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grocery industry
With Corporate Media, Harris Can't Win on Corporate Price Gouging
To explicitly or implicitly accept that Harris’s proposal amounts to price controls, or even socialism, is inaccurate and dangerous. News outlets continue to do their audiences a disservice on this key economic issue.
Sep 25, 2024
Debates over whether Democratic presidential candidate Kamala Harris’s economic proposals constitute Communist price controls or merely technocratic consumer protections are obscuring a more insidious thread within corporate media. In coverage of Harris’s anti-price-gouging proposal, it’s taken for granted that price inflation, especially in the grocery sector, is an organic and unavoidable result of market forces, and thus any sort of intervention is misguided at best, and economy-wrecking at worst.
In this rare instance where a presidential hopeful has a policy that is both economically sound and popular, corporate media have fixated on Harris’s proposal as supposedly misguided. To dismiss any deeper discussion of economic phenomena like elevated price levels, and legislation that may correct them, media rely on an appeal to “basic economics.” If the reader were only willing to crack open an Econ 101 textbook, it would apparently be plain to see that the inflation consumers experienced during the pandemic can be explained by abstract and divinely influenced factors, and thus a policy response is simply inappropriate.
Comrade Kamala?
For all the hubbub about Harris’s proposal, the actual implications of anti-price-gouging legislation are fairly unglamorous. Far from price controls, law professor Zephyr Teachout (Washington Monthly, 9/9/24) noted that anti-price-gouging laws
allow price increases, so long as it is due to increased costs, but forbid profit increases so that companies can’t take advantage of the fear, anxiety, confusion and panic that attends emergencies.
Teachout situated this legislation alongside rules against price-fixing, predatory pricing and fraud, laws which allow an effective market economy to proliferate. As such, states as politically divergent as Louisiana and New York have anti-price-gouging legislation on the books, not just for declared states of emergency, but for market “abnormalities.”
But none of that matters when the media can run with Donald Trump’s accusation of “SOVIET-style price controls.” Plenty of unscrupulous outlets have had no problem framing a consumer protection measure as the first step down the road to socialist economic ruin (Washington Times, 8/16/24; Washington Examiner, 8/20/24; New York Post, 8/25/24; Fox Business, 9/3/24). Even a Washington Post piece (8/19/24) by columnist (and former G.W. Bush speechwriter) Marc Thiessen described Harris’s so-called “price controls” as “doubling down on socialism.”
What’s perhaps more concerning is centrist or purportedly liberal opinion pages’ acceptance of Harris’s proposal as outright price controls. Catherine Rampell, writing in the Washington Post (8/15/24), claimed anti-price-gouging legislation is “a sweeping set of government-enforced price controls across every industry, not only food…. At best, this would lead to shortages, black markets and hoarding.” Rampell didn’t go as far as to call Harris a Communist outright, but coyly concluded: “If your opponent claims you’re a ‘Communist,’ maybe don’t start with an economic agenda that can (accurately) be labeled as federal price controls.”
Donald Boudreaux and Richard McKenzie mounted a similar attack in the Wall Street Journal (8/22/24), ripping Harris for proposing “national price controls” and thus subscribing to a “fantasy economic theory.” Opinion writers in the Atlantic (8/16/24), the New York Times (8/19/24), LA Times (8/20/24), USA Today (8/21/24), the Hill (8/23/24) and Forbes (9/3/24) all uncritically regurgitated the idea that Harris’s proposal amounts to price controls. By accepting this simplistic and inaccurate framing, these political taste-makers are fueling the right-wing idea that Harris represents a vanguard of Communism.
To explicitly or implicitly accept that Harris’s proposal amounts to price controls, or even socialism, is inaccurate and dangerous. Additionally, many of the breathless crusades against Harris made use of various cliches to encourage the reader to not think deeper about how prices work, or what policy solutions might exist to benefit the consumer.
Just supply and demand
“According to the Econ 101 model of prices and supply, when a product is in shortage, its price goes up to bring quantity demanded in line with quantity supplied.” This is the wisdom offered by Josh Barro in the Atlantic (8/16/24), who added that “in a robustly competitive market, those profit margins get forced down as supply expands. Price controls inhibit that process and are a bad idea.” He chose not to elaborate beyond the 101 level.
