A discussion on global shipping, just-in-time manufacturing, and why fixing the supply chain means rethinking endless growth.
This post was originally published on Dissent MagazineDissent Magazine.
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For months, corporate leaders and right-wing pundits have been parroting the dubious claim that inflation in the U.S. is due to social spending policies backed by progressives and the Biden administration. But new data demonstrates that inflation is going up largely because corporations want it to.
During the past two economic quarters, businesses outside of the finance industry have seen their largest profit gains since 1950. According to data from the Commerce Department, corporations’ profits increased by 37 percent during that time period, compared to data from the previous year.
By comparison, consumer prices in the U.S. increased by about 6.2 percent over the past year — the highest increase since 1990.
The costs for raw materials and other goods that companies may require did go up, a complaint made by many corporate executives during earnings calls with stockholders over the past year. But the data suggests that corporations could have absorbed those costs and still seen enormous profits, thereby reducing the inflation felt by American households in recent months.
But instead of pointing out this possibility, corporate allies in Congress have been promoting disinformation about where the inflation came from, claiming that social welfare programs and stimulus bills are to blame.
“Inflation is running rampant due in part to out-of-control spending from President [Joe] Biden and Speaker [Nancy] Pelosi,” House Minority Leader Kevin McCarthy (R-California) tweeted in July.
But just as most economists predicted earlier this year, stimulus spending didn’t impact the economy as much as lawmakers have claimed.
“The checks, while they helped, they didn’t lead to a boom in demand,” said Olivier Blanchard, a senior fellow at the Peterson Institute for International Economics, speaking to CNBC earlier this year.
Progressives took note of the new data released by the Commerce Department last week, highlighting that corporate greed seems to be the primary factor driving higher prices — not social spending, as many have errantly suggested.
“Let’s be clear. The problem is not the worker who got a small raise & a $1,400 check 7 months ago,” tweeted Sen. Bernie Sanders (I-Vermont). “The problem is corporations making record-breaking profits while 700 billionaires became $2 trillion richer during the pandemic. We need an economy that works for all, not the 1%.”
“Under the guise of inflation, large companies are swindling customers to boost their bottom line,” said Family Farm Action Alliance, an advocacy organization that promotes an agriculture system that works for everyday people.
More Perfect Union, a social welfare organization, said that corporations were using inflation as an excuse to raise prices. In other words, as the economy reopened and prices for goods went up a little bit, corporations used the situation to raise prices a lot.
“Corporations are seizing the opportunity to engage in massive profiteering because they can…they don’t care you have to pay more for your groceries,” the organization said in a recently released video.
This post was originally published on Latest – Truthout.
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In a time of high inflation, you hear a lot about companies “passing costs” on to customers. In order for companies to maintain their God-given right to earn a profit, they must raise prices to offset the cost of producing goods and getting them into peoples’ hands. And thanks mostly to the hidden risk, exposed by the pandemic, of neoliberal gospels like just-in-time logistics, deregulation, and offshoring, prices really are going up.
But there’s something else mixed in with this latest bout of inflation. Companies aren’t just passing costs onto us. With corporations using inflation as a cover for raising their prices, you and I are passing profits onto companies.
“Executives are seizing a once in a generation opportunity to raise prices,” reads a Wall Street Journal story explaining that around two-thirds of the largest publicly traded companies are showing profit margins higher today than they did in 2019, before the pandemic.
The post Fighting The Inflation Profiteers appeared first on PopularResistance.Org.
This post was originally published on PopularResistance.Org.
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If you can solve this riddle, you’ll know you can’t just stand by. Who am I?
This post was originally published on Real Progressives.
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Many Americans are noticing the rising price of goods from sour cream to carburetors as politicians sound the alarm on an inflation crisis.
You may be wondering what single force would cause the cost of a dairy product to go up at the same time as the cost of a car part. The truth is that not all inflation is the same. Each sector has its own issues.
And none of it is solved by less government funding for our safety net, as some politicians have proposed.
Some of it is what we can call pandemic inflation. Because our economy bounced back quicker after the COVID-19 shutdowns than anyone predicted — thanks largely to investments from the American Rescue Plan — people have more spending money and demand has risen faster than our underinvested supply chain could handle.
This rising demand accounts for price flares in auto manufacturing and lumber, for example. At the same time, you’ll notice prices that had plummeted during the shutdowns returning to pre-pandemic levels. Think: plane tickets.
Meanwhile, recent price spikes on other goods that families depend on — like diapers, meat, and dairy — can be linked to corporate greed. Decades of corporations monopolizing industries and cutting out competition has given them the power to artificially inflate the prices of these necessities under the guise of “inflation.”
Big business is simply milking this opportunity to claim that they need to raise their prices while they use those profits to engage in stock buybacks — which benefit shareholders and CEOs, not small farmers or the grocers who stock the shelves.
This is hard on consumers as well as small and family-owned businesses who depend on bigger conglomerates like Amazon for supplies and market access. With bigger chains hiking up prices, many smaller businesses are going under.
But the price pressures that hurt families the most are not caused by the pandemic — and in fact have been rising for decades.
By far the biggest ticket items on struggling families’ budgets are rent and child care. The housing crisis is so bad that no person earning minimum wage full-time can afford rent in any U.S. state. And the cost of child care costs more than college tuition in 30 states.
