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      We must raise the minimum wage to a living wage | Bernie Sanders

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      Congress can no longer ignore the needs of the working class of this country. At a time of massive and growing income and wealth inequality and record-breaking corporate profits, we must stand up for working families – many of whom are struggling every day to provide a minimal standard of living for their families.One important way to do that is to raise the federal minimum wage to a living wage. In the year 2023, nobody in the US should be forced to work for starvation wages. It should be a basic truism that in the US, the richest country on earth, if you work 40 hours a week you do not live in poverty. Raising the minimum wage is not only the right thing to do morally. It is also good economics. Putting money into the hands of people who will spend it on basic needs is a strong economic stimulant.When over 60% of American workers are now living paycheck to paycheck, when the life expectancy of low-income Americans is in decline, when we have the highest rate of childhood poverty of almost any major country, we can no longer tolerate a federal minimum wage of $7.25 an hour, a wage that has not been raised since 2009. Incredibly, the federal minimum wage has lost over 27% of its purchasing power since it was last raised 14 years ago. That is unacceptable. Millions of Americans cannot be allowed to fall further and further behind economically, unable to afford the housing, food, healthcare, childcare and education they desperately need in order to live in health and dignity.Whether they are greeting us at Walmart, serving us hamburgers at McDonald’s, providing childcare for our kids or waiting on our table at a diner in rural America, there are too many Americans trying to survive and raise families on $9, $10 or $12 an hour. It cannot be done. This injustice must end. Low-income workers need a pay raise and the American people want them to get that raise.Poll after poll shows overwhelming support for raising the minimum wage to a living wage. But it’s not just polls. In 2021, the Democratic majority in the US House of Representatives voted to increase the minimum wage to $15 an hour. The bad news is that we lacked the votes to pass this legislation through the equally divided Senate. Not only did a $15-an-hour minimum wage bill fail to win the vote of a single Republican in the Senate, eight Democrats voted against it as well.That was then. Now is now. And things are changing. As a result of years of congressional inaction, cities and states all across the country are taking the low-wage crisis into their own hands and raising their minimum wage. Some are doing it through legislative action. Others are doing it through ballot initiatives.Since 2013, the people of 12 states – New Jersey, South Dakota, Arkansas (twice), Alaska, Washington, Maine, Colorado, Arizona, Missouri, Florida, Nevada and Nebraska (twice) – have voted on ballot initiatives to raise their state’s minimum wage. Every single one of these initiatives passed, none with less than 55% of the vote. And these are not just strong “blue states” voting for economic justice. In the recent November 2022 midterm election, two states that voted in Republican governors, Nebraska and Nevada, voted to raise the minimum wage. In 2020, the citizens of Florida, with a Republican governor and two Republican senators, also voted to raise the minimum wage to $15 an hour.The MIT living wage calculator estimates a living wage as a salary that is adequate enough to support a family without luxuries. For two working adults and one child, a living hourly wage for each adult would be $18.69 in West Virginia, $17.55 in South Carolina, $21.57 in Maryland, $20.01 in Utah and $19.33 in Wisconsin. Even in my own state of Vermont, the living wage is $19.58, more than $6 above the current state minimum wage.But there are many families that do not have two working adults and rely on single moms who are raising their children on their own. In that case, the required living wage is much higher. As an example, a single mother in West Virginia would need to make $33.39 an hour to support herself and one child.So it is not radical to suggest that raising the minimum wage to $17 an hour over a period of several years is the right thing to do. In fact, had my 2015 bill to increase the minimum wage to $15 an hour that was indexed to median wages became law, the federal minimum wage this January would be at least $17.40 an hour. And while we deal with the minimum wage, we must also address the scandal of the tipped wage, which has been stuck at an abysmally low $2.13 an hour for more than 30 years thanks, in large part, to the powerful restaurant lobby which has spent millions in campaign contributions and lobbying expenses since 1991 to keep workers in poverty.Together, these two proposals would provide an increase in pay for tens of millions of desperate Americans – disproportionately women and people of color. It would also be a huge boost to single moms. Let us not forget that these are the essential workers who kept the economy going during the worst of the Covid pandemic. At that time we called them heroes and heroines. Well, rhetorical praise is nice. A livable paycheck is better. Let’s do it.