The Wall Street Journal (8/20/24) sought the guidance of Harvard economist Greg Mankiw, who is indeed the author of the most widely used economics textbook in US colleges. He conceded that price intervention could be warranted in markets with monopolistic conditions. However, the Journal gently explained to readers, “the food business isn’t a monopoly—most people, but not all, have the option of going to another store if one store raises its prices too much.” Mankiw elaborated: “Our assumption is that firms are always greedy and it is the forces of competition that keeps prices close to cost.”
Rampell’s opinion piece in the Washington Post (8/15/24) claimed that, under Harris’s proposal, “supply and demand would no longer determine prices or profit levels. Far-off Washington bureaucrats would.” Rampell apparently believes (or wants readers to believe) that grocery prices are currently set by nothing more than supply and demand.
The problem is that the grocery and food processing industries are not competitive markets. A 2021 investigation by the Guardian (7/14/21) and Food and Water Watch showed the extent to which food production in the United States is controlled by a limited group of corporations:
A handful of powerful companies control the majority market share of almost 80% of dozens of grocery items bought regularly by ordinary Americans…. A few powerful transnational companies dominate every link of the food supply chain: from seeds and fertilizers to slaughterhouses and supermarkets to cereals and beers.
While there is no strict definition for an oligopolistic market, this level of market concentration enables firms to set prices as they wish. Reporting by Time (1/14/22) listed Pepsi, Kroger, Kellogg’s and Tyson as examples of food production companies who boasted on the record about their ability to increase prices beyond higher costs during the pandemic.
Noncompetitive market conditions are also present farther down the supply chain. Nationally, the grocery industry is not quite as concentrated as food production (the pending Kroger/Albertsons merger notwithstanding). However, unlike a food retailer, consumers have little geographical or logistical flexibility to shop around for prices.
The USDA Economic Research Service has found that between 1990 and 2019, retail food industry concentration has increased, and the industry is at a level of “high concentration” in most counties. Consumers in rural and small non-metro counties are most vulnerable to noncompetitive market conditions.
The Federal Trade Commission pointed the finger at large grocers in a 2024 report. According to the FTC, grocery retailers’ revenue increases outstripped costs during the pandemic, resulting in increased profits, which “casts doubt on assertions that rising prices at the grocery store are simply moving in lockstep with retailers’ own rising costs.” The report also accused “some larger retailers and wholesalers” of using their market position to gain better terms with suppliers, causing smaller competitors to suffer.
Unchecked capitalism is good, actually
If one still wishes to critique Harris’s proposal, taking into account that the food processing and retail industries are not necessarily competitive, the next best argument is that free-market fundamentalism is good, and Harris is a villain for getting in the way of it.
Former Wall Street Journal reporter (and mutual fund director) Roger Lowenstein took this tack in a New York Times guest essay (8/27/24). He claimed Harris’s anti-price-gouging proposal and Donald Trump’s newly proposed tariff amount to “equal violence to free-market principles.” (The only violence under capitalism that seems to concern Lowenstein, apparently, is that done toward free enterprise.)
Lowenstein critiqued Harris for threatening to crack down on innocent, opportunistic business owners he likened to Henry Ford (an antisemite and a union-buster), Steve Jobs (a price-fixing antitrust-violator, according to the Times—5/2/14) and Warren Buffett (an alleged monopolist)–intending such comparisons as compliments, not criticisms. Harris and Trump, he wrote, are acting
as if production derived from central commands rather than from thousands of businesses and millions of individuals acting to earn a living and maximize profits.
If this policy proposal is truly tantamount to state socialism, in the eyes of Lowenstein, perhaps he lives his life constantly lamenting the speed limits, safety regulations and agricultural subsidies that surround him. Either that, or he is jumping at the opportunity to pontificate on free market utopia, complete with oligarchs and an absent government, with little regard to the actual policy he purports to critique.
A problem you shouldn’t solve
Depending on which articles you choose to read, inflation is alternately a key political problem for the Harris campaign, or a nonconcern. “Perhaps Ms. Harris’s biggest political vulnerability is the run-up in prices that occurred during the Biden administration,” reported the New York Times (9/10/24). The Washington Post editorial board (8/16/24) also acknowledged that Biden-era inflation is “a real political issue for Ms. Harris.”