The Build Back Better Act being debated in Congress right now would help address our housing supply crisis by building new affordable units with a $150 billion investment. The law would also reduce out of pocket child care costs for families, increase labor participation, and raise the wages of care workers.
More local policies like rent control, which advocates won recently in St. Paul, Minnesota, could also help regulate prices.
A few conservative lawmakers have used inflation as an excuse not to pass these programs. But they have it exactly backwards.
The best thing we can do to offset the pain of inflation — whatever its cause — and for the overall health of our economy, is to raise the standard of living for all of us. That means lowering the poverty rate, raising wages, and reaching full employment.
For too long we’ve supported an economy that depends on low-paid jobs, dangerous work, and big businesses monopolizing power. That makes all of us suffer. Slowing down our economy to boost profits for corporations won’t eliminate the need for families to purchase the products they depend on or fix our supply chain issues.
We need to build a system that supports a healthy economy for everyone, and the Build Back Better Act would be a down payment on a future clean bill of health.
This post was originally published on Latest – Truthout.
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As the COVID pandemic upended the economy in the spring and summer of 2020, tens of millions of Americans lost their jobs and became ever more vulnerable to hunger. In consequence, the country’s network of food banks saw a sudden spike in usage.
Just prior to, and at the start of the pandemic, food banks distributed 1.1 billion pounds of food in the first quarter of 2020. By the fall of that year, they were handing out 1.7 billion pounds.
Since then, that dizzying increase has leveled off or fallen somewhat in many places, but that doesn’t mean the country’s no longer suffering an epidemic of food insecurity. To the contrary: Large food banks around the country are still reporting far higher levels of need — and of food distribution to attempt to meet that need — than was the case prior to COVID.
In Washington, D.C. for example, the big food banks are reporting an increase in usage of more than 60 percent compared to 2019. Put simply, as Thanksgiving rolls around again, millions of Americans are struggling to feed their families the bare minimum on a daily basis. If they are able to have a big spread, it will likely be only thanks to food charities and their volunteers and donors.
Meanwhile, Supplemental Nutrition Assistance Program (SNAP) enrollment is up by 7 million compared to two years ago, with more than 42 million Americans now on food stamps. Of these, more than 4 in 10 are members of families with at least one person working.
Throughout much of the South, upward of 15 percent of residents receive SNAP assistance. In New Mexico, the state with the highest rate of food stamp usage in the country, more than one in five residents are enrolled in SNAP. It was in response to the increased reliance on SNAP that the Biden administration, earlier this year, locked into place the largest ever permanent increase in the value of food stamps. Because of this increase, a family of four now qualifies for up to $835 per month in SNAP benefits.
Looked at one way, these numbers, and the resilience of SNAP in the face of long-standing conservative antipathy to the program, are success stories: Tens of millions of Americans do not have enough economic security to easily feed themselves and their families, but thankfully the country does not have an epidemic of starvation. Instead, its charitable networks have gone into overdrive — and a food distribution mechanism has been fine-tuned to keep hunger at bay for the vast majority of recipients. At the same time, SNAP has become the de facto success story of an otherwise withered social safety net.
Looked at another way, however, and these numbers are a devastating indictment of the current U.S. economic model: In the world’s richest country, with more billionaires than anywhere else on Earth, a large percentage of the population lacks the ability to set aside the financial resources to be able to easily feed themselves and their children. Instead, they have to fall back either on charity or on government assistance. Many people who rely on food aid have jobs — just not jobs that pay enough of a living wage to allow them to buy food for their families.
In the South, in particular, where in few places does the local minimum wage exceed the federal minimum of $7.25 per hour (less than half what it is in cities and states that moved toward the $15 per hour “living wage” in recent years), the scandal of food insecurity for the working poor remains omnipresent.
This is a crisis — magnified, though by no means created, by the pandemic — not of food-production failures but of skyrocketing inequality. There is, clearly, no shortage of food in the U.S., but there is a shortage of disposable income among a growing percentage of people at the bottom of the economy. We have, as a society, become inured to the stunning realities of families experiencing shortages of food amid a broader glut of staples.
As the country gears up to celebrate a holiday that for many people revolves around copious feasting with family and friends, that crisis has been exacerbated by months of high inflation, especially in key sectors of the economy such as fuel and food. Some meats have increased in prices by nearly 10 percent this past year. More worryingly, this summer in several food categories, such as eggs, prices began escalating by 3 percent per month.
If that continues for a significant period of time, it will have massive impacts on the purchasing power of poor Americans, who already spend a vastly disproportionate part of their limited income on food. While the average amount of disposable personal income that Americans spend on food for preparing at home declined from 13.7 percent in 1960 to 5.7 percent in 2000 as incomes rose and as food costs declined, this has never held for poor Americans: In fact, U.S. Department of Agriculture estimates from five years ago found that the poorest quintile of Americans were still spending between 28 and 42 percent of their pre-tax income on food.
Given that low-income Americans are also being particularly hard hit by surges in prices for housing, fuel, and a range of consumer goods such as used cars, the inflationary trends within the food industry threaten to render their economic tightrope walk even more dangerous.
