Are Workers Just Too Stupid to Understand Inflation?

by Les Leopold

The pundits are at it again, fretting over the latest poll numbers showing that President Biden is losing in the key swing states, especially those like Michigan, Pennsylvania, and Wisconsin, with heavy concentrations of working-class voters. With inflation down, unemployment at record lows, wages up, and infrastructure projects popping up across the country, the pundits wonder why aren’t these workers thrilled with the economy?

The not-so-subtle implication is that American workers are too dumb to realize that wages are rising faster than the higher prices they see all around them. Even Robert Reich, who I truly admire and hate to call out, recently wrote in his Substack that “wages are rising for American workers,” and he means real wages—wages after taking inflation into account.

Unfortunately for workers, Reich is wrong, as are so many other pundits who keep repeating the same erroneous point.

The St. Louis Federal Reserve has the go-to database that tracks the average weekly earnings of private sector production and nonsupervisory employees. These workers make up 82.2 percent of the total U.S. full-time workforce, and 65.4 percent of all civilian employment, full and part time. If wages are going up for American workers, they should be going up for this very large segment of the working class.

But wages, after inflation, have gone down, not up, since 2020.

Let’s do the math.

The “Actual Wages” column shows the average weekly wages (from the FED data base) that workers received each year, not counting the impact of inflation.

The “Inflated Dollars” column shows those same weekly wages recalculated into April 2024 dollars. (This column is created by plugging the actual wages into the Bureau of Labor Statistics CPI Inflation Calculator.) The rate of inflation in 2020 was only 1.2 percent. In 2021, it jumped to 4.7 percent, then 8.0 percent in 2022, and 4.1 percent in 2023. It took it’s toll on the buying power of wages.

Inflated Dollars shows how much money it would take today to match what the average weekly wage could purchase back then.

For example, in December 2020, it would take $1,035.80 in today’s money to buy what $860.47 bought then. As wages go up year by year, what those wages can buy changes based on how much prices are rising (or, we wish, going down).

If wages were going up faster than inflation, then April 2024’s actual dollars earned would be greater than December 2020’s inflated dollars earned. But, in fact, the actual buying power of worker wages dropped from $1,035.80 in 2020 to $1,005.27 this past April.

Inflation is cruel. You get a raise, you have more money in your pocket, and inflation takes it away, and then some. Since the end of 2020, average weekly wages jumped by 18.8 percent—from $860.47 to $1,005.27. But for the average worker that was a mirage. In terms of buying power, which is what really matters, wages after inflation actually fell by 2.9 percent.

Hmmm. Maybe those workers who complain about inflation aren’t so dumb after all.

Jobs, Jobs, Jobs?

Unemployment is low, and new jobs are being created in record numbers, but that’s only half of the jobs story. The other half concerns layoffs, lots and lots of them, as Wall Street destroys millions of jobs to pay for stock buybacks, leveraged buyouts, and mergers.

The super-rich get richer by laying off workers and nothing is being done about it. (See Wall Street’s War on Workers for all the gory details.)

Jobs are being destroyed even in the booming high-tech sector. In 2022, according to the website Layoffs.fyi, a total of 165,269 workers were laid off. In 2023, the high-tech layoffs jumped to 263,180, and so far this year another 84,060 have been let go.

Overall, Challenger, Gray & Christmas, a job search and career coaching firm, report 554,100 layoffs in the last 9 months (August 2023- April 2024). That’s a lot of unhappy workers who have gone through the hell of losing their jobs. They are not likely to praise the economy or the politicians trying to take credit for it.

It might be wise to stop hyping how wonderful the economy is for working people. Macro numbers, even when they tell a better story than the adjusted wage data, don’t cut it for workers who know that wages aren’t keeping up with prices and that losing a job is an awful experience.

This is not an argument to vote Republican. Rather it’s an argument to face up to the truth about our political and economic system. It’s rigged against working people, and they know it, even if the pundits don’t.

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This work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely. Les Leopold is the executive director of the Labor Institute and author of the new book, Wall Street’s War on Workers: How Mass Layoffs and Greed Are Destroying the Working Class and What to Do About It. (2024). His substack is lesleopold.substack.com/.

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While on routine patrol amid the maze of elevator towers in Portsmouth’s north end on Friday, May 24th, the Flag Police encountered the violation graphically documented above. Swinging into action with all deliberate speed, and being fully briefed on recent trends in Flag Crime, they did the obvious thing: put out an APB for the apprehension of Martha-Ann Alito.

