Patrice Onwuka joins the podcast to discuss this month’s policy focus: Understanding Inflation. We’ll answer the top questions Americans are asking as they face higher prices at the gas pump and grocery stores, including: What causes inflation? Why are we facing higher prices today? And what can be done to slow the trend?
Patrice Onwuka is a political commentator and director of the Center for Economic Opportunity at the Independent Women’s Forum. Patrice is also a senior fellow with The Philanthropy Roundtable and a Tony Blankley fellow at The Steamboat Institute. She has worked in policy, advocacy, and communications roles in Washington, D.C. for more than a decade on issues related to the economy, employment, technology, and the criminal justice system. Prior to moving to Washington, Patrice served as a speechwriter for a United Nations spokesman.
TRANSCRIPT
Beverly Hallberg:
And welcome to She Thinks, a podcast where you’re allowed to think for yourself. I’m your host, Beverly Hallberg and on today’s episode, we delve into this month’s policy focus called understanding inflation. We’ll answer the top questions Americans are asking as they face higher prices at the gas pump and grocery stores, including what causes inflation. Why are we facing high prices and what can be done to slow it? Well, joining us to break all of that down is Patrice Onwuka, co-author of this month’s policy focus. You know her well, but a little bit more about Patrice. Patrice Onwuka is a political commentator and director of the Center for Economic Opportunity at the Independent Women’s Forum. Patrice is also a senior fellow with the philanthropy Round Table and a Tony Blakely fellow at the Steamboat Institute. She has worked in policy advocacy and communications roles in Washington, DC for more than a decade on issues related to the economy, employment, technology, and the criminal justice system. Prior to moving to Washington, Patrice served as a speechwriter for a United Nation spokesman. Patrice, thank you for joining She Thinks.
Patrice Onwuka:
Oh, thank you, Beverly. It’s always great to be on.
Beverly Hallberg:
Yeah. And it’s the last one of the year. So thank you for rounding out this year with the final She Thinks to talk about a topic that has really come full circle this year. And that is the inflation concerns that Americans have. They’re concerned about when it comes to the cost of groceries, when it comes to the cost of cars, it impeded on the supply chains over Christmas. So break it down for us. Give us what is the problem when it comes to inflation, what is it, and why are we seeing it?
Patrice Onwuka:
Absolutely. Well, inflation is a kitchen table issue. There is nothing that’s top of mind more right now for Americans than the cost that they’re spending at the grocery store, at the gas pump, just to heat their own homes. And inflation is something that’s been around for quite some time. But the rapid increase in inflation, we have not seen this rapid pace since 1982. That’s according to the most recent inflation report released just very recently where, you know, we’re looking at 6.8% inflation across the board. But when you dig deeper, you look at things like food, beef up 20%, chicken up 9%, gasoline to fill your car up 58%, hotel stays are up 25% and your home heating bill is 25% higher this November than it was one year prior. And so that’s why Americans are concerned. Inflation hits every household, but it doesn’t hit every household the same. If you are working poor, lower-income, even middle-income families or you have a fixed budget, you are seeing more of your income eaten away, pun intended, by inflation. And that leaves families with some tough choices to make.
Beverly Hallberg:
And I think it’s been interesting to see how the Biden administration has tried to message the topic of inflation. They’ve used different terms such as this is transitory. They’re now admitting it’s not, that this is here to stay. But they seem to think that they can praise the economy while at the same time Americans see day in and day out how much this impacts them. Is the administration just tone-deaf and just skewing numbers to try to serve their own purposes? But I’m assuming the that’s not, that’s not actually polling well with the American people.
Patrice Onwuka:
Well, no. So speaking of polling, I’ve looked at some recent polls from various news sources across the spectrum. And at least 40% or more of Americans recognize that inflation is very much tied to government spending. So they recognize it, it’s a top-of-mind concern for voters, but also they see that the trillions of dollars of federal spending that we have seen over the past year alone is feeding right into the prices that they’re paying. And while yes, there are bright spots in the economy, we have 11 million open positions right now, but we have four million people sitting on the sidelines now, then at the start of the pandemic. So you’ve got a lot of people who are unemployed. That’s driving the worker shortage, feeding right into prices. Wages are rising, but they’re not rising fast enough to keep up with inflation. That is why the real wage, which is really what you earn, is decreasing. It’s declining. And so when families are saying, wow, I got a little bit of a pay raise, but I don’t feel it. It’s going right back out of the window every time I go to the gas pump or every time I go to the grocery store, it’s because inflation is eroding their purchasing power.