Pieces from both of these publications have also claimed the opposite: Inflation is already down, and thus Harris has no reason to announce anti-inflation measures. Lowenstein (New York Times, 8/27/24) claimed that the problem of high food prices “no longer exists,” and Rampell (Washington Post, 8/15/24) gloated that the battle against inflation has “already been won,” because price levels have increased only 1% in the last year. The very same Post editorial (8/16/24) that acknowledged inflation as a liability for Harris chided her for her anti-price-gouging proposal, claiming “many stores are currently slashing prices.”
It is true that the inflation rate for groceries has declined. However, this does not mean that Harris’s proposals are now useless. This critique misses two key points.
First, there are certain to be supply shocks, and resultant increases in the price level, in the future. COVID-19 was an unprecedented crisis in its breadth; it affected large swathes of the economy simultaneously. However, supply shocks happen in specific industries all the time, and as climate change heats up, there is no telling what widespread crises could envelop the global economy. As such, there is no reason not to create anti-price-gouging powers so that Harris may be ready to address the next crisis as it happens.
Second, the price level of food has stayed high, even as producer profit margins have increased. As Teachout (Washington Monthly, 9/9/24) explained, anti-price-gouging legislation is tailored specifically to limit these excess profits, not higher prices. While food prices will inevitably react to higher inflation rates, the issue Harris seeks to address is the bad-faith corporations who take advantage of a crisis to reap profits.
Between January 2019 and July 2024, food prices for consumers increased by 29%. Meanwhile, profits for the American food processing industry have more than doubled, from a 5% net profit margin in 2019 to 12% in early 2024. Concerning retailers, the FTC found that
consumers are still facing the negative impact of the pandemic’s price hikes, as the Commission’s report finds that some in the grocery retail industry seem to have used rising costs as an opportunity to further raise prices to increase their profits, which remain elevated today.
In other words, Harris’s proposal would certainly apply in today’s economy. While the price level has steadied for consumers, it has declined for grocers. This is price gouging, and this is what Harris seeks to end.
Gimmicks and pandering
Once the media simultaneously conceded that inflation is over, and continued to claim inflation is a political problem, a new angle was needed to find Harris’s motivation for proposing such a controversial policy. What was settled on was an appeal to the uneducated electorate.
Barro’s headline in the Atlantic (8/16/24) read “Harris’s Plan Is Economically Dumb But Politically Smart.” He claimed that the anti-price-gouging plan “likely won’t appeal to many people who actually know about economics,” but will appeal to the voters, who “in their infinite wisdom” presumably know nothing about the economic realities governing their lives.
The Washington Post editorial board (8/16/24) wrote that Harris, “instead of delivering a substantial plan…squandered the moment on populist gimmicks.” Steven Kamin, writing in the Hill (8/23/24), rued “what this pandering says about the chances of a serious discussion of difficult issues with the American voter.”
Denouncing Harris’s policies as pandering to the uneducated median voter, media are able to acknowledge the political salience of inflation while still ridiculing Harris for trying to fix it. By using loaded terms like “populist,” pundits can dismiss the policy without looking at its merits, never mind the fact that the proposal has the support of experts. As Paul Krugman (New York Times, 8/19/24) pointed out in relation to Harris’s proposal, “just because something is popular doesn’t mean that it’s a bad idea.”
If a publication wishes to put the kibosh on a political idea, it is much easier to dismiss it out of hand than to legitimately grapple with the people and ideas that may defend it. One of the easiest ways to do this is to assume the role of the adult in the room, and belittle a popular and beneficial policy as nothing more than red meat for the non–Ivy League masses.
Inflation and economic policy are complicated. Media coverage isn’t helping.
Perhaps the second easiest way to dismiss a popular policy is to simply obfuscate the policy and the relevant issues. The economics behind Kamala Harris’s proposed agenda are “complicated,” we are told by the New York Times (8/15/24). This story certainly did its best to continue complicating the economic facts behind the proposal. Times reporters Jim Tankersley and Jeanna Smialek wrote that
the Harris campaign announcement on Wednesday cited meat industry consolidation as a driver of excessive grocery prices, but officials did not respond on Thursday to questions about the evidence Ms. Harris would cite or how her proposal would work.
