A new report examining the causes of inflation demonstrates that corporate greed and increased CEO pay led to higher-than-necessary costs for American consumers in recent months.
The report, from the progressive organization Groundwork Collaborative, found that, in the past two economic quarters alone, 53 cents out of every dollar of inflationary price increases were due to corporate profits.
Since the start of the pandemic, corporate greed and profits accounted for close to one-third of all inflation, the group discovered — resulting in a phenomenon that is oftentimes called “greedflation.”
“Corporate profits as a share of national income have skyrocketed by 29% since the start of the pandemic,” the report says. “While our economy has returned to or surpassed its pre-pandemic levels on many indicators, workers’ share of corporate income has still not recovered.”
“Costs have come down substantially, and while corporations were quick to pass on their increased costs to consumers, they are surprisingly less quick to pass on their savings to consumers,” said Liz Pancotti, strategic adviser for Groundwork Collaborative and a co-author of the report.
It’s one thing for corporations to pass reasonable increased costs to consumers. It’s another for them to line their coffers by exploiting Americans who are just trying to get by.
The report corroborates other studies that have demonstrated that greedflation has played a bigger role in rising consumer expenses than many may think. An AFL-CIO study from 2021, for example, found that corporate pay increased by 18.2 percent that year, “faster than the U.S. inflation rate of 7.1 percent,” noting that worker pay, meanwhile, “fell behind inflation” during the same time period.
The issue of inflation will play a pivotal role in the 2024 presidential election. Republicans will likely try to accuse the Biden administration of causing higher prices, blaming government spending on social and economic stimulus packages for causing inflation, despite evidence suggesting that the effects of such spending on inflation are incredibly minimal. Democrats, meanwhile, will likely attempt to highlight greedflation’s role in rising prices.
Recent polling suggests that, while there is considerable evidence backing claims of greedflation, Democrats may have a hard time convincing the American public to support a second term for President Joe Biden due to the rising costs of goods. An Economist/YouGov poll from last week, for example, found that just 32 percent of Americans give Biden a positive approval rating on the issue of inflation, with 58 percent disapproving.
The poll also showed that the Biden campaign cannot tiptoe around the issue, either. More than 19 in 20 Americans (96 percent) say the issue of inflation and rising prices is important to them.