Beverly Hallberg:
And I know with all of this, we look to the reasons why we’re here. Some are saying the supply chain issue is part of it. Some are saying the pandemic played a large role. I know that it includes a lot of different factors. How much do you say here are some specific policies that the Biden administration put forward that are directly impacting inflation?
Patrice Onwuka:
Well, I would say federal policy from the Biden administration is feeding some of this. So as you rightly said, there are different causes driving inflation. You’ve got the supply chain disruptions, you know, overseas and here in the United States in part, because the lockdowns forced companies to stop producing, inventories fell. At the same time, there’s lots of pent-up demand. So people are back out trying to shop, trying to buy all of those delayed purchases. They’re now buying homes, building homes. And so you have that confluence or convergence of issues at the same time. The worker shortage, though, feeds into both of those. Because you don’t have enough workers, whether because they’re number one, retiring, they can’t find childcare as schools are still not fully opened or there’s been back and forth, or parents have had to make some choices to find flexibility, or for some people who just, they worry about COVID, and then there’s some people who frankly were earning far more from generous government assistance than they were working a regular job.
And the worker shortage is actually feeding into those prices, driving the supply chain disruptions, making it hard to find truckers to get our goods from the ports to our store shelves. And the stores can’t find workers to put the goods out of the boxes and onto the store shelves or cashiers. So there are lots of these different forces going on.
Federal policy, though, makes a difference. Number one, when you are providing stimmies, all those wonderful stimulus checks that were not targeted, they did not go to families who had disruptions in their employment but were broadly distributed to as many households as possible, as quickly as possible. Now you got a lot of people who don’t feel the pressure of needing to find work or families sitting on a lot of cash that they’re willing to spend, which is not a bad thing, but you have all of this cash in the entire economy and not enough goods. And so that’s kind of where you get the inflation coming in.
And you mentioned a word transitory. Janet Yellen, who’s our treasury secretary, has used that term for months on end. Well, no, it’s not going to just come and go very quickly. This is going to be here to stay because it’s going to take time for the supply chain disruptions to peter out. It’s going to take time to get workers back into the workforce. And if you add in three, four, five trillion dollars more of federal spending, particularly sending a lot of money to different households that don’t need it, that is not going to help inflation recede, it’s going to accelerate it.
Beverly Hallberg:
And with inflation, we often think about it really harming those who are low-income families. You touched on that. Does this also hurt, too, specific businesses more than others? So I just want to bring up the fact that I even though the town I live in, most fast food places, most small grocery stores are on their billboards offering higher pay than they normally would to try to get somebody to come and work. There are signs everywhere saying, please, we apologized, please have patience for our delays. We don’t have enough workers. So are you seeing certain industries really suffer because they can’t find workers?
Patrice Onwuka:
I do. I do think you’re seeing that in retail, you’re seeing that in food and dining or hospitality, those are kind of the lower-income positions. They tend to have high turnover, to begin with. And those were the workers who were the first workers to lose their jobs when the pandemic lockdowns kicked in and were least likely to be able to hold onto them. Those workers, you know, they have a lot of competition now. You’ve got warehousing jobs that are increasing. So there are lots of opportunities to work in an Amazon or to be delivering for Uber and the gig economy. So I think you’re seeing a lot of those workers kind of move into other areas.
Childcare workers, again, not particularly high paid, but that’s because most childcare workers do not have degrees. These are people we trust our babies and our children to them, but if they’re finding higher pay in other industries, then that’s going to have an impact on childcare availability. And hey, wait a minute. That’s connected to working moms and dads. So if working moms and dads can’t find a childcare provider because the childcare providers can’t find workers, that’s going to have a rippling impact across the entire economy.
Also small versus big businesses. Big businesses can afford to pay $18 an hour in certain areas. A small mom and dad shop, they may not be able to afford that. However, interesting new surveys of those unemployed workers who lost their jobs because of COVID, you would think that the biggest incentive to get them back would be higher pay. It’s not. Number one, it’s a signing bonus of, let’s say, a thousand bucks, but number two, flexibility. So small businesses can find ways to provide flexible schedules, part-time work, working from home. They may be able to be competitive and to lure some of those workers back into their doors.
Beverly Hallberg:
And I’ve thought about that a lot. And just as far as IWF goes, we’ve always been telework, or have been for a long time. So that was something that was already common to us, but a lot of businesses are really struggling to see whether or not they can get employees back into buildings, especially if they have a building that’s been purchased or they are renting, they have high rent costs. They want bodies in chairs. Do you find that because of the hard time that so many businesses are having finding employees that it’s really the employee that has the upper hand, when it comes to bargaining and can say, “Look, I want to figure out, I want to compromise how I can work from home at least part of the time.” Are we seeing a lot of those negotiations taking place?
