Yves here. We’ve pointed out for some time that corporate profit share of GDP is a stunning 12%, twice the level in the early 2000s that Warren Buffett then deemed to be unsustainable. As this article indicates, one driver of our current inflation is that corporations are generally not lowering their margins even when they are facing cost increases and having difficulty with staffing. Food is a particularly egregious example, where industry middlemen are squeezing farmers, yet the major players are continuing to jack up prices, whether or not fully warranted by expenses.
Bill Boone eats very little meat and avoids expensive gourmet foods altogether.
Yet Boone’s grocery bill still tops $280 a week at a Kroger in Benton, Arkansas, thanks to profiteering on a scale the 92-year-old says he has never witnessed before.
Corporations may try to blame the pandemic and Russia’s invasion of Ukraine for astronomical price increases, but that’s merely a cover story for shameless price gouging that’s left millions of Americans struggling to survive.
“Big money people are the trouble,” summed up Boone, a longtime member of the United Steelworkers (USW) who recently saw the price of his favorite coffee double.
“It’s all these brands,” Boone, who worked at Reynolds and Alcoa, said of the rampant price hikes. “It’s all the basic things people have in their homes, like salt and pepper. I feel badly for these families with three and four kids.”
While parents take second jobs and even hire out their children as movers and gardeners to make extra money, CEOs brag about the exploitation that’s enabling them to pad their own pockets and shower shareholders with dividends.
“A little bit of inflation is always good in our business,” declared Rodney McMullen, CEO of Kroger, which raised prices on customers like Boone before raking in $1.5 billion in operating profits for the first quarter this year.
Procter & Gamble, manufacturer of diapers and other essentials, plans to raise prices throughout the year even though it’s forecasting higher profits. “The consumer is very resilient,” said Andre Schulten, the company’s chief financial officer, blithely dismissing the pain he’s inflicting.
Not even President Joe Biden’s public shaming of oil companies was enough to curb their unprecedented profit-mongering. They still refuse to increase production, even as the average cost of a gallon of gas hovers around $5 and truckers like Boone’s son-in-law spend hundreds of dollars to fill up their rigs.
“People who have got everything they want still never have enough,” Boone said of the executives who aren’t only profiting from inflation but are also engineering and sustaining it. “They don’t really think it’s anything to buy a Rolls-Royce every year.”
Thanks to Boone’s union pension, he and his wife, Carolyn, can cope with padded grocery bills. But the surging prices are breaking families already living on the margins.
During the third week of June, for example, Robert P. Ford Jr. rushed to the grocery store in Akron, Ohio, and purchased emergency supplies for a woman and her teenage daughter who were living in their car.
The woman’s $10-an-hour job could no longer sustain the two of them in the face of crushing inflation, and they lost their rented home amid the mounting costs for food and other basic necessities.
“I’ve been doing this since 2018, and this is the worst I’ve seen it,” Ford said of the poverty he combats through his nonprofit, Forever R Children.
“Companies make any kind of excuse to raise prices on everything. Toilet paper has gone up. Toothpaste has gone up. Deodorant has gone up. Bacon is skyrocketing,” added Ford, a member of USW Local 2L and a production worker at Goodyear in Akron. “It’s corporate greed.”
The number of families served by his mobile food pantry more than quadrupled in the past month alone. Many struggle to afford the cereals, canned soups and other kinds of staples made by General Mills, which increased prices five times over the past year and ratcheted up some items by as much as 20 percent.
The company tried to blame higher production costs and supply chain problems, among other issues.
Yet General Mills amassed $844 million in operating profits during the first quarter of its 2022 fiscal year, and it’s provided shareholders with $375 million in stock buybacks over the past couple of years. Like many other companies, it’s raising prices just because it can.
The growing number of food pantry clients isn’t the only measure Ford has of inflation’s toll.
He sees more and more people lugging groceries home to save on gas. And a growing number, like the mother and daughter he just helped, have no roof over their heads at all as inflation fuels homelessness—including first-time homelessness—in communities across the country.
“They can’t even take all the food I’m offering them,” he said, noting homeless clients want items they can eat on the go because they lack access to ovens and microwaves. “They’re not even turning the corner, and they’re popping that can of ravioli and tossing it down their throat.”
As much as they need food, these clients also seek places to bathe.
“When you lose your home, you lose your water,” observed Ford, who recently secured a bus with the help of donations and now hopes to assemble a group of union workers to help him outfit it with showers. Then he’ll take his “community shower bus” on the road along with his mobile food pantry.
Along with all the other items costing more at grocery stores these days, Boone recently realized how much the price of baloney—the mainstay of his packed lunches during decades of shift work—also had gone up.
And that made him angry all over again with well-heeled executives and investors who will squeeze ordinary Americans at every possible turn.
“It’s just despicable how working people get treated,” he said.