakers this week when he appeared before Congress over the prospect that higher interest rates could trigger a recession and hurt workers.

Sen. Elizabeth Warren on Tuesday asked him to "speak directly to the 2 million hardworking people who have decent jobs today who you’re planning to get fired over the next year." The next day, Rep. Ayanna Pressley called on him to pause the rate hikes, saying, "The people who will bear the brunt of an economic recession are our most vulnerable."

The Sodexo employees are contract workers, so the New York Fed doesn’t have direct control over their pay. The vote, which was unanimous, means that they now have the ability to strike at any time, though they have agreed to hold off for the time being.

“Many important issues have already been agreed upon. There are, however, still some significant issues that remain to be resolved,” Sodexo and UNITE HERE Local 100 said in a statement. “We are confident that we are on a path, with additional and continued good faith bargaining, to reach a full agreement on all issues soon that will be fair to our employees and union members.”

Sodexo has agreed to a minimum of $20 per hour at each of the locations, according to the union.

Taylor pointed to the low unemployment rate as a big reason why the union had been able to secure more wins for its members.

“I’d love to say we’re the greatest negotiators in the world,” he said. “There’s never been a better time to organize.”

“We hope that the company and its employees are able to reach a fair agreement in a timely manner,” a New York Fed spokesperson said.

“We are ready to fight,” Virginia Vargas, a Sodexo employee who works at the New York Fed, said in an interview. “We work very hard. We give them 100 percent, and we deserve that back.”