A few weeks ago, I happened to notice that all Frito-Lay brand items were downsized in portion while prices remained the same. This wasn't the sort of little cuts we saw after the 2008 crash, where portions were minimally reduced and prices tracked up about 25-30 cents higher. These were major cuts of one-third of the portion, all while retaining their inflated prices.
I fired off an angry tweet to them at the time, saying I wouldn't continue to buy any of their products (I am a MASSIVE fan of Baked Lays) if this was how they were going to do business.
However, while shopping for a couple of items today at the grocery store, I noticed Frito-Lay wasn't the only one doing this. Nabisco has cut portion sizes in Ritz crackers by 25%, while retaining the same price points. Canned vegetables have gone up 20-25 cents a can from both the major companies like Del Monte and the store label brands have followed suit. Bread and meat are showing price rises as well.
The food supply has definitely taken a hit the past two years with the severe droughts suffered in our heartland. The Mississippi River has risen and fallen steeply in the past two years, leading to a reduction of cross-river traffic. Fuel prices have continued to stay stubbornly high due to runaway speculation in oil markets that the government has not stepped in to stop.
Food price inflation is a first step to further economic decline amongst anyone making less than six figures (read: almost all of America). More detail and what we can do to stop it over the jump.
It's long been a tenet of one part of our political spectrum that self-suffiency is the American way, and we should cut things like food stamps and not regulate minimum wages, CEO pay, etc. The funny thing about that story is that it fails to consider a multitude of issues.
* America was a lot smaller when we were all "self-sufficient." Most of America was also less-educated, and its inhabitants lived shorter lives. We do pay a price for living longer, and it should be shared.
* America spent a lot of its formative years in an economic boom, with half of the nation's boom being led by industries that used slave labor. Today's America is contracting in nearly all sectors, with most of the world's economic growth being led by nations that use the closest approximation to slave labor possible. We should not be a nation, let alone a world, that condones these practices.
* We do not live in a world where people hunted their own meat and grew their own crops anymore. Most of farming has become a corporate entity, with subsidies helping to raise their profit margins instead of going to the smaller farmers. Furthermore, they are now part of the inflationary process and devastating poor people's ability to rise from poverty.
Food is, of course, a basic foundation of life. Without food security, we are more likely to be malnourished, suffer from disease, and die young. Food security is jeopardized by rising food prices that are coupled with stagnant wages. To wit, the average hourly wage in 1964 was $2.40. In today's dollars, that's $18.05/hour. One quarter of America currently works in retail services. Retail makes $1.50 LESS, on average today, then the average worker did in 1964. Professional services, the largest industry employing people, makes $28/hour on average, putting its wage growth up over where we were about 50 years ago.
However, even that growth isn't enough to make most of those people safe from increased food costs. Household debt as a percentage of disposable income is incredibly high. It currently sits at just under 100 PERCENT. That means that any inflation is detrimental to our ability to pay off our debt. Gas and food money comes AFTER the money needed to keep one's insurance, transportation, and housing. If nearly all our income is going to pay those items, we have very little room to absorb inflation.
Here's some numbers for you.
* Frito-Lay had a profit of $3.65 BILLION dollars last year. Despite this, they are raising prices and cutting portions in their products.
* The Republican-led House voted to cut SNAP funding by $39 billion over ten years. The Democratic-led Senate voted to cut $4 billion in funding. This week, temporary funding raised by the 2009 stimulus bill will end, creating a five percent drop in funds for recipients. One in seven Americans receive SNAP assistance, meaning that 14% of the nation will suffer greater food insecurity.
* All House and Senate members make $174,000, except for the leadership, which makes more. Their salaries place them in the top five percent of American earners, people that are least likely to experience issues with food security. Yet they are cutting assistance to 14% of Americans, who desperately need that help so they don't have to choose between bills and food.
While I've focused on food inflation here, because of its necessity to the well-being of our lives, there are several options available to us that can help correct economic inequality while not being overly punitive to those at the top (thereby helping to gain support from the business community).
* Raise the minimum wage to $10/hour, and set it so it automatically rises with inflation so those on the bottom aren't mired in poverty. Simultaneously, enact a corporate tax cut to bring their rates down, and offer a tax credit of some significance to companies that pay every employee a wage higher that than of the minimum wage. This should have the effect of keeping the overall tax base steady while increasing employment and reducing poverty. And no, it's not raising taxes on the poor. The percentages will stay the same, but with all of them making more money, their overall contributions to the system will increase. And yes, we should raise EITC eligibility as well to keep pace with the wage changes.
* Increase base contributions to Social Security above the current ceiling of $113,000. Right now, employees pay 6.2% of their wages up to $113,000, and employers pay the same percentage. Instead of raising the ceiling higher, add a small additional contribution of 1-2% on salaries above the ceiling. It'll bring more money into the system without making a significant difference in take-home pay for high earners.
* Reintroduce the ceiling in commodities speculation. During the Great Depression, the government passed the Commodity Exchange Act in 1936 to limit fuel and food speculation on the market. This was designed to protect consumers and farmers both from artificial manipulation of prices by speculators. In 1991, the CFTC issued Goldman Sachs an exemption, which was then allowed to be used by other banks, to override these limits. An explosion in commodities prices ensued, and we are still paying the price today, with gas prices above $3/gallon, despite no change in oil on the market from 2007. A strict, inviolable ceiling on commodities trading will help rein in fuel and food prices, further relieving pressure on those people at the bottom of the economic spectrum.
I sincerely believe these are politically doable measures, and more importantly, they are morally right, so let's start pressing Congress to get on this, before the inequality grows and our ability to feed ourselves becomes jeopardized.