As a result, even as the overall unemployment rate has returned to near pre-pandemic levels, with latest Bureau of Labor Statistics data showing 4.6 percent unemployment, even as overall poverty rates have gone down to near-historically low levels due to huge levels of government intervention in the economy, food insecurity remains prevalent in the U.S.
This post was originally published on Latest – Truthout.
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Dollar Tree CEO Michael Witynski — who raked in around $11 million in total compensation last year — announced Tuesday that his company is raising prices to $1.25 at stores across the United States, pointing to the current “inflationary environment.”
But observers weren’t buying Witynski’s explanation for the imminent price hike, which was publicized as Dollar Tree reported $216.8 million in net profits for the third quarter of 2021. The 25% price increase is expected to take effect at Dollar Tree stores nationwide in early 2022.
“Dollar Tree made $1,230,000,000 in profits this year, gave its CEO $10,767,883, and pays workers as little as $8.32 an hour. Over 7,400 Dollar Tree employees are forced to rely on food stamps and Medicaid subsidized by U.S. taxpayers,” Warren Gunnels, majority staff director for Senate Budget Committee Chair Bernie Sanders (I-Vt.), pointed out on Twitter.
“Unfettered greed is corporate America closing U.S. factories where workers made $30/hour, opening sweatshops abroad where workers make 30 cents/hour, hiring U.S. workers to sell the sweatshop goods for $8/hour and blaming inflation for a 25% price increase at Dollar Tree,” Gunnels wrote.
Dollar Tree’s decision to push higher costs onto consumers follows a growing trend of companies citing inflationary pressures in the economy to justify price hikes — even as they bring in record profits and lavishly reward their executives and shareholders. In 2020, according to a recent analysis by the Economic Policy Institute, CEOs made 351 times as much as a typical worker, and CEO pay has soared by 1,322% since 1978.
The Institute for Policy Studies noted in a May study that Witynski — who took over as Dollar Tree’s CEO in July of 2020 — received $11.3 million in total compensation last year.
“That’s 715 times as much as the pay for the company’s median worker, a part-time U.S. store employee who earned $15,816,” IPS observed.
A report released earlier this month by the watchdog group Accountable.US found that at least a dozen major U.S. corporations have “reported nearly $11 billion in profits the same quarter they announced price increases, along with over $34 billion in stock buybacks and dividends this year.”
“As millions of Americans are already struggling against a worsening hunger crisis, eight of these companies, including Proctor & Gamble, PepsiCo, and Coca-Cola, have jacked up food prices, or announced their intent to do so, despite recent healthy financial reports,” the group said.
While acknowledging that many factors — including major supply chain disruptions caused by the coronavirus pandemic — are contributing to rising U.S. inflation, progressive economists and lawmakers have argued that consolidated corporate power is a key driver of recent price increases.
“Corporations are using the excuse of inflation to raise prices and make fatter profits. The result is a transfer of wealth from consumers to corporate executives and major investors,” former Labor Secretary Robert Reich wrote in a blog post earlier this month. “This has nothing to do with inflation, folks. It has everything to do with the concentration of market power in a relatively few hands.”
NEW: Inflation is being blamed on workers and government spending. The real culprit? Corporate greed.
In our new episode of The Class Room we dug into financial reports to investigate the REAL reason prices are going up.
Hint: corporate profits have never been higher. pic.twitter.com/mPmCeDDNiJ
— More Perfect Union (@MorePerfectUS) November 23, 2021
The Wall Street Journal reported last week that as the coronavirus continues to wreak havoc worldwide, executives of U.S. companies “are seizing a once-in-a-generation opportunity to raise prices to match and in some cases outpace their own higher expenses.”
“Nearly two out of three of the biggest U.S. publicly traded companies have reported fatter profit margins so far this year than they did over the same stretch of 2019, before the Covid-19 outbreak,” the Journal noted. “Nearly 100 of these giants have booked 2021 profit margins — the share of each dollar of sales a company can pocket — that are at least 50% above 2019 levels.”
On Monday, Sen. Elizabeth Warren (D-Mass.) called on the Justice Department to investigate “major poultry companies’ anticompetitive practices that have lined the pockets of executives and shareholders while raising prices for families at the grocery store ahead of Thanksgiving.”
“Lack of competition in the poultry industry is allowing these massive companies to squeeze both American consumers and farmers to fuel record corporate profits and payouts to shareholders,” Warren said in a statement. “When companies have monopoly power as massive suppliers, they can jack up prices of the goods they sell.”
“And when those same companies have complete or substantial market power as large employers or buyers of inputs, also known as monopsony power, they can suppress their own costs for those inputs, including workers’ wages,” she added. “This is the worst of all worlds, where wages are held back while prices are jacked up.”
Faiz Shakir, founder of the advocacy journalism organization More Perfect Union, wrote in the New Republic earlier this week that “corporate America has seized on the fears of inflation to jack up prices on you and make a ton more money.”
“For months, they have, with one hand, fueled talk of inflation as a way to make obscene profits off the backs of consumers. That’s bad enough,” Shakir noted. “But with the other hand, they have been manipulating the talk of inflation to engage in a full-frontal assault on President Biden’s efforts to pass a Build Back Better bill for working families.”