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Trump’s Corporate Tax Cuts Paved the Way for Inflation

The former president made it more profitable for companies to gouge us. When those cuts expire next year, we’ll have an opportunity to get our money back.

By Lindsay Owens

Next year, when key provisions of President Trump’s 2017 tax breaks to the wealthy and corporations expire, we have an opportunity to get our money back.

I’m not just talking about all the foregone tax revenue we’ve lost because the rich have paid so little since 2017—though we should get that back, too. I’m talking about the money families have lost to corporate price gouging.

Let me explain.

In 2017, Republicans slashed the corporate tax rate from 35 percent to 21 percent, giving massive corporations their biggest tax windfall since Ronald Reagan was president. A few years later, as Americans emerged from a global pandemic, these same corporations drove up prices for families.

While inflation hamstrung workers and families, it didn’t make a dent in corporate profits. In fact, as many CEOs boasted themselves, it’s been a boon. Companies simply passed rising costs along to consumers—and then some, bringing in record profits as a result.

All told, corporate profit margins skyrocketed to 70 year-highs. And by the end of 2023, when Americans were beyond fed up, after-tax corporate profits hit an all-time record high of $2.8 trillion. My organization, Groundwork Collaborative, recently found that corporate profits drove over 50 percent of inflation in the second and third quarters of last year.

But why would a change in the corporate tax rate unleash the kind of rampant corporate profiteering we saw in the aftermath of the pandemic? Simple: It’s a lot more fun to gouge customers when you get to keep more of what you pull in.

Look at Procter & Gamble, which has raised the price of everything from toothpaste to diapers. Last year, the company pulled in more than $39 billion in profit.

If they had to pay the 35 percent statutory tax rate, they would have sent nearly $14 billion to Uncle Sam. Instead, they paid a 21 percent rate and, using loopholes, got to keep an extra $10 billion—which helped with their combined $16.4 billion worth of dividends and stock buybacks for shareholders.

Corporations did well from Trump’s corporate tax cuts, with executives getting big raises and shareholders receiving big buybacks. But the real bonus came when inflation hit. Corporations used the cover of supply chain issues and broader inflation to hike prices more than their higher input costs justified—and they didn’t have to worry about their tax bill.

Our tax code is exacerbating some of the worst corporate excesses, effectively “subsidizing corporate price gouging,” as Sen. Elizabeth Warren (D-Mass.) described it recently. But it’s not only that low tax rates incentivize companies to overcharge. Rock-bottom tax rates also make collusion more profitable, as we saw with Pioneer Oil.

Recently, the Federal Trade Commission barred former Pioneer Oil CEO Scott Sheffield from joining the board of ExxonMobil following their merger, because Sheffield allegedly colluded with OPEC to raise oil prices. As families struggled with higher energy costs, the oil and gas industry banded together to keep prices high, which according to one analyst accounted for 27 percent of inflation in 2021.

When the reward is higher with lower corporate taxes, executives like Sheffield are more willing to take the risk. Higher corporate taxes are both crucial for accountability and for ensuring that there’s far less incentive for executives to squeeze as much as they can from their customers.

Wall Street tycoons and CEOs didn’t take the heat of inflation—they fanned its flames and families got burned. It’s no wonder people overwhelmingly favor a tax code that’s no longer rigged for corporations, especially as they struggle with high prices.

Congress raising the corporate tax rate in 2025 is an opportunity to recoup some of the truly obscene profits corporate America raked in during this period of economic upheaval for American families. It’s time Americans got their money back.

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Lindsay Owens is the executive director of Groundwork Collaborative. This op-ed was distributed by OtherWords.org, and is licensed under a Creative Commons Attribution-No Derivative 3.0 License.

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RiverRun Bookstore Recommends …

… American Character, by Colin Woodard.

Who came from where, what they believed, and where they settled can tell us a lot about how historical events have played out in U.S. History, and how they might play out in the future. Puritans, aristocrats, libertarians, socialists; Maine author Woodward argues that our country is really a collection of a dozen small nations, and he is compelling. Accessible and very interesting.

Readers: Because we love and depend on RiverRun Bookstore, we signed up for membership at riverrunbookstore.com/Patreon. We hope you will, too. – The Ed.

