Plenty of politicians and news outlets are sounding the alarm on rising inflation rates. But not many of them are talking about what this buzzword actually means for families or what we should be doing to ease the burden. Here’s everything you need to know.
1. Temporary price spikes do not equal an unhealthy economy.
Inflation is one measure of the economy, but it’s not the only or most important one. Our goal should be to raise people’s standard of living, especially for people at the bottom of the income ladder. By multiple other measures, we are on our way to doing that.
Full employment is one of the most powerful tools to raise the living standard and increase racial equity. We’ve seen encouraging job and wage growth in the last few months and the infrastructure package that Congress just passed will help get us even closer. Right now, thanks to investments from the American Rescue Plan, we have some of the lowest poverty rates in recent U.S. history—which is astonishing amidst the pandemic. There are also less people going hungry since the expanded child tax credits started to hit families’ bank accounts back in July.
These investments in families have dwarfed the impact of higher prices on some goods for the families who are most at risk of financial hardship. The economy is improving at an impressive rate since the pandemic thanks to federal government action and that’s what we need to see more of.
2. The price pressures that hurt low-income families the most have been decades in the making and can be addressed by passing the Build Back Better Act.
The biggest ticket items that hurt families’ budgets are rent and child care. The skyrocketing costs of these vital needs were not caused by the pandemic—they have been rising for decades while wages have remained stagnant.
The Build Back Better Act would help address our housing supply crisis by building new affordable units with a $150 billion investment. And we could regulate prices with rent control policies. Similarly, we finally have the chance with investments from BBB to reduce out of pocket child care costs for families, increase labor participation, and raise the wages of care workers.
There is no way out of these challenges without massive public investment.
3. Rising costs of essentials like diapers and food can be traced back to corporate greed.
For decades, a consolidation of industries has led to less competition. That means corporations have the power to artificially inflate the prices of necessities like diapers, meat, and dairy that families depend on. Meanwhile, these same conglomerates are using these profits to engage in stock buybacks. This is not the fault of small farmers or grocers who stock the shelves—it comes down to corporate greed.
There are also real effects of supply chain issues on small businesses. Some had to go under because corporate actors like Amazon and conglomerates in the restaurant industry eat up the incomes of the small businesses they work with.
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 these products or fix our underinvested supply chain issues.
We need to build systems that support a healthy economy for all of us.
4. The price flare-ups in specific sectors like auto manufacturing and lumber are not expected to spread to the rest of the economy.
This temporary inflation was caused by our economy improving quicker than anyone predicted. Because of government intervention that got people back to work and vaccinated with bonus checks in their bank accounts, demand for some goods has risen faster than the supply chain for them could handle. The solution to this problem is sustained investments in our supply chain—not making more people poor again to slow the demand. Biden’s infrastructure plan that just passed should help alleviate some of these issues.
5. The real danger of inflation is inflating the crisis as a means to stop the momentum on passing the Build Back Better Act.
Some politicians are using inflation rates that are misleadingly compared to rates during the height of our pandemic-induced shutdown to stop investments for our families and protect their corporate donors. We cannot sacrifice reduced child poverty and increased economic well being among the vast majority of our families to fix rising prices in a select few sectors. That response would be far more damaging to all of us than any temporary price spike.
The greatest economic risk we face right now is stopping investments when we’ve done too little.