      Bernie Sanders is a US senator from Vermont and the chair of the Senate committee on health, education, labor and pensions More

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      Low-income Americans face a ‘hunger cliff’ as Snap benefits are cut

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      Gina Melton is facing a dilemma. Like millions of other Americans, Melton and her family relied on food assistance benefits boosted by Congress to help them through the pandemic. Now that extra cash is gone.The reduction has hit them hard. Three of her family members are disabled and one of her daughters works to take care of them through an agency. They had already relied on credit cards to pay for medical equipment that wasn’t covered by the federal health insurance schemes Medicare or Medicaid but have had to stop paying a couple of them in order to afford food.“When you have to choose between feeding your family and paying a credit card bill, you have to choose food,” said Melton, 62.Around 42 million Americans are currently enrolled in Supplemental Nutrition Assistance Program (Snap) benefits. Congress increased Snap benefits in response to the Covid-19 pandemic in March 2020. The last extra payments went out at the end of February in the remaining 32 states that were still issuing them, in addition to the District of Columbia, Guam and the US Virgin Islands.The emergency allotments were authorized in tandem with the Covid-19 emergency declaration in March 2022, but in December 2022, Congress passed a law to end the allotments.The lapse in the additional benefits will reduce Snap allotments for the average recipient by $90 a month, with some households losing $250 a month or more. Older adults at the minimum benefit level will see their monthly Snap benefits drop from $281 a month to $23.Though Melton’s husband, a diabetic, is still recovering from a recent surgery, he has been considering going back to work part time at the age of 65 as the family struggles to afford basic necessities, including healthy food. They’ve cut back on food purchases and buy what’s on sale or in reduced-price bins.“The extra food allotment was helping us a lot,” said Melton. “We’ve started shopping at lower-priced stores that don’t bag your groceries, but for a disabled person like myself, that requires me to go with a helper. We’ve also cut back on some more expensive necessities and are relying on the local food pantry more.”The end of the expanded benefits comes at a time when US consumer debt has been on the rise, with 20.5 million Americans currently behind on their utility payments and nearly 25 million behind on credit card, auto loan or personal loan payments, the highest number since 2009. Low-wage workers in the US, who make less than $20 an hour, have experienced drops in wage growth compared with other workers in recent months.Food prices have and are expected to continue to significantly rise in 2023 as well. The US Department of Agriculture estimated that all food prices will increase by 7.9% in 2023 – and they were already 9.5% higher in February 2023 compared with February 2022.With so many Americans receiving Snap benefits because of low wages, unemployment and underemployment, the sudden end of the emergency allotment has been characterized as a “hunger cliff”.Ellen Vollinger, Snap director for the nonprofit Food Research and Action Center, said: “The cliff is aptly named because this a very abrupt change in what people are going to have in their food budget and it’s affecting tens of millions of people.“When the federal government doesn’t provide as much support for food, it doesn’t mean that hungry people all of a sudden are better off, or no longer need assistance, or they go away. The hunger is still there, people are still there, the need is there, but the federal government is too abrupt in shifting the burden and costs of dealing with that downstream, to states [and] localities, and puts a greater burden on charities.”Vollinger noted that the end of emergency allotments leaves low-income families facing difficult choices around food, from forgoing meals and purchasing less to buying cheaper food.“There’s a lot of stress, that’s why we call it a hunger cliff. It’s very precipitous,” she added.Food banks have been bracing for a surge in demand as the expanded Snap benefits expire, with state agencies directing recipients to food pantries to help cope with the reduction in benefits.Studies have shown that the extra payments worked. The Urban Institute found that the increased Snap benefits during the Covid-19 pandemic kept 4.2 million Americans out of poverty in the fourth quarter of 2021, reducing poverty by 9.6% and child poverty by 14% in states with emergency allotments. They also have a wider economic benefit. Every $1 invested in Snap benefits yields between $1.50 and $1.80 in economic activity during economic downturns.A 2022 survey conducted by Propel found that among Snap recipients, there was a significant level of higher food insecurity in states where emergency allotments were cut off. In a January 2023 survey, there was an increase in the number of Snap recipients who reported skipping meals, eating less, visiting food pantries or relying on family or friends for meals compared with December 2022.The end of the emergency Snap allotments also coincides with a push from Republicans in Congress to cut regular Snap benefits this year, despite the majority of Americans having favorable views of the benefits. A January 2023 survey conducted by Purdue University found that seven out of 10 respondents supported permanent expansions of the Snap program.But an expansion looks very unlikely in the current Congress. In the meantime, recipients are facing tough choices.“I just received the last one last week,” said Patricia Ameral, 67, of Massachusetts, referring to the Covid emergency benefits. “I am certain it will mean the difference between consuming less fresh produce and less meat, fresh or frozen.” More

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      Citizens’ assemblies: are they the future of democracy?

