The Sentinel

Commentary |
It’s not ‘Inflation’ — We’re just getting ripped off

These corporate giants have no plans to bring prices down anytime soon.

by Lindsay Owens & Elizabeth Pancotti

Many Americans are still experiencing the sticker shock they first faced two years ago when inflation hit its peak. But if inflation is down now, why are families still feeling the pinch?

The answer lies in corporate profits — and we have the data to prove it.

Our new report for the Groundwork Collaborative finds that corporate profits accounted for more than half — 53 percent — of inflation from April to September 2023. That’s an astronomical percentage. Corporate profits drove just 11 percent of price growth in the four decades prior to the pandemic.

Businesses have been quick to blame rising costs on supply chain shocks from the pandemic and the war in Ukraine. But two years later, our economy has mostly returned to normal. In some cases, companies’ costs to make things and stock shelves have actually decreased.

Let’s demonstrate with one glaring example: diapers.

The hyper-consolidated diaper industry is dominated by just two companies, Procter & Gamble and Kimberly-Clark, which own well-known diaper brands like Pampers, Huggies, and Luvs. The cost of wood pulp, a key ingredient for making diapers absorbent, did spike during the pandemic, increasing by more than 50 percent between 2020 and 2021.

Corporate profits accounted for more than half of recent price increases. To stamp out inflation once and for all, we need to crack down on price gouging.

But last year it declined by 25 percent. Did that drop in costs lead Procter & Gamble and Kimberly-Clark to lower their prices? Far from it. Diaper prices have increased to nearly $22 on average.

These corporate giants have no plans to bring prices down anytime soon. In fact, their own executives are openly bragging about how they’re going to “expand margins” on earnings calls. Procter & Gamble predicted $800 million in windfall profits as input costs decline. Kimberly-Clark’s CEO said the company has “a lot of opportunity” to expand margins over time.

It’s not just diapers — while many corporations were quick to pass along rising costs, they’ve been in no hurry to pass along their savings. A recent survey from the Richmond Fed and Duke University revealed that 60 percent of companies plan to hike prices this year by more than they did before the pandemic, even though their costs have moderated.

Photo: Israel Albornoz/Unsplash

Corporations across industries, from housing to groceries and used cars, are juicing their profit margins even as the cost of doing business goes down. And they’re not hiding the ball. Since the summer of 2021, Groundwork began listening in on hundreds of corporate earnings calls where we heard CEO after CEO boasting about their ability to raise prices on consumers.

Now we hear something slightly different: CEOs crowing about keeping their prices high while their costs go down.

PepsiCo raised its prices on snacks and beverages by roughly 15 percent twice in the last year while bragging to shareholders that their profit margins will grow as input costs come down. Tyson’s earnings report flaunted how their higher prices have “more than offset” their higher costs. The CFO of Hershey said last quarter that pricing gains more than offset inflation and higher costs.

So what can we do about it?

The Biden administration has taken important steps to rein in corporate profiteering and address the longstanding affordability crisis, from eliminating junk fees to strengthening global supply chains and cracking down on corporate concentration.

With the 2017 Trump tax cuts set to expire, Congress should also take this opportunity to raise taxes on corporations. Taxing profits helps disincentivize price gouging and profiteering because large corporations will have to send a greater share of their windfall to Uncle Sam.

We’ve come a long way in bringing inflation down since its peak in 2022. But stamping out inflation once and for all will require a concerted effort to rein in the corporate profiteering.

Elizabeth Pancotti

Lindsay Owens

Lindsay Owens is the Executive Director of the Groundwork Collaborative. Elizabeth Pancotti is Strategic Advisor to Groundwork. This op-ed was distributed by OtherWords.org.

Commentary |
Airbnb is driving up housing costs for all of us

In the early years, staying in other people’s houses felt like an act of rebellion against corporate hotel chains.

by Sonali Kolhatkar

Americans have been on a vacation binge since the easing of COVID-19 restrictions. In particular, the vacation rental company Airbnb is thriving. Late last year, the company posted its highest-ever profits.

Sonali Kolhatkar

Meanwhile cities are seeing rising rents, unaffordable home prices, and increased homelessness. Authorities are now linking these crises in part to Airbnb — and some now are passing strict regulations.

Just as companies like Uber were once touted as a way for working people with cars to earn a little extra spending cash, Airbnb offered the promise of supplementary income for those with an extra room or converted garage.

I’ve rented several Airbnb homes over the 15 years since the company was founded. In the early years, staying in other people’s houses felt like an act of rebellion against corporate hotel chains. The privacy, convenience, and often lower cost enabled tourists with tighter budgets to enjoy family vacations that otherwise might have been unavailable.

Now, however, the market is increasingly dominated by a small number of corporate “hosts” and professional property managers — wealthy elites and corporate entities that scoop up large numbers of properties and turn big profits by renting them out to travelers.

And that’s driving up housing costs for everyone.

Stephanie Synclair, a 41-year-old Black mom from Atlanta, recently made the news for becoming a home-buyer — not in her hometown, but in Palermo, Sicily.

In spite of having a budget of $450,000 — no small sum — Synclair had no luck buying a home in Atlanta, where properties are among the most overpriced in the nation. Atlanta’s housing market is dominated by investors and cash-rich corporations who scoop up practically every home listed at $500,000 or less, many of which are then transformed into Airbnb listings for tourists.

So Synclair now plans to retire in her $62,000 home on the other side of the planet instead.

"Staying in other people’s houses felt like an act of rebellion against corporate hotel chains," Kolhatkar said. Affordable, off-the-beaten path rentals once had their quirky charm until corporations invaded the short-term rental market.

Photo: Theo Rivierenlaan/Pixabay

A 2017 study of New York City by the watchdog group Inside Airbnb concluded that the Airbnb model also fuels racism in the housing market. “Across all 72 predominantly Black New York City neighborhoods,” the group found, “hosts are five times more likely to be white.” But the “loss of housing and neighborhood disruption due to Airbnb is six times more likely to affect Black residents.”

To curb such inequities, New York City, which already had strict rules about short-term rentals and subleases, passed a law in 2023 requiring Airbnb to ensure that hosts obtain permission to rent out housing. If it fails to do so, both the host and the company are hit with hefty fines.

While this means potentially higher hotel costs for out-of-town visitors, it could also free up rentals for long-term residents. According to The Guardian, this may already be happening, just months after the law went into effect in September.

While cheaper vacation stays are certainly desirable for those of us who love to travel, vacationing is a privilege in the U.S. More than a third of Americans, a 2023 survey found, are unlikely to take a summer vacation. And of those, more than half say they simply can’t afford it.

A 2019 Economic Policy Institute study pointed out that “Airbnb might, as claimed, suppress the growth of travel accommodation costs, but these costs are not a first-order problem for American families.” What is a first-order problem is affordable housing.

While regulating Airbnb will not mitigate all economic injustices facing Americans — such as suppressed wages and a lack of government-funded health care — it certainly will move the needle in the right direction.

Sonali Kolhatkar is the host of “Rising Up With Sonali,” a television and radio show on Free Speech TV and Pacifica stations. This commentary was produced by the Economy for All project at the Independent Media Institute and adapted for syndication by OtherWords.org.