Patrice Onwuka:
We are. I’m sure you’ve heard, Beverly, about the great resignation. That’s a nice way of putting this worker turnover. And, you know, the bureau of labor statistics, on a monthly basis, looks at how often and people are quitting. Quit rates are probably near historic highs right now. So people know that they can leave one job and go to another one and probably earn more money or negotiate for other types of compensation, whether that’s time off, flexible schedule, remote work, you know, certain number of days or full time. So workers absolutely have a lot of power right now. It’s a good thing. I mean, it’s great if you can have better flexibility, have more pay, but we also have to recognize that the contrast is that someone is going to have to pay for those increased wages and that’s probably going to be the consumer. So if you know, you’re paying $5 more for a small item, you know, that’s the reason why.
I don’t know about you, Beverly, but I love to do from-home DIY projects and fun stuff that I see on Instagram, home decor. I go to the dollar store to pick up on some materials, everything is no longer a dollar at the Dollar Tree. It’s because of inflation, it’s because of these increased prices, whether you’re talking about the increased labor costs or the cost to produce goods. Also, not just the consumer goods that we’re paying for are increasing in prices, but the companies that are producing them, they are seeing their raw materials prices go up 9.6% for the whole year.
So everywhere you turn, small businesses, large businesses, families, homes, we are all dealing with inflation. It’s going to take some time until all of this gets back to a place of normal. But I do. I’m hopeful that, hopefully not 2023, but it’s going to take some time for us to get back to normal inflation.
Beverly Hallberg:
And so tell us, what are some of those specifics, if we want to slow down inflation, if we want to get to a more normalized state, you talk about time, but I’m assuming it’s policies as well. How do we get there?
Patrice Onwuka:
Absolutely. So the federal government has a few tools, a number of tools in their toolbox to deal with inflation. One of these tools is monetary policy, the federal reserve bank of the United States, they kind of set all of the interest rates for everything. And so their federal fund’s rate is kind of the most basic interest rate that they charge to banks. So far, they’ve kept that rate very low. That is to stimulate the economy, to allow people to borrow money and to spend money, to work on home repairs, to buy homes, all of those things. So what I think you’re going to see is the federal government pull back on that and maybe raise interest rates, reward people for saving rather than spending. And again, that’ll kind of cool down some of the demand on the spending side.
On the fiscal policy side, that is where Congress comes into play. That is where the federal budget and all of the different priorities that we spend our tax dollars on. There’s been this push for pandemic relief, pandemic relief, pandemic relief. We’ve had five different relief bills, totaling, I guess probably over six trillion dollars’ worth of federal spending. That is a lot of money in the economy right now. What we don’t need, and this is something the federal government can do, not do anything. Not pass another multi-trillion-dollar federal spending bill. And that is what Congress is discussing right now with this Build Back Better Act. But if they want to cool down the economy, slow inflation, let’s not spend more federal dollars, and let’s not push more federal money into the economy. Let’s let the economy do what it does best.
State and local governments, I think we can stop with the draconian lockdowns, shutting down economies, making it difficult for businesses to operate on a consistent basis. Scaring people to stay at home with these mandates, all of that. If government doesn’t do anything, that’s actually not a bad thing, you know? So those are some of the tools that I think our federal and state local policymakers can be doing to slow down inflation.
Beverly Hallberg:
And I guess that’s your New Year’s Eve pitch for lawmakers next year, do less, not more, we don’t need more spending.
Patrice Onwuka:
Two words, do less. I love it, Beverly. That is a fantastic tagline.
Beverly Hallberg:
Now, one of the things that we can do is, of course, take a look at this policy paper called Understanding Inflation. You can find it at iwf.org. Patrice Onwuka with IWF, and also the co-author of this report. Thank you so much for joining us on the final She Thinks of the year.
Patrice Onwuka:
Thank you and happy New Year to you, Beverly.
Beverly Hallberg:
Happy New Year and Happy New Year to all of you. But before you go, just want to let you know that IWF does want you to know that we rely on the generosity of supporters like you. An investment in IWF fuels our efforts to enhance freedom, opportunity, and wellbeing for all Americans. And it’s also tax-deductible. So please consider making a small donation before the end of the year, by going to iwf.org/donate. That’s iwf.org/donate. And last, if you enjoyed this episode of She Thinks do leave us a rating or a review. It does help. And we’d love it if you shared this episode and let your friends know where they can find more She Thinks. From all of us here at Independent Women’s Forum, thanks for watching.