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      Citizens’ assemblies: are they the future of democracy? A look at the surge in popularity of randomly selected councils that offer an alternative to politics as we know itWhen Fauzia Bajwa, a retired software developer who lives in St-Bruno-de-Montarville, Quebec, received an invitation to participate in something called a citizens’ assembly, her first impulse was to write the letter off as junk mail. It’s a common reaction: most recipients of such a mailing never bother to respond. Then Bajwa looked at it again. The sender was listed as the Canadian Commission on Democratic Expression, a non-profit organization that compiles opinion reports to submit to the Canadian government. Though the mailing’s language was vague – the assembly would be on the subject of so-called “online harms” – Bajwa’s curiosity was piqued. After all, she’d just read a book about online surveillance, and at the time was waking up to a news cycle that seemed to revolve around the tweets of a certain president of the United States. “I found it quite concerning that people were using what I initially considered to be a very good and useful tool” – the internet – “to put out lies and fake information, so I was already thinking about these issues,” she says. She went online and signed up.Citizens’ assemblies, a phenomenon that is gaining in popularity around the globe, date back to ancient Athens, where legislative panels, courts and councils were chosen via random selection. In a practice known as sortition, Greek citizens over the age of 30 were enlisted to debate governmental matters from city finances to military strategy. More recently, citizens’ assemblies have convened to hammer out solutions to such issues as homelessness in Los Angeles, the allocation of a $5bn budget in Melbourne, Australia, and the longstanding ban on abortion in Ireland.Is the tiny little neighborhood the city of the future?Read moreIn 2017, after meeting over the course of five weekends for deliberation, an Irish citizens’ assembly came up with a recommendation to legalize the procedure. Sixty-six per cent of Irish voters later approved the referendum, ending more than four decades of fruitless political debate.Modern citizens’ assemblies are typically convened by legislative bodies, which work alongside non-profit groups to reach out to large numbers of citizens at random – sending letters like the one Bajwa received in the mail – then sorting the respondents who express interest according to social and economic factors. The result is a group of people who are randomly selected and reflect the demographics of the population as a whole.Sortition, a word that might evoke the next chapter in the Hunger Games franchise, offers a revived spin on democracy. Instead of leaving the decision-making up to elected officials, citizens’ assemblies can offer a special interests-free alternative to politics as we know it.The system is not unlike jury duty. With facilitators in place to provide background information on the issue at hand and encourage everyone’s participation, the group meets over the course of several days to learn about a problem, hear from a range of stakeholders and experts, and come up with recommendations for new legislation.Claudia Chwalisz, founder of the Paris-based international research institute DemocracyNext, has dedicated her career to promoting this resurrected model of democracy. “As the ancient Greeks and others recognized, elections are a way of constituting an oligarchy,” she says. “When the French and American revolutions led to the establishment of the institutions that today we call democratic, the word ‘democracy’ was never used – the intent was for them to be oligarchic, concentrating power in the hands of the few.”Today, when a run for Congress can come with a price tag starting at $400,000 (Senator Raphael Warnock of Georgia raised a whopping $26.4m for his run in the third quarter of 2022), the notion that government is run by the elite is pretty much a given. More than half of the members of the US Congress are millionaires. The same cannot be said of the participants in an average citizens’ assembly.And yet, more than 500 citizens’ assemblies have informed policymaking in recent years, with permanent citizens’ councils now in place in Paris, London and Ostbelgien, Belgium. These groups have deliberated on everything from affordable housing in Switzerland and taxes on corporate income in Oregon to population decline in Japan. Wherever it’s practiced, sortition facilitates meaningful conversations among everyday people, and has the potential to help fractured societies not only work on complicated problems, but learn how to live with one another. According to Peter MacLeod, founder of MASS LBP, a Toronto-based firm that works on a number of citizens’ assembly projects, “Getting opinions is not difficult. Finding common ground, however – that’s the art of the process.”But does the process actually work? A citizens’ assembly on climate in France resulted in an ambitious climate bill that promised to reduce the country’s carbon emissions by 40% – but fewer than half of the assembly’s proposals made it to parliament for debate. Without a commitment from lawmakers to include an assembly’s recommendations in bills and voter referendums, the practice can be little more than an intensive debate club.But the potential for far-reaching change is vast. In the case of overturning the abortion ban in Ireland, the assembly that recommended an amendment to the Irish constitution functioned like a “miner’s canary”, according to Peter Stone, associate professor in political science at Trinity College, Dublin. “Everyone