Brookings and EPI Agree: Rising Corporate Profits are Driving Inflation
Brookings and EPI Agree: Rising Corporate Profits are Driving Inflation, Leaving Workers Behind
Yesterday, two leading economic think tanks – the Brookings Institution and the Economic Policy Institute – released new reports that reached a similar conclusion: high corporate profits, not workers’ wages, are driving high prices at the checkout line, and consumers are paying the price.
Economic Policy Institute’s Josh Bivens: “It is unlikely that either the extent of corporate greed or even the power of corporations generally has increased during the past two years. Instead, the already-excessive power of corporations has been channeled into raising prices rather than the more traditional form it has taken in recent decades: suppressing wages.”
Brookings Institution’s Molly Kinder, Katie Bach, and Laura Stateler: “Overwhelmingly, financial gains benefitted wealthy shareholders and executives, while frontline workers experienced the greatest losses and benefited minimally from company success. Despite the hope and hype, the companies are paying workers only modestly more in real terms than they did before the pandemic—and, for most workers, still not enough to get by.”
Lindsay Owens, executive director of Groundwork Collaborative and a leading expert on inflation, released the statement that follows:
“Corporate profit margins are at seventy-year highs, and Wall Street is eating it up. Giant corporations are overcharging customers to maximize profits – and these are the very same companies that are still paying their workers less than $15 an hour.”
Visit Groundwork’s new site to learn more about the link between rising prices and corporate profiteering.
In the News – Corporate Profiteering
- Star Tribune: Greed or good business? A look at food company profits over the past year. “Corporate profits are at a record high — and, more critically, corporate profit margins are at their highest point since 1950,” said Rakeen Mabud, chief economist and managing director of policy and research at the progressive Groundwork Collaborative. “What we’re seeing across the board is companies are taking advantage of this moment and jacking up prices beyond what their input costs would justify.” [4/9/22]
- Salon: Mitch McConnell leads Republicans in profiting off of corporate price hikes. “They tell investors every quarter our pricing actions more than offset our [cost of goods sold]. They’re passing along the rising cost of production, and they’re still charging more,” Owens added. “And so it’s actually quite a straightforward story. It’s interesting to me that there’s been such a vigorous debate about it, because it’s sort of just factually true.” [4/9/22]
- PBS Newshour: Why corporations are reaping record profits with inflation on the rise. Lindsay Owens: What we’re seeing in this moment is really when that profit maximization and opportunity collides. And the opportunity is the cover of inflation. [4/12/22]
- Politico: The hunt for peak inflation. “Policymakers should tax excess profits to encourage productive investment, pursue a federal price gouging standard to protect consumers, and make long-overdue investments in our supply chain. Regulators should also enforce existing laws to make markets more competitive and prevent collusion and price-fixing.” — Rakeen Mabud, chief economist and managing director of policy and research, Groundwork Collaborative. [4/15/22]
- CBS News: Companies use inflation to hike prices and generate huge profits, report says. “Companies know that consumers expect higher prices right now and they’re really seeing how far they can push that,” Lindsay Owens, executive director of the left-leaning economic think tank Groundwork Collaborative, told PBS. [4/18/22]
- Public News Service: Minnesota Grapples with Inflation; Report Blames Corporate Profits. A new report from the Groundwork Collaborative said corporations are taking advantage of the pandemic to drive up costs for things such as prescription drugs, groceries and diapers. The authors pointed to corporate earnings calls in which some CEOs openly boast about their price hikes. [4/20/22]