“As we head into Thanksgiving and Christmas, and we all look forward to large enjoyable feasts with friends and family, we should rightly harbor anger about inflation,” Shakir continued. “Not just that they made us pay more for turkey, cranberries, and pie crusts. We’re having to pay more because corporate America made a choice to raise prices on us, and then on top of that, it tried to manipulate your fear about those prices to keep you from getting paid leave, home care, childcare, and climate change action. Corporate America made you pay more while trying to make sure it didn’t have to.”
This post was originally published on Latest – Truthout.
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Family poverty has substantially declined thanks to the child tax credit
Original article: https://www.huffpost.com/entry/inflation-child-poverty-tax-credit_n_61940234e4b005197af7ddaa
WASHINGTON ― Rising prices have crushed consumer sentiment and become a major political story as President Joe Biden struggles to enact the broad social policy agenda that helped him win the White House last year.
But inflation is actually just one of several big economic stories happening right now. There has also been a big reduction in child poverty ― and Congress could make it permanent.
The same fiscal policies that are partly blamed for high inflation produced a 40% reduction in child poverty in July, according to researchers at Columbia University’s Center on Poverty and Social Policy. The one-month decline was steeper than any year-to-year change in child poverty from 1967 until 2020, when Congress first sent out stimulus checks and boosted unemployment benefits in response to the coronavirus pandemic.
Since July, the reduction in family poverty has been mostly sustained by monthly payments worth as much as $300 per child. The payments have lifted between 3 and 4 million children above the poverty line each month.
“The sheer magnitude of just that number is not what we normally see on a regular basis, especially from a single policy,” Megan Curran, director of policy at Columbia’s Center on Poverty, said in an interview.
Democrats are planning to continue the payments through next year as part of the Build Back Better social spending bill that they hope to pass in the coming weeks. If Democrats succeed in entrenching the policy, it would represent a dramatic shift for the American welfare state in favor of families.
One of Democrats’ biggest obstacles is inflation, with news that prices rose 6.2% since last October prompting fresh warnings from Republicans and even some Democrats that Build Back Better is a bad idea.
“From the grocery store to the gas pump, Americans know the inflation tax is real and DC can no longer ignore the economic pain Americans feel every day,” Sen. Joe Manchin (D-W.Va.), a pivotal Senate vote, said in a tweet last week.
Higher prices weaken the spending power of every paycheck, but for most families with children, the monthly child tax credit payments more than make up for that erosion. In October, Moody’s Analytics estimated that for households earning the U.S. median income of about $70,000 a year, higher inflation costs them $175 a month. The child payments are worth $300 for each kid under 6 years old and $250 for kids under 18; that money comes on top of wage growth that is already outpacing inflation for lower-income households.
In Washington, reducing poverty means pushing family incomes above an arbitrary threshold corresponding to the number of people in the household. For the actual people affected the extra money can be a lifesaver; low-income families report using the child payments mostly for necessities like food, clothing and shelter. Monthly survey data from the U.S. Census has also foundthat households with children reported notable declines in difficulty obtaining food and meeting basic expenses before and after child payments went out, changes that were absent in households without children. Research suggeststhat people who grow up poor tend to earn less money, have worse health outcomes and a higher likelihood of winding up in trouble with the law.
In short, the new child tax credit payments are cutting down on real human misery by partially making up for the labor market’s indifference to parents, who have more expenses and less flexibility to work at whatever jobs might be available.
Sen. Sherrod Brown (D-Ohio) listens during a business meeting with the Senate Committee on Veteran Affairs on Capitol Hill on Oct. 20 in Washington, D.C. Sen. Sherrod Brown (D-Ohio) said the new policy isn’t getting its due in the national conversation about the economy.
“We don’t talk about it enough, and, not to tell you what to do, but you guys don’t cover it enough,” Brown said, referring to the press. “The discussion is, ‘Democrats can’t pass these next two bills,’ instead of the discussion being, ‘Look what the child tax credit has done.’”
Brown said that “90% of families in my state who have kids under 18 have gotten at least a $3,000 a year tax cut. And that should be said over and over and over.”
Ally Rykiel has received $550 per month since July for her two kids age 5 and 11. She had another baby in October, though she has not yet been able to update her family’s information with the IRS to get another $300 for the new child.
Rykiel, 33, said her family hasn’t particularly noticed inflation, partly because she and her husband don’t drive, partly because they recently moved to Richland, Washington, to be with her family, and partly because they shop for food at different grocery stores and are used to finding different prices for similar goods.
Still, the cost of food has been a burden ― especially after her husband took off four weeks from work to help with the baby and received no pay from his employer. The child tax credit has been helpful.
“If we didn’t have that, we would have had nothing,” Rykiel said. “Counting on that $550 in the middle of the month has been huge. We just expect it now.”
The child benefit policy might not deliver to the fullest extent Democrats said it would. It was supposed to slash poverty by 40% annually, but because they structured the payments as advance refunds of the child tax credit, and because low-income households aren’t required to file federal tax returns, the Internal Revenue Service has been unable to reach millions of eligible households. As a result, the poverty reduction from the child tax credit has ranged between 25% and 29% each month since July, according to estimates from Columbia’s Center on Poverty and Social Policy.