knew that things had changed since abortion was banned in the 1980s with overwhelming support, but no one was sure how much things had changed. And for a politician, it can be very dangerous when things change.” Citizens’ assemblies, Stone argues, function as a kind of hothouse for public opinion. The act of getting a bunch of randomly selected citizens together to work out their views on a contentious subject functions as invaluable market research on the future. It not only reveals what the public believes right now, but shows also how those beliefs are changing as people talk about an issue. In Ireland, the assembly gave the Oireachtas, the Irish parliament, the political green light it needed to make a change.When Bajwa first spoke up at the Canadian assembly on digital technology, she came out against online anonymity. “You can’t just spew out hate speech or slander online from behind the veil of anonymity,” she argued. Then other members of the assembly, immigrants from places like the Philippines and the Middle East, shared their own takes. “People talked about places in the world where having your identity revealed can be a danger to your life,” she said. “It didn’t change my point of view totally, but I did modify my opinion on that.” She also learned that there were parts of Canada that had no internet access whatsoever, which surprised her and reshaped her understanding of the issue. “Being in a room with people who you would probably not meet on a day-to-day basis – that in itself was fantastic.”Critics of citizens’ assemblies – including none other than Socrates – point to the lack of expertise among the general public about a given issue. Without adequate educational materials and expert testimony, an assembly can end up relying less on fact than on opinion – or be influenced by bias in the resources they have available. The UN Democracy Fund has a guidebook that details best practices for choosing background materials and speakers at assemblies, and offers more information for participants who request it.At the digital technology assembly commissioned by the Canadian Commission on Democratic Expression, Bajwa and her fellow participants heard from 13 experts, including university professors, specialists in internet and criminal law, and even one representative from Twitter. The minister of Canadian heritage, Pablo Rodriguez, found the assembly’s process so compelling that he has requested an additional assembly to consider its findings. Legislation incorporating many of its recommendations is expected to be proposed in March.TopicsUS politicsRadical thinkingInequalityfeaturesReuse this content More

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      The US ultra-rich justify their low tax rates with three myths – all rubbish | Robert Reich

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      The US ultra-rich justify their low tax rates with three myths – all of them rubbishRobert ReichA record share of the nation’s wealth is in the hands of billionaires, who pay a lower tax rate than the average American. This is indefensible On Tuesday, the Congressional Budget Office released a study of trends in the distribution of family wealth between 1989 and 2019.Over those 30 years, the richest 1% of families increased their share of total national wealth from 27% to 34%. Families in the bottom half of the economy now hold a mere 2%.Meanwhile, a record share of the nation’s wealth remains in the hands of the nation’s billionaires, who are also paying a lower tax rate than the average American.How do the ultra-wealthy justify their wealth and their low tax rates? By using three myths – all of which are utter rubbish.The first is trickle-down economics.Billionaires (and their apologists) claim that their wealth trickles down to everyone else as they invest it and create jobs.Really? For more than 40 years, as wealth at the top has soared, almost nothing has trickled down. Adjusted for inflation, the median wage today is barely higher than it was four decades ago.Trump provided a giant tax cut to the wealthiest Americans, promising it would generate $4,000 increased income for everyone else. Did you receive it?In reality, the super-wealthy don’t create jobs or raise wages. Jobs are created when average working people earn enough money to buy all the goods and services they produce, pushing companies to hire more people and pay them higher wages.The second myth is the “free market”.The ultra-rich claim they’re being rewarded by the impersonal market for creating and doing what people are willing to pay them for.The wages of other Americans have stagnated, they say, because most Americans are worth less in the market now that new technologies and globalization have made their jobs redundant.Baloney. Even if they’re being rewarded, there’s no reason why the “free market’ would reward vast multiples of what the rich were rewarded with decades ago.The market can induce great feats of invention and entrepreneurship with lures of hundreds of thousands or even millions of dollars – not billions.As to the rest of us succumbing to labor-replacing globalization and labor-saving technologies, no other advanced nation has nearly the degree of inequality found in the United States, yet all these nations have been exposed to the same forces of globalization and technological change.In reality, the ultra-wealthy have rigged the so-called “free market” in the US for their own benefit. Billionaires’ campaign contributions have soared from a relatively modest $31m in the 2010 elections to $1.2bn in the most recent presidential cycle – a nearly 40-fold increase.What have they got for their money? Tax cuts, freedom to bash unions