Watch a recording of the hearing here and read Baydoun’s opening statement here.
Today, Groundwork Collaborative Director of Policy and Research Bilal Baydoun testified before the Senate Banking Committee at a hearing titled, “Higher Prices: How Shrinkflation and Technology Impact Consumers’ Finances,” where he outlined the rampant corporate power behind price hikes facing consumers. In an exchange with Sen. Elizabeth Warren (D-MA) about shifts in corporate behavior, Baydoun laid out some of the tactics companies are now deploying to gouge consumers:
“Companies deploy a vast array of tactics that really threaten to make the price tag as we know it totally obsolete. In addition to shrinkflation, there’s also skimpflation – this is the idea of degrading the quality of a product by using inferior ingredients while keeping the price the same or higher.
“There’s also dynamic pricing. This involves changing the price of a product hundreds, thousands, even millions of times in a day or week – making it difficult to predict costs. And finally, there’s a practice known as drip pricing, this involves adding on mysterious, confusing fees as consumers are making a purchase, as opposed to building all of those fees into the upfront price.”
You can read Bilal Baydoun’s testimony before the Committee here. Email press@groundworkcollaborative.org to speak with Bilal Baydoun about corporate pricing power and efforts to rein it in.
Testimony Excerpts
“While price hikes aren’t new, today’s companies have reinvented them, relying on surveillance, deception, and even high-tech forms of collusion to wring as much as possible out of American consumers. All of these tactics converge on a single goal: find out the maximum price each individual consumer can be charged at any given time.”
“Over the last few decades, we’ve seen runaway corporate consolidation across our economy…This grants the remaining corporate giants the freedom to hike prices without fear of being undercut by the competition. In many markets, there simply is none.”
“Technologies help companies build profiles of individual consumers that include things like our age, marital status, estimated salary, ethnicity, the magazines we read, and even the kinds of topics we talk about online. All of these private aspects of our lives can be used to determine how much price hiking each of us can tolerate.”
“Market power and technological advances came together in the shadow of inflation, giving companies the cover they needed to begin rolling out pricing strategies they’d previously thought of as risky precisely because consumers dislike them. But with prices rising everywhere, consumers couldn’t discern which hikes were justified by companies’ own rising costs, and which were truly excessive.
“As the head of research for Barclay’s bank told Bloomberg in 2022, ‘The longer inflation lasts and the more widespread it is, the more air cover it gives companies to raise prices.’ Visa’s CEO was still more direct, saying, ‘historically, inflation has been positive for us.’”