Over the past few years, Erin Wiggle has approached every trip to the grocery store with a sense of dread. During each visit, the retired army veteran, small business owner and mother from Worcester Township, Pennsylvania, has seen her budget stretched thinner and thinner as prices keep ratcheting up for the goods her family relies on. Erin's burden has grown heavier despite pandemic-related supply chain issues subsiding, and she has a growing sense that the companies making the products she needs are padding their profits at the expense of her family.
Erin is right. Under the cover of inflation, companies have raised the prices of everyday household items to rake in record profits at the expense of American families. As my investigation into what I've called "greedflation" shows, from mid-2020 to mid-2022, corporate profits rose by 75% - five times as fast as inflation. In fact, corporate profits jumped so much that they played a major role in causing inflation - according to the Federal Reserve, corporate profits accounted for all the inflation from July 2020 through July 2021 and 41% of all inflation from July 2020 through July 2022.
We should not let powerful corporations use a crisis to jack up prices way beyond what is necessary to make a profit. In fact, many states across the country have already steeled themselves to fight the most egregious examples of this shameful practice. Laws against price-gouging are on the books in 37 states and the District of Columbia, giving state attorneys general the power to investigate and prosecute companies that excessively raise prices during emergencies. In the US Senate, I've introduced legislation with my colleagues Elizabeth Warren and Tammy Baldwin to give the federal government power to do the same.
In recent weeks, after Kamala Harris embraced our bill as a part of her economic agenda, the legislation has come under fire from various defenders of corporate greed. These critics appear to have missed the fact that the federal legislation is modeled on laws that are already in effect across the nation, where capitalism is still alive and well. In Texas, for example, where the attorney general has the power to take on companies that unfairly exploit state residents, the governor regularly touts the state as the best place to do business in the country.
Similarly, the critics are ignoring the very real protections these laws have offered for consumers. In Pennsylvania, where a price-gouging ban was enacted in 2006, the office of the attorney general investigated hundreds of cases of businesses taking advantage of Covid-19 to price-gouge desperate consumers. The investigations ultimately led to fines and to restitution for many consumers who were taken advantage of in the early days of the pandemic, including hundreds of thousands from just one seller alone.
Bans on price-gouging protect victims from companies that would take advantage of different crises to rip off scared consumers. In New York, the state was able to punish Walgreens for taking advantage of customers during the infant formula crisis when supply chain issues reduced the availability of baby formula across the country. In North Carolina, the attorney general won a series of cases against companies that gouged consumers following hurricanes. In both Kentucky and Idaho, companies were held accountable for artificially forcing up gas prices in the wake of pipeline closures.
These laws don't just prevent price-gouging on a case-by-case basis; they also send a message to companies about where and when to draw the line. In the 37 states with price-gouging bans, companies can still raise prices, and they can still bring in a healthy profit for their shareholders. It's only when they seek to take advantage of a crisis to fleece consumers that they can expect the government to step in and stop them. Our bill would apply this standard to massive corporations that exploit consumers while specifically protecting small businesses under $100m in earnings that don't have the same power to set prices.
There are multiple factors that contribute to the high cost of living, but there is no question that corporate greed plays a role. While companies have a right to turn a profit - even a substantial one - American consumers deserve to pay fair prices. That means holding giant corporations accountable when they go too far to make a buck.
Giving the federal government the power to investigate and prosecute large companies that price-gouge isn't a campaign gimmick, nor is it the beginning of the end of capitalism in America. It's simply a way of ensuring that when corporations are using a crisis as an excuse to jack up prices on consumers, we will not surrender - instead, we will fight back.
