Fox News reports that Sen. Elizabeth Warren (D-Massachusetts), has "accused three major grocery store chains of exploiting the coronavirus pandemic to exponentially raise prices for American consumers, even as the companies rake in record profits.
"Warren, a former Democratic presidential candidate, suggested in separate letters to the chief executives at Publix, Kroger and Albertsons that the companies had used their massive profits earned in 2020 to reward executives with bonuses and make additional stock buybacks, all while jacking up the price of food.
"'Your company, and the other major grocers who reaped the benefits of a turbulent 2020, appear to be passing costs on to consumers to preserve your pandemic gains, and even taking advantage of inflation to add greater burdens,' Warren wrote."
Warren went on: "Your companies had a choice: they could have retained lower prices for consumers and properly protected and compensated their workers, or granted massive payouts to top executives and investors … It is disappointing that you chose not to put your customers and workers first."
While none of the companies have commented on the letter, FMI-The Food Industry Association stepped up to say that the real culprits for higher prices range from "cost increases on supply chain disruptions, including a shortage of labor and transportation, to higher fuel costs and increased consumer demand."
According to the story, "Warren asked the companies to respond to a series of questions by Jan. 7, 2022, including the extent to which they met or exceeded profit goals during the pandemic; any increase in the average wholesale price paid by their company for different food items; any increase in the average retail price offered by the company for different food; and whether the companies raised wages this year."
- KC's View:
It is possible for two things to be true at the same time - that these chains did reward top executives while at the same time paying employees more. I wouldn't mind seeing how the percentages work out at all three companies - did the pay disparity between senior executives and front line workers grow over the past two years? I also think that the ownership structures at Kroger and Albertsons are different from that of Publix, so we may not be comparing apples to apples.
It is curious timing for such a challenge to the chains, since inflation has affected prices on almost everything, and there are demonstrable supply chain issues contributing to the problem. And we know that compared to the before-times, employees are being paid more, and the pendulum, at the moment favors labor over management.
One other thing occurs to me. Companies like these know that they are facing enormous competitive challenges, which means they have to worry about being undercut on price by the likes of Amazon and Walmart. If they are artificially increasing their prices to pad the pockets of senior executives, it seems to me that this could put them at competitive risk. Which would be their problem, not the Senate's. I think.
Sen. Warren may not like the answers she gets, but she also may find that the answers are not as simple as she expects.