As working-class Americans struggled with high inflation, corporate profits soared to a record high in 2021, reaching nearly $3 trillion.
Data from the Department of Commerce’s Bureau of Economic Analysis shows that pre-tax profits over the whole year increased by a whopping 25 percent, reaching $2.8 trillion. The annualized rate of profit from the fourth quarter was even higher, at $2.94 trillion.
The boost in profits exceeds the 7 percent inflation for consumer prices, bolstering arguments that companies are raising prices beyond inflation rates in order to pad their profits. Meanwhile, hourly wages for U.S. workers increased by about 4.7 percent last year, which is equivalent to a pay cut of about 2.4 percent.
Experts say that the record profits are evidence that inflation isn’t a concern for corporations.
“Clearly, mega-corporations could easily absorb the higher costs of goods and services right now,” wrote Robert Reich, former labor secretary and economics professor at University of California, Berkeley. “They’re not raising prices because they have to. They’re doing it because – with so few competitors – they can. The problem, at its core, is corporate greed.”
Indeed, corporate executives have admitted on earnings calls with shareholders that they’re not afraid to exploit inflation and current crises like the pandemic and the Russian invasion of Ukraine in order to increase their profits.
“Our business operates the best when inflation is about 3 percent to 4 percent,” Kroger CEO Rodney McMullen told investors last June. “A little bit of inflation is always good in our business.”
Other corporate executives have lied about their reasons for raising prices. As CBS reported, Tyson’s CEO told shareholders that the company it’s only raising prices on meat products in order to cover inflation costs for the company. However, it posted profits of $1 billion in the first quarter of 2022, a 48 percent raise over the same period last year.
Lawmakers have proposed legislation to reign in runaway profits. Last year, Sen. Elizabeth Warren (D-Massachusetts) introduced a bill that would have created a minimum tax rate of 15 percent in order to prevent companies from paying $0 in taxes or a negative tax rate, thanks to corporate subsidies.
Other recent proposals have been aimed directly at current profits. Last week, Sen. Bernie Sanders (I-Vermont) unveiled his corporate windfall profits tax, which would levy a 95 percent tax on corporate profits that exceed pre-pandemic levels for companies that make more than $500 million in profits yearly. The tax resembles policies that the U.S. put in place during World Wars I and II and the Korean War to discourage companies from profiteering from the conflicts.
“We cannot allow big oil companies and other large, profitable corporations to continue to use the war in Ukraine, the COVID-19 pandemic, and the specter of inflation to make obscene profits by price gouging Americans at the gas pump, the grocery store, or any other sector of our economy,” Sanders said in a press release on the bill. “During these troubling times, the working class cannot bear the brunt of this economic crisis, while corporate CEOs, wealthy shareholders, and the billionaire class make out like bandits.”
Help us Prepare for Trump’s Day One
Trump is busy getting ready for Day One of his presidency – but so is Truthout.
Trump has made it no secret that he is planning a demolition-style attack on both specific communities and democracy as a whole, beginning on his first day in office. With over 25 executive orders and directives queued up for January 20, he’s promised to “launch the largest deportation program in American history,” roll back anti-discrimination protections for transgender students, and implement a “drill, drill, drill” approach to ramp up oil and gas extraction.
Organizations like Truthout are also being threatened by legislation like HR 9495, the “nonprofit killer bill” that would allow the Treasury Secretary to declare any nonprofit a “terrorist-supporting organization” and strip its tax-exempt status without due process. Progressive media like Truthout that has courageously focused on reporting on Israel’s genocide in Gaza are in the bill’s crosshairs.
As journalists, we have a responsibility to look at hard realities and communicate them to you. We hope that you, like us, can use this information to prepare for what’s to come.
And if you feel uncertain about what to do in the face of a second Trump administration, we invite you to be an indispensable part of Truthout’s preparations.
In addition to covering the widespread onslaught of draconian policy, we’re shoring up our resources for what might come next for progressive media: bad-faith lawsuits from far-right ghouls, legislation that seeks to strip us of our ability to receive tax-deductible donations, and further throttling of our reach on social media platforms owned by Trump’s sycophants.
We’re preparing right now for Trump’s Day One: building a brave coalition of movement media; reaching out to the activists, academics, and thinkers we trust to shine a light on the inner workings of authoritarianism; and planning to use journalism as a tool to equip movements to protect the people, lands, and principles most vulnerable to Trump’s destruction.
We’re asking all of our readers to start a monthly donation or make a one-time donation – as a commitment to stand with us on day one of Trump’s presidency, and every day after that, as we produce journalism that combats authoritarianism, censorship, injustice, and misinformation. You’re an essential part of our future – please join the movement by making a tax-deductible donation today.
If you have the means to make a substantial gift, please dig deep during this critical time!
With gratitude and resolve,
Maya, Negin, Saima, and Ziggy