and monopolize markets and government bailouts. Their pockets have been further lined by privatization and deregulation.The third myth is that they’re superior human beings.They portray themselves as “self-made” rugged individuals who “did it on their own” and therefore deserve their billions.Bupkis. Six of the 10 wealthiest Americans alive today are heirs to fortunes passed on to them by wealthy ancestors.Others had the advantages that come with wealthy parents.Jeff Bezos’s garage-based start was funded by a quarter-million-dollar investment from his parents. Bill Gates’s mother used her business connections to help land a software deal with IBM that made Microsoft. Elon Musk came from a family that reportedly owned shares of an emerald mine in southern Africa.Don’t fall for these three myths.Trickle-down economics is a cruel joke.The so-called free market has been distorted by huge campaign contributions from the ultra-rich.Don’t lionize the ultra-rich as superior “self-made” human beings who deserve their billions. They were lucky and had connections.In reality, there is no justification for today’s extraordinary concentration of wealth at the very top. It’s distorting our politics, rigging our markets and granting unprecedented power to a handful of people.The last time America faced anything comparable was at the start of the 20th century.In 1910, former president Theodore Roosevelt warned that “a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power” could destroy American democracy.Roosevelt’s answer was to tax wealth. The estate tax was enacted in 1916, and the capital gains tax in 1922.Since that time, both have eroded. As the rich have accumulated greater wealth, they have also amassed more political power – and have used that political power to reduce their taxes.Teddy Roosevelt understood something about the American economy and the ultra-rich that has now re-emerged, even more extreme and more dangerous. We must understand it, too – and act.
      Robert Reich, a former US secretary of labor, is professor of public policy at the University of California, Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com
      TopicsUS politicsOpinionInequalityTax and spendingJeff BezosElon MuskBill GatescommentReuse this content More

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      Why is the White House having its first hunger conference in 50 years?

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      ExplainerWhy is the White House having its first hunger conference in 50 years?The Biden administration is hosting a conference to coincide with a new hunger and nutrition plan – what can it achieve? What’s happening?The Biden administration is hosting a one-day conference on Wednesday on hunger, nutrition and health, bringing together advocates, researchers and activists and leaders in business and philanthropy, faith groups and communities around the US.Just before the conference, the administration launched its strategy aimed at ending hunger in the US by 2030 with plans to expand benefits and access to healthy food. The conference will be streamed live from 9am ET on the White House Youtube channel, with Joe Biden expected to make remarks in the early afternoon. The strategy and conference are aimed at making “America truly a stronger, healthier nation”, he says.But it all comes at a difficult time for many households as pandemic support measures fall away, record inflation and rising food prices (linked to climate breakdown, Russia’s war in Ukraine and Covid supply issues) squeeze budgets, and just before November’s midterm elections.When was the last food conference?The last food conference, hosted by Richard Nixon in 1969, was a pivotal moment in American food policy that led to the expansion of food stamps and gave rise to the Women, Infants and Children program that today provides parenting advice, breastfeeding support and food assistance to the mothers of half the babies born each year.How bad is hunger in the US now?One in 10 households struggled to feed their families in 2021 due to poverty – an extraordinary level of food insecurity in the richest country in the world. The rate has barely budged in the past two decades amid deepening economic inequalities and welfare cuts.Food insecurity remains stubbornly high in the US, with only a slight downward trend from 2021 – but significantly lower than 2020 when the Covid shutdown and widespread layoffs led to record numbers of Americans relying on food banks and food stamps to get by.The conference comes as the cost of food is soaring due to double-digit inflation, and amid fears of recession. The cost of groceries in July was up 13.1% compared with last year, with the price of cereal, bread and dairy products rising even higher, according to the Consumer Price Index.Households are under more pressure as states roll back pandemic-linked financial support such as free school meals for every child and child tax credits. Many states are stopping expanded food stamp benefits.Real-time data from the US Census survey “suggest that food hardship has been steadily rising in families with children this year”, Diane Whitmore Schanzenbach, director of the Institute for Policy Research at Northwestern University, recently told the Guardian.What are the main parts of the administration’s strategy?It includes multiple ambitious goals but few concrete measures, as the plans depend on securing support from a polarised Congress, which so far this year has refused to extend the child tax credit and universal free school meals – both of which led to historic improvements in food security in the wake of the pandemic.