Generally, when the word “but” is used, the following clause will refute or contradict the prior. However, the Times chose not to engage with Harris’s concrete example and instead moved on to critiquing the vagueness of her campaign proposal. The Times did the reader a disservice by not mentioning that the meat industry has in fact been consolidating, to the detriment of competitive market conditions and thus to the consumer’s wallet. Four beef processing companies in the United States control 85% of the market, and they have been accused of price-fixing and engaging in monopsonistic practices (Counter, 1/5/22). However to the Times, the more salient detail is the lack of immediate specificity of a campaign promise.
Another way to obfuscate the facts of an issue is to only look at one side of the story. A talking point espoused by commentators like Rampell is that the grocery industry is operating at such thin margins that any decrease in prices would bankrupt them (Washington Post, 8/15/24). Rampell wrote:
Profit margins for supermarkets are notoriously thin. Despite Harris’s (and [Elizabeth] Warren’s) accusations about “excessive corporate profits,” those margins remained relatively meager even when prices surged. The grocery industry’s net profit margins peaked at 3% in 2020, falling to 1.6% last year.
This critique is predicated on Harris’s policies constituting price controls. Because Harris is proposing anti-price-gouging legislation, the policy would only take effect when corporations profiteer under the cover of rising inflation. If they are truly so unprofitable, they have nothing to fear from this legislation.
The other problem with this point is that it’s not really true. The numbers Rampell relied on come from a study by the Food Marketing Institute (which prefers to be called “FMI, the Food Industry Association”), a trade group for grocery retailers. The FTC, in contrast, found that
food and beverage retailer revenues increased to more than 6% over total costs in 2021, higher than their most recent peak, in 2015, of 5.6%. In the first three-quarters of 2023, retailer profits rose even more, with revenue reaching 7% over total costs.
Yale economist Ernie Tedeschi (Wall Street Journal, 8/20/24) also “points out that margins at food and beverage retailers have remained elevated relative to before the pandemic, while margins at other retailers, such as clothing and general merchandise stores, haven’t.” In other words, if you look at sources outside of the grocery industry, it turns out the picture for grocers is a little rosier.
British economist Joan Robinson once wrote that the purpose of studying economics is primarily to avoid being deceived by economists. It takes only a casual perusal of corporate media to see that, today, she is more right than ever.
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Coalition Rises to 'Stop the Merger' of Kroger and Albertsons
"This deal is an antitrust travesty and it must be stopped," says a letter urging the FTC to block the proposed $25 billion merger between two of the nation's largest grocery chains.
Mar 14, 2023
A progressive coalition of more than 100 unions and consumer advocacy groups from across the United States has come together to build the "Stop the Merger" campaign, a national and state-level effort to prevent Kroger from acquiring Albertsons and establishing the country's most powerful grocery cartel.
On Tuesday, the coalition announced the launch of NoGroceryMerger.com, which includes information about the negative impacts of the proposed $25 billion merger between two of the nation's largest grocery chains, testimony from unionized grocery workers and elected officials, and tools for people to express their opposition to the potential deal.
Individuals and organizations can sign the coalition's letter to the Federal Trade Commission (FTC), which is currently reviewing the grocery giants' proposal and has the regulatory authority to reject it.
If approved, the merger would likely "lead to store closures, worsen food deserts, increase prices for consumers, and destroy thousands of unionized grocery jobs," the letter warns. "This deal is an antitrust travesty and it must be stopped."
Since the Covid-19 pandemic and Russia's invasion of Ukraine disrupted international supply chains—rendered fragile by decades of neoliberal globalization—Kroger, Albertsons, and other mega-grocers have capitalized on these crises as well as the bird flu outbreak, citing them to justify price hikes that far outpace the increased costs of doing business.
Such price gouging has been exacerbated by preceding rounds of supermarket consolidation, and the coalition warns that if the proposed merger between Kroger and Albertsons goes through, it "will no doubt create a monopoly in the grocery industry."
