As voters decide who is to blame for inflation, corporations continue to rake in the profits—at consumers’ expense.
While there are lots of things on voters’ minds this fall, inflation and the economy consistently rank as top concerns for the electorate.
Depending on who’s doing the talking, inflation can be blamed on President Joe Biden or on his predecessor, Donald Trump. But one—and perhaps the greatest—driver of higher prices lies under the radar: corporate profits.
2Companies providing goods and services have historically raised prices when their own costs, like raw materials and labor, go up. But no more. The surge in profits since 2020 has been fueled in part by corporations getting greedier and expanding profit margins above what they were in the past—at consumers’ expense.
The big bonus kicked off when the global pandemic produced supply chain bottlenecks, meaning delays and increased costs of production, which led to price increases that were justifiable. But when the bottlenecks eased in 2023, production costs receded and prices should concomitantly have been reduced. No such luck for consumers.
Corporations have continued to use the cover of supply chain issues and broader inflation to hike prices more than their input costs justify—meaning jacked-up profits beyond what used to be normal.
Recent research from Groundwork Collaborative found that corporate profits drove the lion’s share of inflation in much of 2023. In the four decades prior to the pandemic, profits accounted for just 11 percent of price increases. According to the organization’s analysis, “corporate profits drove 53 percent of inflation during the second and third quarters of 2023 and more than one-third since the start of the pandemic.”
So while inflation left many workers and families hamstrung, it actually fueled a big boost in corporate profits. Companies simply kept the pandemic-era prices up, passing rising costs along to consumers … and then some. And they’ve continued to increase prices for goods and services by much more than needed to cover increases in costs. Last year, their profit margins (excluding the financial sector) were over 15 percent—a level not seen since the 1950s.
And the suits in the C-suites have kept the windfall for themselves, consumers be damned. Where did new higher profits go? Forbes notes that companies are using them “mainly to pay dividends to their shareholders and building up their stockpiles of cash.”
There is also CEO pay, which rose 13 percent in 2023. The typical compensation package for those who run companies in the S&P 500 jumped nearly 13 percent, easily surpassing the gains for workers at a time when inflation was putting considerable pressure on Americans’ budgets. The median pay package for CEOs rose to $16.3 million per year. At half the companies in this year’s pay survey, it would take ordinary workers in the middle of the firm’s pay scale almost 200 years to make what their CEO pocketed in a single year.
Companies simply kept the pandemic-era prices up, passing rising costs along to consumers … and then some.
It has without doubt hit women the hardest, given that the pay gap with men (84 cents to the dollar for white women, 69 cents for Black women and 57 cents for Latina women) shows no signs of closing anytime soon. So it’s no surprise that according to the latest figures available, three in 10 households headed by single women with children live in poverty. Poverty rates are particularly high for Black women (16.6 percent) and Latinas (16.8 percent).
Celinda Lake, one of the top pollsters in Washington, D.C., put it this way: “The average woman goes to the grocery store three times a week, so she’s well aware of inflation and she’s focused on food prices and healthcare costs, and both have been very high inflationary items.”
There’s no question basics like eggs, gasoline and even school meals cost more. And who will voters blame? The party of the person in the Oval Office is the prime candidate, no matter that the corporate culprits behind the curtain with their exorbitant profits are the real perps.
This is definitely a time when majorities matter. Women are the majority of the population, the majority of registered voters and the majority of those who actually show up at the polls. Let’s hope they do their homework and remember in November which candidates are coziest with the profit-mongering corporations picking their pocketbooks.
This article appears in the Fall 2024 issue of Ms., which hit newsstands Sept. 24. Join the Ms. community today and you’ll get issues delivered straight to your mailbox.
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