‘The kids are just happier’: could California’s universal school meal program start a trend?Read moreThe plan states that the administration is committed to “pushing for Congress to permanently extend the expanded, fully refunded child tax credit and expanded Earned Income Tax Credit … to raise the minimum wage to $15 an hour; close the Medicaid coverage gap; invest in affordable, high-quality child care; and expand the Housing Choice Voucher”.The strategy also aims to cut diet-related diseases by increasing access to healthy food and exercise as new data shows that more than 35% of people in 19 states and two territories are obese – more the double the number of states in 2018 – while one in 10 Americans have diabetes.It includes proposals to reform food packaging, voluntary salt and sugar reduction targets for the food industry, and working to expand Medicaid and Medicare access to obesity counselling and nutrition.According to Andy Fisher, researcher and author of Big Hunger, the strategy includes lots of great ideas but lets the food industry off the hook and fails to adequately address the impact of racism, misogyny or the climate crisis on food inequality.“What they don’t realize or say is that hunger and health disparities are baked into our political and economic system, and require much more than these technocratic policy reforms.”TopicsBiden administrationHungerInequalityUS politicsJoe BidenexplainersReuse this content More

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      White House announces internet program for low-income Americans

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      White House announces internet program for low-income AmericansWith new commitment from 20 internet providers, about 48m households will be eligible for $30 monthly plans The Biden administration announced on Monday that 20 internet companies have agreed to provide discounted service to people with low incomes, a program that could effectively make tens of millions of households eligible for free service through an already existing federal subsidy.The $1tn infrastructure package passed by Congress last year included $14.2bn in funding for the Affordable Connectivity Program, which provides $30 monthly subsidies ($75 in tribal areas) on internet service for millions of lower-income households.Jill Biden makes unannounced visit to Ukraine and meets first ladyRead moreWith the new commitment from the internet providers, about 48m households will be eligible for $30 monthly plans for 100 megabits per second, or higher speed, service – making internet service fully paid for with the government subsidy if they sign up with one of the providers participating in the program.Biden, during his White House run and the push for the infrastructure bill, made expanding high-speed internet access in rural and low-income areas a priority. He has repeatedly spoken out about low-income families have struggled to find reliable wifi, so their children could take part in remote schooling and complete homework assignments early in the coronavirus pandemic.“If we didn’t know it before, we know now: high-speed internet is essential,” the Democratic president said during a White House event last month honoring the National Teacher of the Year.The 20 internet companies that have agreed to lower their rates for eligible consumers provide service in areas where 80% of the US population, including 50% of the rural population, live, according to the White House. Participating companies that offer service on tribal lands are providing $75 rates in those areas, the equivalent of the federal government subsidy in those areas.Biden and Vice-President Kamala Harris on Monday were set to meet with telecom executives, members of Congress and others to spotlight the effort to improve access to high-speed internet for low-income households.The providers are Allo Communications, AltaFiber (and Hawaiian Telecom), Altice USA (Optimum and Suddenlink), Astound, AT&T, Breezeline, Comcast, Comporium, Frontier, IdeaTek, Cox Communications, Jackson Energy Authority, MediaCom, MLGC, Spectrum (Charter Communications), Starry, Verizon (Fios only), Vermont Telephone Co, Vexus Fiber and Wow! Internet, Cable and TV.American households are eligible for subsidies through the Affordable Connectivity Program if their income is at or below 200% of the federal poverty level, or if a member of their family participates in one of several programs, including the Supplemental Nutrition Assistance Program (Snap), Federal Public Housing Assistance (FPHA) and Veterans Pension and Survivors Benefit.TopicsUS newsBroadbandInternetBiden administrationIncome inequalityTelecommunications industryUS politicsnewsReuse this content More

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      ‘What am I going to do?’: soaring prices fuel calls for US government to step in

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      ‘What am I going to do?’: soaring prices fuel calls for US government to step inLarge corporations are passing on higher-than-needed price increases to customers under the cover of inflation, war and supply chain squeezes, experts say Outside a Dollar Tree in Detroit, Latasha Holmes lamented the rising cost of toilet paper, beverages, food and other items she had just purchased. The price increases, she said, were forcing her to choose among necessities for her and four kids.