A new report sheds light on the role corporations played during the pandemic and throughout supply chain challenges in raising prices on consumers, maintaining them at elevated levels for an extended period of time.
Groundwork Collaborative, a leading economic policy organization, unveiled a groundbreaking report titled "Inflation Revelation: How Outsized Corporate Profits Drive Rising Costs."
The report states, “Inflation has come down significantly from its peak over the past year, yet prices remain high for American consumers. From housing and groceries to car insurance and electric bills, families are still feeling the squeeze. In the wake of the pandemic, virtually every company in every industry faced rising costs to make products and stock shelves. Labor costs rose sharply, the cost of transporting goods across the country hit record highs, and raw materials became costly or impossible to get. Corporations were quick to pass rising costs – and a little extra – on to consumers, fueling rapid inflation.”
Corporate Profits Driving Inflation: From April to September 2023, the report reveals that corporate profits were the driving force behind 53% of inflation. This is a significant shift compared to the 40 years prior to the pandemic, where profits contributed just 11% to price growth.
Consumer Prices vs. Producer Input Costs: Despite consumer prices rising by 3.4% over the past year, the report highlights that input costs for producers have increased by only 1%. In several cases, producers' prices for commodities and services have actually decreased. The report emphasizes that corporations have not passed these savings on to consumers.
Corporate Profits' Share of National Income: The report unveils a staggering 29% increase in corporate profits as a share of national income since the start of the pandemic. While various economic indicators show the recovery of the economy to or surpassing pre-pandemic levels, workers' share of corporate income has not yet rebounded.
"This report exposes the concerning trend of corporations leveraging the pandemic and supply chain challenges to boost their profits at the expense of Colorado consumers. While most of us have had to tighten our belts during this time and some struggled mightily, it turns out corporate greed just kept making it worse for all of us. This report is a wake up call for corporations to stop taking advantage of our small businesses and hardworking families and instead pay their fair share,” said Justin Lamorte, Executive Director of Rocky Mountain Values.
The report underscores the need for policymakers, businesses, and consumers to address the disparities in the distribution of economic gains. Groundwork Collaborative urges a reevaluation of corporate practices to ensure fair pricing and equitable sharing of profits.
The full report, "Inflation Revelation: How Outsized Corporate Profits Drive Rising Costs," isavailable for download here.