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It looks like some wiseguy with a welding torch and a low tolerance for bureaucratic requirements thought he could dodge the city’s street encumbrance permitting ordinance by building himself a mobile container for carting refuse which is almost capable of fitting into a standard parking space. It is a clever enough idea, we suppose, but it’s a shame about the aesthetics. Surely something might have been done to make it less of an affront to the eye. After all, even the designers of the lowly and ubiquitous convenience at the right in the photo made an effort to render it inoffensive.

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Accusing Mercedes of ‘Wanton Lawlessness,’ UAW Seeks New Alabama Vote

by Jessica Corbett

The United Auto Workers last Friday formally challenged its recent election loss at a pair of Mercedes-Benz facilities in Alabama, accusing the company of engaging in “an unprecedented, illegal anti-union campaign” and requesting a new vote.

“All these workers ever wanted was a fair shot at having a voice on the job and a say in their working conditions,” the UAW said in a statement. “And that’s what we’re asking for here. Let’s get a vote at Mercedes in Alabama where the company isn’t allowed to fire people, isn’t allowed to intimidate people, and isn’t allowed to break the law and their own corporate code, and let the workers decide.”

Of the more than 5,000 employees at the two Mercedes-Benz United States International (MBUSI) plants, 2,045 (45 percent) voted to join the UAW and 2,642 (56 percent) voted against it. After the ballots were counted, union president Shawn Fain said that it was “obviously not the result we wanted” but “we’ll be back.”

The UAW complaint to the National Labor Relations Board (NLRB) accusing MBUSI of “wanton lawlessness” echoes the union and workers’ previous allegations that the company engaged in illegal union-busting at the Vance and Woodstock facilities, which led to ongoing reviews from U.S. and German authorities.

“The employer engaged in a relentless anti-union campaign marked with unlawful discipline, unlawful captive audience meetings, and a general goal of coercing and intimidating employees.”

“On January 11, 2024, employees of MBUSI publicly announced that they were exploring forming a union with the UAW at MBUSI’s facilities,” says the new complaint, according to Alabama Reflector. “Almost immediately thereafter, both prior to and during the election period, the employer engaged in a relentless anti-union campaign marked with unlawful discipline, unlawful captive audience meetings, and a general goal of coercing and intimidating employees who were attempting to exercise their Section 7 rights.”

The Reflector reported that “the charges include disciplining employees for discussing unionization at work; not allowing union materials or paraphernalia to be distributed; surveilling employees; discharging supporters of the union; forcing employees to be in captive audience meetings, and making comments that union activities will not work.”

MBUSI has denied any wrongdoing and a company spokesperson said Friday that “our goal throughout this process was to ensure every eligible team member had the opportunity to participate in a fair election.”

“We sincerely hoped the UAW would respect our team members’ decision,” the MBUSI spokesperson added. “Throughout the election, we worked with the NLRB to adhere to its guidelines and we will continue to do so as we work through this process.”

Lisa Henderson is the NLRB’s regional director responsible for the complaint. The agency confirmed to CNBC that her office is still investigating the earlier accusations against MBUSI and received the new filing. As the outlet detailed: “If she finds that the objections raise substantial and material issues of fact that could be best resolved by a hearing, she will order a hearing. If after the hearing, she finds that the employer’s conduct affected the election, she can order a new election.”

Although leading public figures—from Republican Gov. Kay Ivey to retired University of Alabama football coach Nick Saban—battled the UAW push, organizers had high hopes going into last week’s vote, which came after a victory at a Volkswagen facility in Chattanooga, Tennessee last month and union workers winning new contracts at the “Big Three” following a six-week strike last year.

Reflecting on the initial outcome in Alabama, Dave Kamper, senior state policy strategist at the Economic Policy Institute, wrote Wednesday that “while this result shows the power of corporations and state governments to smother worker efforts to unionize, even in defeat the UAW helped Mercedes workers win substantial improvements in pay and benefits.”

“Workers organizing to improve their working conditions benefit from unions in many ways, but even when a union victory eludes them like in Alabama, the organizing can pay off,” he stressed. “The more workers band together to fight for better jobs, the more likely they and other workers will see the benefits.”

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This work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely. Jessica Corbett is a senior editor and staff writer for Common Dreams.

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Ports. Dem. Roundtable on June 11th

Portsmouth Democrats hold a roundtable at a local restaurant on the 2nd Tuesday of every month. The next will be on June 11th from 6:30 to 8:00 p.m. It’s an opportunity for new residents and old friends to socialize without any agenda or rigid structure. New residents can meet those involved in the Portsmouth Democrats and learn of opportunities to get involved, suggest new ideas, or be supportive of planned initiatives. In July the Roundtable will be held on June 9th. For location and other information contact Peter Somssich at (603) 436-5382 (No Texts Please) or email peter.somssich@gmail.com.