“What am I going to do? Prices are up everywhere, all over town,” she said. “I can’t afford everything.”But while Holmes struggles, Dollar Tree thrives. The retailer increased its prices by 25% as profits jumped 269% between 2019 and 2021, and its profit margins widened. Shareholders won too. The company also announced a stock buyback program worth $1bn that will deliver cash from those price increases to its investors.Dollar Tree and other large corporations are juicing profits by passing on higher-than-needed price increases to customers like Holmes under the cover of inflation, war and supply chain squeezes, consumer advocates and economists say. They are calling for the federal government to take bold steps to rein in the companies.Revealed: top US corporations raising prices on Americans even as profits surgeRead moreAmong proposed prescriptions are price controls, improved price fixing rules, commodity market intervention, stock buyback regulation and antitrust enforcement. Ranged against those proposals are a powerful business lobby and a divided Congress that seems unable to pass major legislation.“There are reasons to have a profit incentive, but there are also reasons to have an overall regulatory body that can say, ‘This is actually profiteering … while everyone is hurting,’” said Krista Brown, a policy analyst with the American Economic Liberties Project.A Guardian analysis of 100 top corporations’ Securities Exchange Commission filings found a median increase of 49% in profits between the most recent quarter and the same quarter two years ago, pre-pandemic. It shows companies have largely shielded themselves from inflationary pain by passing most or all of their increased costs on to customers via price hikes.So far, the federal government’s most visible attempt to address inflation has been to increase interest rates, rates look set to rise again this week. But the Guardian’s data suggests such a measure may miss an important mark. Raising rates effectively takes money out of consumers’ pockets to cool the economy.If corporate profits are contributing in a meaningful way, then raising rates would only reduce the amount of money people have to spend on products and services for which prices are still going up.“That would mean you’re exacerbating this dynamic instead of doing anything to help it,” said Isabella Weber, University of Massachusetts Amherst economist.Instead, limited and targeted price controls could work for essentials like bread, she said, but stressed those would have to be coupled with a bailout plan for negatively affected companies.“Increased prices for basic items like bread can exert enormous pressure on wages” and send inflationary ripples throughout the economy, Weber added. Though price controls are controversial and generally regarded as a leftist idea, the last president to enact them was Richard Nixon, who imposed a 90-day freeze on wages and prices to address inflation in 1970. Price controls were also enacted during and following the second world war, when, again, supply chain issues and pent up demand led to soaring prices.Table of 100 US companies’ profit growthBut price rises are not the only issue critics would like to see the Biden administration address. Others, like Groundwork Collective’s executive director, Lindsay Owens, have called for a ban or new restrictions on stock buyback programs. Joe Biden’s 2023 budget proposes prohibiting executives from selling their stock three to five years after enacting a buyback program.“The other big winner besides the shareholders in excess cash that’s going to buybacks are the executives,” Owens said. “They announce the buybacks, their stock prices soar, then they sell their shares and there are a number of ways to make this work better.”The Guardian’s analysis found companies’ buyback programs over the last 15 months totaled $544bn. That cash could have been reinvested to keep prices down, or increase workers’ wages, consumer advocates say.Others levelled accusations of price fixing and gouging. The American Economic Liberties Project is helping draft legislation that would make it easier for businesses to sue companies for price fixing by making private corporate communications more accessible. As of now, only 3% of price fixing cases make it to trial, Brown said.“Reinvigorating price fixing laws and going after price gouging in moments like this, where a war or Covid are used as excuses for companies to raise rates just because they can, could help a lot,” she added.Fixing is especially a problem in highly consolidated industries, consumer advocates say. Companies have benefited from “decades long under-enforcement of consolidation laws”, added Martin Schmalz, an Oxford University economist.Just four companies control most of the US beef industry, four airlines control about 80% of domestic passenger traffic, Walmart accounts for the majority of grocery sales in the majority of US states, the list goes on and on.And it’s not just the companies that have outsized control. Large investors also a role to play.Schmalz pointed to the Investment Company Act, which limits investment funds to holding no more than 10% of a corporation’s securities. Vanguard on average holds 10% of all S&P 500 companies, Schmalz research has found, but it is not violating the law because companies within its fund family own the shares, not Vanguard itself. But Vanguard still executes the voting rights of more than 10% of shareholders.