by How Workers Can Fight Inflation and Climate Change
By Kip Hedges
Going to the grocery store or driving to the gas station has become a stomach churning experience for tens of millions of workers in the United States. Inflation, at 9.1 percent according to US Inflation Calculator, has reached its highest point in four decades. Older people on fixed incomes are being forced back into the workforce. Overtime and second and third jobs are becoming a necessity for millions, as inflation lays waste to budgets.
This article was first published in Reform & Revolution #9. You can subscribe to our magazine here.
The So-Called “Wage Price Spiral”
Inflation has become a political hot potato. The right wing blames President Biden and the Democrats. They advance three main steps that could be taken to bring inflation down.
Inflicting pain on workers is at the heart of their plan.
First, the right wants to end aid to workers facing eviction and slash measures giving direct assistance to people already working two jobs and struggling small businesses. They blame pandemic relief to workers and small businesses for inflation, saying the flood of dollars into the economy is the culprit.
Second, they claim aggressive action is needed to bring wages down. According to Republicans, wages for workers are too high. In this view they are joined by Democrats.
Lastly, to bring skyrocketing gasoline prices down, more oil must be brought out of the ground. They are demanding President Biden allow more drilling on Federal land, never mind the effect on climate change and record high temperatures across the globe.
For their part, the Democrats are relying on the Federal Reserve to raise interest rates. They believe this will slow down the economy, making jobs less plentiful. This in turn will ease a very tight labor market, forcing workers to take jobs at lower rates of pay, thus stopping the so-called “wage price spiral.” Inflicting pain on workers is at the heart of their plan.
More Oil?
Like Republicans, Biden believes more oil must be pumped to bring down the price of gas. Although gas prices have come down slightly, they are still 58 percent higher than ten years ago according to usinflationcalculator.com.
Oil companies in the US are presently using only a fraction of the leases from the Federal government available to them. The price and supply of oil is tightly controlled by companies like Exxon, Chevron, and Conoco. Certainly there has been some disruption of world oil supplies because of the war in Ukraine, but as Biden’s recent trip to Saudi Arabia to encourage more production proves, producers are holding supply off the market and reaping super profits as a result.
“Supply Chain Problems”
The pandemic has certainly disrupted supply chains in the US. But these problems were emerging even before the pandemic. “Supply chain problems,” a phrase that is commonly used by both political parties and business leaders, is attributed almost mystical power. What’s a supply chain? Simply put, it’s how goods move; rail, truck, ship, aircraft. Trucking, which accounts for 71 percent of the movement of goods, according to Forbes magazine, used to be a good blue collar job. No more. Because of low wages and harsh conditions, many truckers have left the profession.
Alltruckjobs.com points to several factors forcing hundreds of thousands of truckers to find other jobs. Truckers are not usually paid for time spent waiting to be loaded, driving down the amount of money truckers are actually paid. At the Port of Los Angeles trucks waiting to be loaded can sometimes be measured in days. Trucking companies increasingly are ignoring maintenance to boost profits. This means more last minute and unscheduled repairs that cost truckers money. Trucking companies also try to force truckers to ignore safety rules, according to Alltruckjobs.com.
Federal regulations governing trucking are key to driver and public safety so truckers resist, but often end up leaving the field. In short, the desire for ever higher profits is causing a shortage of truckers and thus, a “supply chain problem.”
On the nation’s railroads, crew sizes have been cut, wages for new workers slashed, and hours extended. Paralleling trucking, railroad owners desire to increase profits at the expense of workers is driving workers from the industry. The airline industry, as anyone who has flown recently knows, is experiencing a similar phenomenon with a now chronic shortage of workers. All of this means a shortage of goods on the shelves. Under a capitalist economy, a shortage of goods means higher prices and inflation.
The Economic Policy Institute has some interesting statistics that help us get to the root of the problem. Nominal wage growth has lagged far behind inflation, dampening, not increasing inflation. What has contributed mightily to inflation is a dramatic increase in profits over the past two years. Fatter corporate profits have driven over 50 percent of the increase in prices over 2020 and 2021. From 1979 to 2019, profits contributed about 11 percent to price increases. This certainly points to some possible solutions.
An Emergency Plan to Fight Inflation
What is to be done? Organizations like DSA must offer solutions that are easily understandable to working-class people and provide a pole of attraction for those who want to fight. We might call our program an Emergency Plan To Fight Inflation. Top on the list must be strict price controls given the fact that higher prices and profits are at the heart of the crisis. Increasing taxes on corporate profits should be next in our program. Both of these would address the problem and also be popular with any working class person.
In the 1970s and early ’80s when the nation was gripped with oil shortages and exploding gas prices, the call for nationalization of the oil industry became popular. It’s time to advance this demand again. Gas prices are driving workers into despair. Once placed under the control of the government, oil companies would no longer be able to manipulate the market, control supply and drive up prices. Instead of being a funnel into the pockets of billionaires, profits could be used to finance the long delayed implementation of a Green Economy. While making this a reality would take a movement of huge proportions, with economic shocks and climate change upon us, raising the nationalization of big oil companies points us in the right direction. Only the concerted activity of working class people can bring the crisis of inflation and climate change to an end.
