Inflation is at 6.8%, and people are rightly worried about this kitchen-table issue.
“The amount I paid for 3 packs of chicken last month was $18. For the same amount of the same cut of chicken this month is $27,” wrote frustrated shopper Judy Brandt to our organization. And while elected officials may ultimately “pay the price” in the 2022 midterm elections if inflation persists, families face pressure on their budgets right now.
Instead of looking to Washington for answers, we need creative ways to reengage sidelined workers. They are a key market force in bringing prices down, but that will take smart policies, not more federal money.
According to the latest Monmouth University poll, 3 out of 10 Americans say that paying everyday household bills and inflation are their top concerns — a sharp increase from this summer. Meanwhile, those who say it is easy to pay grocery bills dropped by 13 points in the past two years to just 56%.
Women are acutely aware of inflation because they control or influence 85% of household purchases. Women also own nearly 13 million businesses, meaning they are sensitive to how much even a few cents of price increase on raw materials, labor, and other inputs cut into their profits.
Inflation is a tax that everyone pays, but not everyone can afford. Price fluctuations are most devastating on low-income and elderly consumers who spend more of their budgets proportionately on groceries and other necessities such as home heating. Families up the income ladder are also feeling the price pinch. Foot traffic among middle-income families picked up at discount stores such as Dollar Tree. Even there, the price-conscious shoppers are shocked that everything is no longer just a dollar.
Nearly half of the adult population thinks that the federal government’s actions have actually made inflation worse. When left-leaning economist Larry Summers sounded the alarm that too much federal spending on COVID-relief — especially after the passage of the American Rescue Plan last year — would trigger inflation, he was dismissed. However, Summers has been vindicated by economic data from the Federal Reserve Bank of San Francisco.
The private and public sectors must find ways to reengage sidelined workers who left for any number of reasons, including fears over COVID, childcare issues, retirements, and generous government benefits. Another round of stimulus checks and expanded entitlements are not the answer as they will disincentivize work. Bumping up compensation is not enough to lure back workers either, as stubborn unemployment numbers demonstrate. Workers want more flexibility.
In a Chamber of Commerce poll, COVID-19 unemployed workers ranked flexible hours and full-time working from home above compensation increases. Small employers are often better positioned to negotiate flexible arrangements than large companies, and this could be a competitive advantage over higher pay.
Workers in need of flexible schedules such as caregivers, women, and retirees may find good opportunities in gig work. Two million gig workers were reportedly added in 2020 alone. Lawmakers should protect gig work and independent contracting by not enacting restrictive labor policies that would wrongly reclassify gig jobs as full-time employees. States and Congress should consider legislation that encourages employers to create flexible opportunities.
We don’t have to accept millions of vanished workers as a new normal. If we do, we consign ourselves to an economy that is robbed of critical labor and to prices that will remain elevated for some time to come.