Less competition, says the coalition, would result in even higher food prices and hundreds of shuttered stores—intensifying unequal access to healthy food. It also threatens to destroy thousands of jobs and hurt the ability of farmers and other suppliers to sell their products.
"It's simple: This merger will be bad for workers, bad for customers, and bad for our communities."
Cincinnati-based Kroger trails only Walmart in grocery sales, while Boise-based Albertsons is the fourth largest grocery chain in the U.S., behind Costco. Together, Kroger and Albertsons, including their numerous subsidiaries, employ more than 700,000 workers at roughly 5,000 retail stores and more than 50 manufacturing facilities across 48 states plus Washington, D.C.
According to the campaign's fact sheet, "If this merger goes through, the resulting company will become the largest supermarket by revenue in the United States with a current national market share of 36% and a combined annual sales of more than $200 billion."
As Michelle Freitas, a United Food and Commercial Workers (UFCW) Local 7 member who works at a Safeway in Gunnison, Colorado, noted: "My town only has two standalone grocery stores. If one closes and we only have one option, it will be a monopoly which means this new grocery company could raise food prices to exorbitant amounts."
"If the prices for essential goods go up, how are people who are lower-income or middle-income going to be able to survive?" she asked. "Many people who work at my store live paycheck to paycheck, including parents with small children and single moms."
Lawanna Archer, a UFCW Local 770 member who works at a Vons in Gardena, California, described the devastation that accompanied a merger between Albertsons and Haggen eight years ago.
"The deal between Albertsons and Haggen in 2015 was really bad for workers," said Archer. "I saw massive layoffs, cars being repossessed, foreclosures, and loss of benefits. I am a single mother and I provide for my daughter and myself. The Kroger and Albertsons merger could possibly impact us in the most harmful way ever."
Christina Robinett, another UFCW Local 770 member who endured that merger and now works at a Vons in Ojai, California, said, "After Haggen went bankrupt and shut down my store, I applied for work at four different stores."
"I wasn't able to get a job for three months and I had to take side jobs as a seamstress and cleaning houses to make ends meet," she said. "That merger caused me a lot of anxiety. No worker should go through this kind of hardship again."
The campaign's website features several videos, including one in which Robert Reich, a professor at the University of California, Berkeley and former U.S. labor secretary, explains how the proposed merger "could send skyrocketing food prices through the stratosphere unless government sees the deal for what it is: a rotten egg."
Soon after the proposed deal was announced in October, Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) implored the FTC to block it.
Although consolidation in the grocery sector has, according to the American Economic Liberties Project, "previously been mismanaged by antitrust enforcers," approval of Kroger's buyout of Albertsons—the largest supermarket deal since Supervalu, CVS, and a group of investment firms bought Albertsons for $9.7 billion in 2006—is far from guaranteed.
Federal officials, including FTC Chair Lina Khan and Jonathan Kanter, assistant attorney general of the U.S. Department of Justice's Antitrust Division, have both taken a more hard-nosed approach to mergers following decades of lax enforcement.
The decision before regulators should be easy, the coalition argues.
Its members have "written numerous letters to the FTC and state attorneys general, held meetings with federal and state elected officials and regulators, held press conferences and virtual town halls, attended public events on the merger hosted by government officials, and participated in various local community activities opposing the merger," the coalition said in a statement. "All this activity has helped reveal growing evidence that shows the real motives for the proposed merger: corporate greed at the hands of C-suite executives and the private equity firms that are significant owners of their stock."
"It's simple: This merger will be bad for workers, bad for customers, and bad for our communities," reads the campaign website. "Union grocery workers, consumers, elected officials, and community members are standing together to fight for access to nutritious food, safe shopping experiences, and investment in good jobs in our communities."
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Progressive Senators Demand Answers From Kroger on 'Widespread Wage Theft'
"Even as your company was failing to address concerns about systemic wage theft, you have been pushing through a $24.6 billion merger with Albertsons Companies, Inc. that further threatens workers' wages and jobs."
Feb 16, 2023
A trio of progressive U.S. senators on Wednesday pressed the CEO of Kroger to answer longtime worker allegations of rampant wage theft, accusations that continue as the supermarket giant pursues a contentious megamerger with erstwhile competitor Albertsons.