The federal government determines the official poverty rate on an annual basis; the center produces its monthly poverty estimates by comparing household budgets to a poverty threshold one-twelfth the size of the annual one. For a two-parent, two-child household, that monthly poverty line is about $2,300 per month. If Democrats continue the benefits through next year as planned, the monthly poverty reduction could translate to a similar annual impact, at least according to the federal government’s supplemental poverty measure that accounts for cash payments from the IRS.
A political problem for the child tax credit is that because economists say inflation has been caused partly by increased consumer spending colliding with supply problems ― with the increased consumer demand resulting partly from Congress giving everyone more money ― Republicans can skewer the child tax credit as just another thing causing inflation, rather than something that mitigates its impact for most households.
“The economy has an inflationary problem ― this makes it worse,” Sen. Lindsey Graham (R-S.C.) told HuffPost earlier this month, referring to the child tax credit. “The more you expand government, the more money you put in the system, the more inflation you’re gonna have. Now’s not the time to do these policies.”
The cash payments do boost aggregate demand, said economist Dean Baker, co-founder of the Center for Economic and Policy Research, but to such a small extent that it shouldn’t contribute much to inflation. Baker has argued that the burst of inflation this year will likely wane as companies resolve supply chain problems and increased demand for durable goods subsides.
“I see this as a story where people are actually doing pretty well with higher pay and many getting the CTC, but they are hearing about inflation in the media 24-7, so they think the economy is going to hell,” Baker said in an email.
Many people do think the economy is going to hell, with consumer sentiment falling to its lowest level in a decade in November, according to the University of Michigan’s surveys of consumers. And people’s moods could be consequential for what happens with inflation, because if consumers expect higher prices and in return demand higher wages, a self-perpetuating cycle could develop. The University of Michigan’s Richard Curtin said his consumer surveys show people believing their own income gains will be wiped out if inflation continues.
“Nominal income gains were widely reported but when asked about inflation-adjusted gains, half of all families anticipated reduced real incomes next year,” Curtin wrote. “The reactions of consumers to surging inflation should be no surprise, as it has been reported during the past several months.”
The post Inflation Is Not The Biggest Thing Happening In The Economy Right Now appeared first on Basic Income Today.
This post was originally published on Basic Income Today.
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It is conventional wisdom that printing more money causes inflation. The only problem is, it’s not true. That’s not how inflation works.
This post was originally published on Real Progressives.
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If anyone needs any examples or evidence in advance that something is extremely amiss in Western, especially United States, economics; we could point to how the 1st richest country on Earth has only the 15th highest standard of living, and 10% of the people there own 70% of the stuff (including, crucially, property). On the …
4 Key Ignored Points in the Inflation / MMT debate Read More »
This post was originally published on Real Progressives.
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Introduction The purpose of this chapter is to present a framework for the analysis of the price level and inflation. MMT (Modern Monetary Theory) is currently the only school of economic thought that, in direct contrast to other schools of thought, specifically identifies and models both the source of the price level and the dynamics …
A Framework for the Analysis of the Price Level and Inflation Read More »
This post was originally published on Real Progressives.
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In our economy, most workers simply aren’t powerful enough to demand wage increases in line with inflation. In the sectors where wage pressures are most obvious, the problem is a shortage of skilled workers as a result of both the changing labour market we’ve seen during the pandemic and a sudden fall in migration resulting from both the pandemic and the Tories’ desperate attempts to prevent people from migrating to the UK.
The post The Inflation Class War appeared first on PopularResistance.Org.
This post was originally published on PopularResistance.Org.
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A “triple-whammy” of incoming budget pressures over the next six months could leave low income families more than £1,000 worse off annually, according to a think tank.
The Resolution Foundation said inflation, rising energy bills, the looming rise in National Insurance (NI), and October’s Universal Credit (UC) cut could leave households worse off. And that’s even after accounting for increases in the minimum wage.
The foundation is urging ministers to take action where they can by keeping the UC uplift in place for 4.4 million households.
Squeezed
Karl Handscomb is a senior economist at the Resolution Foundation. He said upholding the weekly bonus would “go a long way towards easing the coming cost-of-living squeeze”.
The Treasury provided the additional £20 per week to UC recipients at the outset of the pandemic. But chancellor Rishi Sunak has so far been adamant it must end by October.
In their financial analysis, the independent think tank researchers said they took into account:
- The consumer prices index (CPI) hitting 4% – the highest in a decade – over the winter.
- Increased energy bills, with the 12% increase in the energy price cap from 1 October and a further projected 19% rise in six months.
- The cut to UC from 6 October.
- And the 1.25% health and social care levy being added to NI from April 2021.
Implications
The energy price cap increase means that from October a typical gas and electricity customer could see bills rise by £139 a year to £1,277.
The foundation took into account a 37p national living wage increase and a higher benefits uprating in April as a result of inflation being forecast to hit 2.7%. But despite these, a typical low-income household was still likely to feel the pinch. And families with children would be the worst off.
A couple with two children, where the parents are both working full-time and earning the minimum wage and slightly above that rate, would be £23 a week worse off over the next six months. The UC cut and rising energy bills would dwarf the £3 per week boost from the national living wage.
The organisation’s analysis also suggests that a single parent working part-time could see their income fall by £20 a week. While a low-earner without children working full-time on minimum wage could see their £9-a-week boost in hourly pay rate wiped out by the cost of living crunch.