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Summer must be just around the corner—here’s the M/V Thomas Laighton passing under Memorial Bridge. It’s common knowledge that the ship is named for the father of the poet Celia (Laighton) Thaxter. What’s less well known is that, not too long before Thomas Bell Laighton became “Lord of the Isles,” he was co-owner, with Abner Greenleaf, Jr., of this newspaper. That partnership lasted from July, 1835, through the end of 1836. As Greenleaf went for four more years as the sole proprietor of the New Hampshire Gazette, Laighton ran for Governor. He “was defeated for Governor by what he thought were questionable means,” according to a Boston Globe story dated July 29, 1951. The victor was Benjamin Pierce, whose son Franklin became president 15 years later.

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‘Bluelining’ Leaves Climate Vulnerable Communities Without Home Insurance

Insurers are pulling out of areas prone to climate risk—even as they insure the fossil fuel companies contributing to that risk. These communities deserve better.

By Jessica Garcia

In an era of climate disasters, Americans in vulnerable regions will need to rely more than ever on their home insurance. But as floods, wildfires, and severe storms become more common, a troubling practice known as “bluelining” threatens to leave many communities unable to afford insurance—or obtain it at any price.

Bluelining is an insidious practice with similarities to redlining—the notorious government-sanctioned practice of financial institutions denying mortgages and credit to Black and brown communities, which were often marked by red lines on map.

These days, financial institutions are now drawing “blue lines” around many of these same communities, restricting services like insurance based on environmental risks. Even worse, many of those same institutions are bankrolling those risks by funding and insuring the fossil fuel industry.

Originally, bluelining referred to blue-water flood risks, but it now includes other climate-related disasters like wildfires, hurricanes, and severe thunderstorms, all of which are driving private-sector decisions. (Severe thunderstorms, in fact, were responsible for about 61 percent of insured natural catastrophe losses in 2023.)

In the case of property insurance, we’re already seeing insurers pull out of entire states like California and Florida. The financial impacts of these decisions are considerable for everyone they affect—and often fall hardest on those in low-income and historically disadvantaged communities.

A Redfin study from 2021 illustrated that areas previously affected by redlining are now also those prone to flooding and higher temperatures, a problem compounded by poor infrastructure that fails to mitigate these risks. This overlap is not a coincidence but a further consequence of systemic discrimination and disinvestment.

This financial problem exists no matter where you live. In 2024, the national average home insurance cost rose about 23 percent above the cost of similar coverage last year. Homeowners across more and more states are left grappling with soaring premiums or no insurance options at all. And the lack of federal oversight means there is little uniformity or coordination in addressing these retreats.

This situation will demand a radical rethink of how we approach investing in our communities based on climate risks. For one thing, financial institutions must pivot from funding fossil fuel expansion to investing in renewable energy, natural climate solutions, and climate resilience, including infrastructure upgrades.

What about communities in especially vulnerable areas?

One strategy is community-driven relocation and managed retreat. By relocating communities to low-risk areas, we not only safeguard them against immediate physical dangers but also against ensuing financial hardships. Additionally, preventing development in known high-risk areas can significantly decrease financial instability and economic losses from future disasters.

As part of this strategic shift, financial policies must be realigned. We need regulations that compel financial institutions to manage and mitigate financial risk to the system and to consumers. We also need them to invest in affordable housing development that is energy-efficient, climate-resilient, and located in areas less susceptible to climate change in the mid- to long-term.

Meanwhile, green infrastructure and stricter energy efficiency and other resilience-related building codes can serve as bulwarks against extreme temperatures and weather events.

The challenge of bluelining offers us an opportunity to forge a path towards a more resilient and equitable society. We owe it to the future generations to do more than just adapt to climate change. We also need to confront and overhaul the systems that harm our climate. The communities most exposed to climate change deserve no less.

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Jessica Garcia is a senior policy analyst for climate finance at Americans for Financial Reform Education Fund. This op-ed was distributed by OtherWords.org, and is licensed under a Creative Commons Attribution-No Derivative 3.0 License. For more on bluelining, see Jessica’s two-part blog series at OurFinancialSecurity.org.

This Fortnight in 1892

Another Murder