“The law is written at the fund level so technically speaking they don’t violate the law, but they are violating the spirit of the law,” Schmalz said.Economists and attorneys working on US antitrust law have proposed prosecuting mutual funds like BlackRock or Vanguard that own large stakes in multiple companies in the same sector. Such shareholders can exert an outsize influence on companies’ pricing decisions, Schmalz said, and he noted Investment Company Act language that specifically targets this scenario: “The national public interest … is adversely affected … when investment companies [have] great size [and] excessive influence on the national economy.”Schmalz said there’s little discussion among policymakers to address that specific issue.Biden’s budget includes over $220m for antitrust enforcement, and bills that would break up large tech companies have bipartisan Senate and House support.The Guardian’s analysis highlighted the commodity market boom as companies trading in grain, steel, mining, wood, rubber, meat, oil, homes and other materials generally recorded higher profit increases than companies across the rest of the economy.However, many commodity companies operate in what analysts characterize as “feast and famine” cycles in which they’re unprofitable for years before cashing in. The pendulum has swung for many commodity companies in the day’s economic climate.“When there’s a chance to raise prices when markets are tight, companies are going to do so,” said Skanda Amarnath, executive director of the Employ America thinktank. “It’s some part opportunistic, some part greed, some part rationality, some part a response to uncertainty.”The oil industry highlights the dynamic. After seven years of low returns, it’s restricting supply to boost profits regardless of how that hits Americans at the pump. Earnings calls transcripts reveal executives eagerly “putting shareholders first” and an investor who described industry-wide supply suppression “one of the delights of this earnings season”.Bar chart of the monthly change in US wages since January 2019Bringing volatile commodity prices under control would require curtailing uncertainty and building supply chain resiliency, analysts who spoke with the Guardian say. That could involve some degree of government intervention to cut down on risk by establishing a floor on commodity prices. The government could do that by effectively becoming the “buyer of last resort” when material prices dip below a certain level.But the government should also set a ceiling above which it collects profits, said commodities analyst Alex Turnbull. He suggested the federal government set up what’s effectively a state reserve board.Turnbull pointed to lithium, which, amid increased demand for EV batteries and supply chain squeezes, jumped from $5,000 a ton to $45,000 a ton last year. Higher prices impact the pace of the clean energy transition, and the government could hypothetically set a $10,000 a ton floor price and $25,000 a ton ceiling that would limit the volatility, Turnbull said.The federal government could also increase stockpile reserves of products like grain or oil that are released when prices spike.“That sends the message ‘You should plant more wheat because if it goes really bad, you might have a lean year or two, but we will buy your wheat. But on the other hand don’t expect to buy a Lamborghini if you’re a farmer in Iowa because when prices get too high we’ll be out there selling the shit out of our stockpiles,’” Turnbull said.Stabilization may also spur investment in raw material production that’s risky, which would further bolster markets against future supply shortages. Few companies have built steel plants in recent years because the prices have been so low, Turnbull noted, and now the world is short on steel.Though price caps are “not politically palatable” Bespoke Investment analyst George Pearkes said, the government could take a number of measures to steer futures curves and markets for raw commodities like oil and wheat.“Something in between where there are strategic efforts to smooth volatility, and provide the private sector with enough certainty that they can make decisions is a lot more compelling,” he said.Spikes in investment for some commodities, like nickel, that are essential to the clean energy transition, can be a positive development, Turnbull said. Mining companies limped through the several years leading up to the pandemic, but reaped windfalls over the last year.“People say ‘Nickel producers are making too much money’, well, they didn’t make money for a decade,” Turnbull said. “At some point, somebody has to put money down to dig holes because people aren’t going to drive to the middle of fucking nowhere with a truck and work for free.”Another force in some commodity price spikes: Wall Street speculation. Commodity markets were once heavily regulated because they deal in raw materials that underpin the economy. An influx of investment capital followed the commodity markets’ deregulation about 20 years ago, and some are now treated like speculative assets similar to bitcoin, said Rupert Russell, who authored a book on the topic.The consequences of economy-addling commodity price spikes are real, he adds, pointing to the 2010 grain prices that helped trigger the Arab spring uprising in Tunisia.Supply chain back ups, inflation and war have generated “radical uncertainty” in which no one knows how much commodities are worth, because the prices are no longer anchored, Russell told the Guardian. He echoed others’ calls for stronger government intervention to tamp down the casino-like mentality.“Once there’s not just radical uncertainty but markets dominated by speculators, algorithmically driven speculation that is just kind of responding to headlines, then you’re going to get that kind of Bitcoin-esque volatility,” he said.But experts say there are few viable short-term solutions, and long-term measures don’t help Holmes. That’s forcing her to think about getting another job to survive as she feels the pressure of an economic system stacked against her.“I don’t want to. I’ve got four kids to take care of, but what am I supposed to do?” she asked.TopicsUS economyInflationEconomicsUS politicsUS income inequalityInequalityfeaturesReuse this content More