Poor families hit hardest
A government spokesperson said:
We’ve taken action to keep the cost of living down for families, including the energy price cap, which is in place to protect 15 million households from increases in global gas prices this winter, and the doubling of free childcare.
Our warm home discount, winter fuel payments and cold weather payments will also support millions of vulnerable and low-income households with their energy bills.
The uplift to Universal Credit was always a temporary measure to help claimants through the toughest stages of the pandemic, and it has done so.
It’s right that as the economy rebounds, we should focus on our multibillion-pound plan for jobs, supporting people back into work and helping the employed progress in their career and earn more.
However, the government response doesn’t seem to account for the disproportionate impact of the “tight cost of living squeeze” on benefit claimants. As Handscomb said:
Britain is about to enter a tight cost-of-living squeeze over the next six months as high inflation and rising energy bills collide with the Government’s decision to cut benefits and raise taxes.
Low-and-middle-income families will face the tightest squeeze.
Many drivers of high inflation should be short-lived, but that will be of little comfort to families struggling over the coming weeks and months.
While policies like the national living wage will deliver a welcome income boost for some, for many low-income families this won’t come close to offsetting the damage caused by cutting universal credit.
Maintaining the £20-a-week uplift will go a long way towards easing the coming cost-of-living squeeze for millions of families.
By The Canary
This post was originally published on The Canary.
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With Christmas a couple of months away, there are signs the festive season will be a lean one. We’re already seeing some of the consequences of a triple whammy of supply shortages, prices rises, and income lowering. Inevitably, poor people will be hit the hardest.
A ‘winter of discontent’ has been predicted, though not the degree of protest or anger that this may elicit.
Supply shortages
Politics Home reported on how labour shortages:
which have been exacerbated by the coronavirus and Brexit, have resulted in household names like McDonald’s, Gregg’s, and the Co-op running out of certain items in recent weeks, with the disruption expected to worsen in the coming weeks in the run-up to Christmas.
In August, Iceland managing director Richard Walker warned that Christmas could be cancelled. Co-operative Group chief executive Steve Murrells blamed Brexit and coronavirus. The Confederation of British Industry, the body representing UK businesses, has blamed coronavirus and Brexit for the shortage of workers and disruption of transport. Provision Trade Federation director general Andrew Kuyk said that the gaps on supermarket shelves were caused by supply chain staff shortages. And retail stocks are reportedly at “their lowest since 1983”, according to the Mirror.
There’s also news of shortages in the supply of toys, exacerbated by shortages of HGV drivers. Moreover, driver shortages could disrupt bin collections. And a lack of HGV drivers is also blamed on fuel shortages, leading to some garages closing down. Hanna Hofer, BP’s head of UK retail, said the company only had “two-thirds of normal forecourt stock levels required for smooth operations”. She added that the level was “declining rapidly”.
Furthermore, on 21 September, iNews reported that Food and Drink Federation chief executive Ian Wright said products such as chicken, pork and bakery goods could “start to run out” in 10 or so days. At the time of writing, that’s less than a week away.
Significantly, HGV drivers are not included in the list of jobs eligible for the Skilled Worker visa. The government is now reportedly considering a temporary visa scheme. However, European Road Haulers Association general secretary Marco Digioia said he expects “many drivers will not return to the UK”.
Price rises
According to the Office of National Statistics (ONS), inflation rose to 3.2% in August. It’s the highest figure since 2012. It means, for example, that the NHS workers 3% pay deal is effectively cancelled out. Rehana Azam, GMB national secretary, commented on how surging inflation:
is part of a perfect storm that includes the public sector pay freeze, the imminent cut to universal credit and the withdrawal of the furlough scheme, and the national insurance hike that will cost care workers £150 a year.
Commercial CO2 supplies are also at risk because of a massive rise – 250% since January – in wholesale gas prices. Two fertiliser plants in Cheshire and Teesside that produce CO2 as a by-product have closed because of this rise in gas prices. While the government is now subsidising one of the plants so that it can reopen, it’s only for three weeks.
If the CO2 crisis continues, that could affect supplies of many food and drink items. These include fizzy drinks, beer, and pre-packaged foods and meat products like frozen turkeys.
Meanwhile, The Canary pointed out that the solution to this crisis is simple: re-nationalisation. According to We Own It, “Public ownership of energy networks will save £3.7bn a year – enough to buy 222 new offshore wind turbines”.
Income cuts
According to the Living Wage Commission, income has stagnated over the last 30 years and is the “leading cause of income disparity in the current generation“.
Based on ONS figures, UK workers have experienced an average real terms pay cut of £1,000 per year since the Tories were voted into government. That equates to a cut of £11,000 per person in total. Meanwhile for healthcare workers, a recent House of Commons library report showed that any rise in their income will be offset by the April 2021 increase in National Insurance. According to the Guardian:
A nurse or midwife on an average salary will see their tax bill soar by £310, care home workers will have to pay at least £140 more and ambulance staff will be hit with a £420 increase.
As former Labour leader Jeremy Corbyn MP makes clear, there’s more misery to come:
With energy prices set to rocket – plus National Insurance hikes and the Universal Credit Cut on the way – the Tories are condemning millions to a winter of misery.#CancelTheCut
— Jeremy Corbyn (@jeremycorbyn) September 21, 2021
Indeed, the £20 a month cut in Universal Credit is anticipated to see more than 600,000 people pushed into poverty. According to a 2019 report by Labour, poverty is entrenched in the UK thanks to successive Tory governments .
