Why We Must Understand Inflation Inequality
by Maurice BP-Weeks, Executive Director at ACRE
New research unveiled this week revealed that, because of a phenomenon known as inflation inequality, the federal government has been underestimating the number of Americans living below the federal poverty line by the millions.
The paper, released by Groundwork Collaborative and the Columbia Center for Poverty and Social Policy, shows that there are 3.2 million previously uncounted poor people. The research is also striking in that it reveals, yet again, that the economy is rigged in favor of the wealthy and mega-corporations.
Much like the widely held conservative economic view that considers the “free market” a force of nature rather than the result of policy choices, inflation — the percentage increase in the price of most products — has been accepted as a natural force rising and falling with economic trends that affect everyone in the same way. The paper builds on research tracking retail scans, which shows that because inequality is so extreme, corporations focus product innovation on products targeting the wealthy, and that competition for their money keeps prices lower.
…the same people who have been squeezed by wage stagnation and soaring healthcare prices and an ever shrinking amount of influence over their own lives and well-being in the face of political corruption, are also being charged more than the rich when they go to the grocery store.
This all means inequality, which we already know is a result of extracting wealth from low-income communities, communities of color, and other vulnerable communities to build wealth for a few, is also causing prices to rise more quickly for the poorest Americans. It means that inequality itself is a cause of higher prices for the poor and cheaper prices for the rich. It means the same people who have been squeezed by wage stagnation and soaring healthcare prices and an ever shrinking amount of influence over their own lives and well-being in the face of political corruption are also being charged more than the rich when they go to the grocery store. And it’s clear that this isn’t a natural force. Decisions are made, both by corporations that control the economy, and elected officials who do their bidding, that makes this a reality.
Inflation inequality is a real factor in families’ ability to make ends meet, but it has an immediate effect on our public policies as well. It means that the many government programs we index to inflation to help their value keep up with rising costs over time, like Supplemental Nutrition Assistance (SNAP), Pell grants and Social Security, might be losing value for the very people they’re meant to help. And at the same time, this new research reveals income for the poorest Americans has grown even more slowly than we knew. All of this makes even clearer the crisis that poor communities are in every day.
At the Action Center on Race and Economy, we help workers, organizers, and allies build power to take on the powerful companies extracting their wealth from our communities. Building that power, and ultimately succeeding in reshaping our economy, takes an enormous amount of coordination, effort, and shared information. It also requires research to accurately understand how the economy works and how it needs to be remade. Inflation inequality is a harrowing example of how inequality’s impact on already economically vulnerable people is greater than we realized, and our attempts to build an economy that works for us all will never be enough if we don’t face the lessons of new research like this. Above all, this new research should be a call to reclaim power for those most vulnerable in the economy, taking it out of the hands of the wealthy and powerful corporations.
