Groundwork Chief Economist Testifies at Congressional Hearing on Pandemic Profiteering
February 2, 2022 Groundwork Collaborative
Today, Groundwork Collaborative’s Chief Economist and Managing Director of Policy and Research Rakeen Mabud testified at a hearing of the Committee on Energy and Commerce Subcommittee on Consumer Protection and Commerce. The hearing, “Pandemic Profiteers: Legislation to Stop Corporate Price Gouging,” focused on the critical issues of pandemic profiteering and price gouging.
Dr. Mabud opened with examples of corporate executives bragging about their ability to raise prices under the cover of inflation – while raking in record profits for their CEOs and investors. She laid out how current profiteering is the direct result of decades of policy choices that have resulted in an imbalanced and brittle economy. And she recommended that Congress tackle pandemic profiteering and price gouging head-on. You can read her full remarks, as delivered, here.
“The best path towards an inclusive, resilient economy is to support policies that foster competitive markets where consumers, working people, and smaller competitors all have meaningful bargaining power,” Dr. Mabud told the Committee on Wednesday. “Smart investments, coupled with pro-competition safeguards, will reduce costs and prices in the long run, and ensure that no one is left behind during the recovery and beyond.”
Watch Dr. Mabud’s testimony here – and read her full remarks submitted for the record here.
KEY EXCERPTS FROM DR. MABUD’S TESTIMONY:
“First, pandemic profiteering is widespread, and is taking a massive toll on consumers, workers, and small businesses, all while corporate executives and shareholders are getting richer. Second, today’s profiteering is the direct result of decades of policy choices resulting in an imbalanced and brittle economy that allows mega-corporations to profit from crises. Third, wage increases for workers are not a driver of current price spikes.”
“Corporations have this kind of power because we spent a half-century allowing mega corporations to take control of our supply chains. Corporate America’s ruthless pursuit of efficiency ushered in a wave of mergers and acquisitions that has contributed to today’s high prices…”
“While concentrated market power isn’t the only reason for our current plight, it plays a critical role in propping up an imbalanced economy that prioritizes profits over a functioning system.”
“Recent research demonstrates there has been no correlation between price increases and wage increases since December 2020. In short, there is absolutely no evidence to suggest wage increases for workers are to blame for the price increases we are seeing today.”
“…Congress should take up H.R. 675, the “Price Gouging Prevention Act.” … [and] the Committee can continue to insist that the FTC investigate anticompetitive, deceptive, and unfair business practices to protect consumers and encourage competition.”
NEW FINDINGS FROM CEO EARNINGS CALLS:
Kimberly Clark CEO Mike Hsu crowed to investors about “multiple rounds” of “significant pricing actions” in the company’s recent Q4 earnings call, and admitted he plans to continue doing it throughout the year.
In its 4th quarter report, Johnson & Johnson revealed it had raised prices…despite raking in billions from COVID vaccine sales. J&J CEO Joaquin Duato told investors that the “strong underlying demand for medical care,” and all there is to do to “address suffering and death” caused by different diseases, is part of their company’s “optimism” and “opportunity” for its future performance.
The company 3M, which produces N95 masks (and other things) crowed on its earnings call that “the team has done a marvelous job in driving price. Price has gone up from 0.1% to 1.4% to 2.6%.” The CFO told investors, “We see that to be a tailwind.”
Earlier this month, Procter & Gamble, which produces a range of essential household products, from feminine care items to cleaning supply, announced price increases in all 10 of their product categories: “Building on the strength of our brands, we are thoughtfully executing tailored price increases…We see a lower reaction from the consumer in terms of price elasticity than what we would have seen in the past.” Procter & Gamble reported that price increases helped drive their net sales up six percent higher than the previous year, bringing their total net earnings for the quarter up nine percent to $4.2 billion.
About Groundwork Collaborative
The Groundwork Collaborative’s mission is to advance an economic vision for strong, broadly shared prosperity and true opportunity for all. Visit our website and follow us on Twitter @Groundwork.