Also, according to Action for Children (AfC), prior to the pandemic 31% of children in the UK were living in poverty. And the Joseph Rowntree Foundation calculated that price rises in energy and consumer goods and the additional NI payment will cost lower income households £710. At the same time, many will be suffering a £20 weekly cut to Universal Credit.
Tory disorder
Road Haulage Association’s Rod McKenzie has accused the Johnson-led government of being nothing less than “government by inertia”.
And Andy Beckett commented in the Guardian how:
Boris Johnson has presided over more disruption than any prime minister for decades: in education, agriculture, construction, the courts, manufacturing, exports and imports, the hospitality industry, retail and, above all, public health policy. He has rarely been able to present himself as in control of events. And unlike the crises of the 1970s – which led to almost no loss of life – his premiership has seen tens of thousands of unnecessary deaths.
Also that:
the hardest possible Brexit, and [Johnson’s] careless governing style have greatly contributed to the disorder.
Beckett asked: “So why has all the chaos not left his administration seriously damaged?” He offered a number of answers, including how the population may have got used to this chaos being the new norm. However, this analysis doesn’t fully take account of the dismal offerings by Labour leader Keir Starmer, who Beckett described as “baffled”.
‘Winter of discontent’ 2021/2
But forget Starmer. The real question is this: just how much hardship and chaos can working class people endure?
Is it when Christmas means no turkey or chicken or toys or your favourite beer? Or no Christmas at all? Or freezing homes because there’s not enough money to pay the lecky? Or far more people desperately turning to food banks to avoid starving?
And at what point does discontent turn to sheer, unadulterated anger?
Featured image via Flick/Dark Dwarf
By Tom Coburg
This post was originally published on The Canary.
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The big shift in wealth from non-owners of residential property to owners continues. Renfrey Clarke argues the federal government’s efforts to inflate its way out of the COVID-19 economic slump have made upward pressures on housing prices extreme.
This post was originally published on Green Left.
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Three weeks have passed since the fall of Kabul. If one dares to go outside, then all you see is the Taliban — with their guns roaming around — very few women can be seen outside, writes Yasmeen Afghan.
This post was originally published on Green Left.
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Inflation is on course to increase above 4% in the coming months. This would reduce average household incomes by £700, research suggests.
The Resolution Foundation said higher than expected inflation poses more of a challenge to household incomes than to the Bank of England.
Findings
The think tank said UK inflation has mirrored trends in the United States when the rate is increasing.
It added that near-term inflationary pressures in the UK are less stark than the US.
The Foundation’s analysis showed that while the UK is unlikely to experience the same inflation peaks seen in the US, if commodity prices remain at their current levels, inflation could rise above 4% later in 2021. This is more than double the rate of inflation forecast by the Bank of England for the third quarter.
‘The Government cannot afford to ignore it’
James Smith, research director at the Resolution Foundation, said:
With the US experiencing the fastest rise in inflation in nearly half a century, and the UK also experiencing sharp increases, many people are getting increasingly worried about a possible price spiral.
While UK inflationary pressures are nothing like as stark as the US, we could still see inflation breaching 4% this summer, a figure well in excess of the OBR and Bank’s expectations.
The temporary nature of this inflation spike means the Bank can look through it and avoid premature rate rises, but the £700 hit to living standards it will bring means households and the Government cannot afford to ignore it.
‘Squeeze on household incomes’
Smith went on to add:
The Chancellor can start by cancelling the planned cut to Universal Credit this autumn, which will only add to families’ financial pressures.
A squeeze on household incomes later this year, even if temporary, is a significant threat to the strength of our current recovery.
By The Canary
This post was originally published on The Canary.
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The May employment report was somewhat weaker than had generally been expected, with the economy adding 559,000 jobs. On the household side, the unemployment rate fell by 0.3 percentage points to 5.8 percent. While this is still high by any reasonable measure, it is worth noting that the unemployment rate did not get this low following the Great Recession until October of 2014.
The employment-to-population ratio (EPOP) edged up to 58.0 percent, which is 3.1 percentage points below the pre-pandemic level. By this measure, the gender differences in the hit from the pandemic have largely disappeared, the women’s EPOP for May was 53.1 percent, down 2.3 percentage points from its average in 2019. For men the May EPOP was 63.4 percent, down 3.2 percentage points from its year-round average of 66.6 percent in 2019. However, in payroll employment, women’s share was 49.8 percent in May, compared with 50.0 percent before the pandemic.
(It is important to note that states that ended unemployment insurance supplements would not likely affect the May data. The termination did not take effect until June, the reference point for the survey is May 12th.)
Private Sector Performance Was Strong, as Governments Lag in Rehiring Workers
The private sector accounted for 492,000 of the May job growth, as state and local governments added back just 78,000 workers in the month (the federal government lost 11,000 jobs). State and local employment is still 1,191,000 below its pre-pandemic level, with the vast majority of this gap in education. With the end of the regular school year this month, pandemic closings will be less of an issue in June, but presumably all schools will be open again for in-class instruction in the fall.
The private sector is down 6,462,000 jobs since February 2020. At the May rate of job growth, it will take just over 13 months to make up the gap.
