Rising inflation in the United States has captured headlines during November. Mainstream media outlets have been warning of increasingly expensive commodities like coffee and deciding where to assign blame — including to Joe Biden, to Americans themselves, and far too rarely, to corporate greed.
A bevy of factors contribute to rising inflation levels, including interruptions in the supply chain, increased labor costs, and rising demand for goods. But a key force driving up prices is the U.S.’s mega-corporations.
In a competitive market, profit margins should approach zero, given that consumers can finds substitutes for products. But corporate profits have surged over the past two decades, reaching new heights in recent months as prices increased. As Judd Legum explains, “corporations are not being forced to raise prices to stay afloat. They are choosing to raise prices to maintain large profit margins because they have enough market power to do so without losing customers.”
Procter & Gamble (P&G), a leading consumer product company, announced a price raise in April 2021 for household staples from diapers to toilet paper. It reported in the fiscal quarter ending March 31, 2021, a profit of $3.785 billion, amounting to a 20.9% profit margin compared to total sales.
In the fiscal quarter ending September 30, 2021, after some of P&G’s price increases went into effect, the company reported a profit of $5.06 billion, representing a profit margin of 24.7%. The company attributes its price increases to the “rising costs for raw materials, such as resin and pulp, and higher expenses to transport goods,” but its climbing profits tell a different story.
While competitors should ideally undercut P&G to keep prices of goods like diapers down, not much competition exists. Its main competitor, Kimberly-Clark, announced similar price increases at the same time.
These rising costs hurt those who can least afford them while disbursing the gains to wealthy shareholders and executives. According to Rakeen Mabud, Chief Economist at the Groundwork Collaborative, “This has nothing to do with inflation, and everything to do with corporate greed by those who are focused on enriching themselves at the expense of workers and families.”
PepsiCo, Coca-Cola, Whirlpool, and supermarket chains Albertsons and Kroger all announced price hikes and have reaped gains, with the CEO of the latter admitting, “A little bit of inflation is always good in our business.” Dollar Tree CEO Michael Witynski recently announced his company’s price raise to $1.25 in the U.S., citing the “inflationary environment.”
As Warren Gunnels, majority staff director for Senate Budget Committee Chair Bernie Sanders, pointed out on twitter, the wealth accrued by Dollar Tree and subsequently swept to its administrators stands in stark contrast to the low wages earned by its employees.
Dollar Tree made $1,230,000,000 in profits this year, gave its CEO $10,767,883 and pays workers as little as $8.32 an hour. Over 7,400 Dollar Tree employees are forced to rely on food stamps and Medicaid subsidized by U.S. taxpayers. Cite the damn corporate greed. https://t.co/6cA6rMtY51
— Warren Gunnels (@GunnelsWarren) November 24, 2021
On FAIR’s CounterSpin, writer for The Intercept Jon Schwarz discussed the need to question when corporate media collectively pushes the same issue. In this case, The New York Times, CNN, and CNBC, among others, have been ringing alarm bells about how inflation may hurt working Americans. But as Shwarz explains, the current figure of 6.2% inflation also “works out to a transfer of wealth from creditors to debtors of about $850 billion,” because debt sits at a fixed rate while inflation lowers the value of the dollar.
This doesn’t represent a one-to-one wealth transfer from rich to poor, “But it is a significant amount. And you may have noticed people with a lot of money do not like to lose it. And that’s really at the root of this inflation freak-out.”
Corporate media has used inflation as a partisan weapon to fling back and forth, and invoked workers solely for their economic utility. While reporting on current price hikes, media has the responsibility to outline how corporate greed, in addition to supply chain and labor woes, is contributing to the financial impact on Americans.