"We are writing today regarding alarming new reports of Kroger's involvement in the mistreatment of workers and consumers through widespread and unresolved wage theft," Sens. Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), and Ron Wyden (D-Ore.) wrote in a letter to Kroger Company chairman and CEO Rodney McMullen. "These reports indicate that 'systemic and widespread errors' by Kroger resulted in thousands of your employees experiencing delays and missing wages in their paychecks in late 2022."
Warren explained on Twitter that "Kroger stiffed its own workers while pushing a merger deal with Albertsons that could harm both consumers and workers," and that the senators "are calling them out for lining their pockets at the expense of their employees."
Kroger workers say a big part of the problem is MyTime, a new payroll system rolled out last year that McMullen claimed would "simplify day-to-day work" but instead has resulted in problems including missing pay and incomplete checks.
"I'm tired of having to beg for pay that's due to me," one Kroger employee toldPopular Information last month.
\u201cKroger workers across the country are in a crisis due to widespread wage theft - some have gone weeks without pay! Our union alone has received over 1,000 reports of wage theft as a result of Kroger's new payroll system.\n\nThank you @SenSanders & @SenWarren https://t.co/Jnkl38118e\u2026\u201d— UFCW Local 400 (@UFCW Local 400) 1676559443
In January, hundreds of Kroger employees, most of them members of the United Food & Commercial Workers (UFCW) Local 400 Union, filed a class-action lawsuit alleging widespread wage theft.
The senators' letter states that "given your company's record of anti-worker policies, and your ongoing attempt to push through a merger that would harm both consumers and workers, we are writing to request a full explanation of how your workers will be compensated for any lost or delayed wages, and how you will prevent future wage theft."
The lawmakers asked McMullen to answer questions including:
- How many missing or incorrect paychecks were reported to the company in 2022, and how many of these reports were related to the MyTime system?
- What was the total amount of wages owed to workers that Kroger failed to pay in 2022?
- How much back pay has Kroger issued to date for missing or incorrect paychecks in 2022?
- Is Kroger continuing to use the MyTime payroll system, despite significant accuracy issues, and if so, what steps has the company put in place to prevent further wage theft?
- Have any company executives had pay, bonuses, or other compensation withheld or clawed back as a result of the systemic problems affecting workers' pay in 2022?
- Will you commit to fully redressing all workers affected by missing or late pay prior to taking any additional steps to move forward with the Albertsons merger?
Warren, Sanders, and Wyden are among the many progressive and labor voices urging the federal government to reject Kroger's proposed merger with Albertsons. Together, the two supermarkets and their subsidiaries employ more than 710,000 workers at around 5,000 stores in 48 states and Washington, D.C. and rake in $208 billion in annual revenue, second only to Walmart.
In a bid to fend off antitrust challenges to the proposed merger, Kroger and Albertsons announced earlier this week that they would sell off as many as 300 stores, mostly in areas where the two chains overlap, GlobeStreported.
"Even as your company was failing to address concerns about systemic wage theft, you have been pushing through a $24.6 billion merger with Albertsons Companies, Inc. that further threatens workers' wages and jobs and hurts consumers by reducing competition among grocers," the lawmakers' letter asserts. "This merger would exacerbate corporate consolidation in the grocery sector, and likely result in the shuttering of some stores across the country and the firing of workers from both Kroger and Albertsons."
A Kroger spokesperson told Common Dreams via email that"while the majority of issues have been resolved, we understand these issues have caused undue difficulty for the impacted associates," and that"we are taking multiple steps to pay our associates as quickly as possible, including overnighting checks to impacted associates."
According to the left-leaning Economic Policy Institute, more than $3 billion in stolen wages were recovered for U.S. workers between 2017 and 2020—a fraction of the $50 billion EPI says is stolen by employers each year. By contrast, the FBI said the total value of all 267,988 reported U.S. robberies in 2019 was around $482 million.
The lawmakers' letter came as Communications Workers of America and the National Employment Law Project published a study in which 9 in 10 surveyed workers at independent authorized retailers of telecom titans AT&T, T-Mobile, and Verizon in 43 states said they've experienced wage theft.
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