Restaurants Biggest Source of Job Gap
In absolute numbers, restaurants make up the largest chunk of this shortfall, with employment still down 1,480,000 from the pre-pandemic level, after adding 186,000 jobs in May. While many employers claim that they aren’t hiring because they can’t find workers, it’s not clear how much impact this shortage is having. Wages have been rising rapidly for nonsupervisory workers in the industry, a 22.2 percent annual rate comparing the average of the last three months (March, April, and May) with the prior three months (December, January, and February), but the average workweek actually fell slightly in May, from 25.3 hours to 25.1 hours.
On the plus side, the index of aggregate hours in the industry is still 12.4 percent below its pre-recession level. With restaurant sales likely passing their pre-pandemic level in May, this implies a huge gain in productivity. This is true more generally, as the overall index of aggregate hours for May stood 3.6 percent below the February level, even as output is virtually certain to pass pre-pandemic levels in the quarter.
Big Job Gains in Most Troubled Sectors
The health care sector, which is down 508,000 jobs from before the pandemic, added 22,500 jobs in May. Nursing care facilities, which are down 202,000 jobs, added back just 1,000 jobs in May, after losing 17,700 in April. This is a sector where low and poor working conditions may make it difficult to attract workers.
Hotels, which are down 526,000 jobs, added 34,600 jobs in May. The other services category, which includes sectors such as hair salons and dry cleaners and is down 353,000 jobs, added 10,000 jobs in May. The retail sector, which is down 411,000 jobs, actually lost 5,800 jobs in May. This is another sector where it seems there have been strong productivity gains. The motion picture sector, which is among the worst hit in percentage terms, down 157,000 jobs or 35.6 percent, added 13,900 jobs in May.
Construction and Manufacturing Coping With Shortages
Construction lost 20,000 jobs in May after losing 5,000 in April. This is likely due to temporary shortages of building material, most importantly lumber. Manufacturing added 23,000 jobs, reversing most of the job loss in April, as it seems auto manufacturers are finding ways to deal with the semiconductor shortage.
Recovery Continues to Benefit More Educated Workers
The unemployment rate for college grads fell 0.3 percentage points to 3.2 percent in May. It is down 0.8 percentage points from the start of the year. By contrast, the unemployment rate for high school grads dropped just 0.1 percentage points to 6.8 percent. It has fallen 0.3 percentage points since January.
Black Teen Unemployment Hits a Record Low
The unemployment rate for Black teens fell to 12.1 percent in May, by far the lowest level on record. These data are highly erratic, so we may see a big jump in future months, but it does seem to indicate they are doing relatively well in the current labor market.
The overall Black and Hispanic unemployment both dropped 0.6 percentage points in May, to 9.1 percent and 7.3 percent, respectively. The unemployment rate for Asian Americans is still somewhat higher than for whites, 5.5 percent compared to 5.1 percent for whites. It was slightly lower pre-recession.
Long-Term Unemployment Falls and Quit Rate Rises Modestly
The share of long-term unemployed (more than 26 weeks) fell back from 43.0 percent to 40.9 percent in May. This is still very high; a more normal rate would be in the teens. The percent of unemployment due to voluntary quits edges up to just 8.4 percent. It was over 14.0 percent pre-pandemic, indicating workers still don’t feel great about their labor market prospects.
Jump in Self-Employed
There has been a big jump in the number of self-employed workers in the last three months, with the three-month average of 9,843,000 more than 300,000 above the year-round average for 2019. These data are erratic, but it is possible that many people are finding ways to work from home for themselves instead of returning to the workplace.
Generally Solid Report
The jobs numbers were somewhat weaker than expected again in May, but much of this continues to be due to schools not reopening. In terms of employers having trouble hiring workers, there is some evidence, most notably the relatively rapid wage growth for production workers, (i.e., 4.5 percent annual rate, comparing the last three months with the prior three months.) On the other hand, the small drop in hours in average weekly hours is not consistent with a shortage.
The plus side of weaker-than-expected job growth is that it means productivity growth is very strong. With output now passing pre-pandemic levels, but employment still far lower, this means we are getting much more output per hour. Strong productivity growth should eliminate any fears of inflation.
This post was originally published on Latest – Truthout.
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Surging prices for necessities like used cars, phones, and housing have caused the biggest jump in “core” consumer prices in nearly four decades, according to new figures released Wednesday by the US Department of Labor (DOL).
Rising prices for food, heating oil, gas, and other necessities are eating into workers’ incomes both in the United States and internationally.
Workers are finding it increasingly impossible to make ends meet, even if they are employed full-time. The minimum wage in the United States remains at $7.25 per hour, and US President Joe Biden has reneged on his campaign promise to raise it.
Workers’ real average hourly earnings have plunged, falling 3.4 percent over the past year, according to the latest jobs report from the DOL, as companies used the pandemic as a pretext to slash wages over the past year.
The post Soaring Prices Push US Households To The Edge appeared first on PopularResistance.Org.
This post was originally published on PopularResistance.Org.
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Their cry-wolf act is well practiced but lacks credibility. Continue reading
The post Republicans Greet Covid Stimulus With Another Round of Inflation Fearmongering appeared first on BillMoyers.com.
This post was originally published on BillMoyers.com.