Groundwork to the Fed: Rate Hikes Will Hurt Recovery, Workers

March 15, 2022 Groundwork Collaborative

As the Federal Reserve Open Market Committee kicks off its two-day meeting to discuss potential interest rate hikes, please feel free to use the following quote from Groundwork Collaborative’s Chief Economist Rakeen Mabud highlighting the primary drivers of inflation and laying out what is at stake: 

“Raising interest rates will do nothing to address the root causes of rising prices: pandemic profiteering, concentrated corporate power, and decades of underinvestment in our supply chains. 

“Rate hikes will increase unemployment, slow down wage growth, and hurt the very people who are bearing the brunt of recent price increases. Throwing cold water on the economic recovery will only calcify long-standing inequities in our labor market, harming all of us.” 

Email to set up an interview with Groundwork’s team of experts about inflation and corporate profiteering.

CEOs can’t stop crowing about inflation. Below are some recent examples from corporate earnings calls: 

  • Pioneer Natural Resources, a Texas shale company, chose to limit production to line the pockets of Wall Street investors, despite the recent spike in prices around the war in Ukraine. As their CEO stated, “We think it’s important to return cash back to the shareholders.”
  • Constellation Brands, the parent company of popular beers Modelo and Corona, is also engaging in bald-faced profiteering. On its January call, Constellation’s CFO admitted that its consumer base “skews a bit more Hispanic” and the company wants to “take as much as [we] can” from them.
  • The CFO of Hormel, maker of popular grocery brands, bragged to investors about its pricing strategy: “I think we’ve done a great job with our pricing. I think it’s been very effective.” As a result, the company improved operating income by 19% in the first quarter of 2022 compared to 2021. 
  • Retail giant Kohl’s knows what many other retailers know too: When others raise prices, so can we. Their CEO stated “… there are certain national brands that are taking pricing. … We’ll, of course, be taking that along with them…” Kohl’s achieved an “all-time record” in profits in 2021, reaching $7.33 in earnings per share.
  • The CEO of the snack cake company Hostess appreciates how helpful price increases have been for the company’s bottom line: “Pricing, by definition, is a change model. It’s temporary. Consumers get used to it. When all prices go up, it helps.” Hostess beat analyst expectations by 8.7 percent and revenue was up $41.1 million in the fourth quarter of 2021 compared to 2020.