📈 War(ren) on Inflation
We’ve covered the topic of inflation in the summer when the term du jour was “transitory.” Which loosely translated to inflation being here for a good time but not a long time. Well, our buddy at the Fed, Jerome Powell, admitted that inflation was here for longer than expected and it was time to drop the term “transitory.” In case you missed the press conference we have a summary:
Powell isn’t an elected official and was just reappointed by President Biden, so he DGAF. He can admit this and move on to trying to control inflation as is his duty. Elected officials, however, are feeling the heat of the no-longer-transitory inflation as the midterms approach. Combine that with the holiday season and we got some truly stunning takes, like this gem from Senator Elizabeth Warren:
We have a lot of respect for Senator Warren’s efforts to protect consumers, including the founding of the CFPB. But this ain’t it, chief.
Not only is her message and the headline misleading, but the actual content of the article contradicts the headline. Since attempting to read the article without AdBlock will cause your browser to crash due to all the capitalist advertisements *gasp* we have some excerpts.
Oh, so businesses are being forced to pay more for raw materials and workers due to Covid related shortages. Makes sense, makes sense. Let’s see how these greedy bastards take advantage of this situation.
See, I knew it! They raised prices by *checks notes* less than half of the increase they are paying for raw materials and workers.
So, by reading the attached article, we can see it’s not purely corporate greed driving the price increases. Companies are raising prices, but often by less than the increase in the cost of production. To examine this further let’s look at Dollar Tree, another company under scrutiny for raising prices from $1 to $1.25 recently. When will these companies learn to stop tying their name to a price?
Now, this was the first price increase for Dollar Tree since 1986 so, despite the hand wringing it doesn’t appear they are price gouging. But the talking points came down to a couple of bullet points that feed Senator Warren’s narrative:
Dollar Tree made over $1B last year
The CEO made over $10 million last year
Many employees only make ~$10/hr
Employees only making $10 per hour has been one of the worst parts of globalization over the last several decades, so we sympathize. What if we paid that greedy CEO nothing and reallocated his pay to the hard-working employees of Dollar Tree?
With 200,000 mostly part-time employees, let's say the average employee works 30 hours per week
200,000 total employees x 30 hours per week x 52 weeks in a year = 312 million hours worked
$10 million CEO Pay / 312M hours worked = $0.03/hr raise. Is it more? Yes. It’s a total of $50 more per year per employee.
But let’s look at that juicy $1B of income. For the sake of round numbers, Dollar Tree earned $25B in revenue in 2020 for a net profit of just over $1B. Meaning it took a lot of work to earn that $1B in profit that is thrown out there as “excessive”.
$1B / 312 M hours = $3.20/hr extra for each worker
That’s a huge raise! But that would mean the company made no money that year, and companies kind of need to make money to survive? Given the current inflation rate, this would mean they would begin losing money in 2022 - so, do they lay off people or raise prices again?
Despite paying too little, Dollar Tree still managed to lose $1.5B in 2019. In that scenario, how much do we pay employees?
What’s the Upside?
We sympathize with workers who are unable to survive on low wages and think that one of the few good things about the pandemic was an increase in worker mobility (thanks to government unemployment subsidies) and wage increases.
However, saying companies that are raising prices are gouging consumers is incomplete at best and a lie at worst.
And we are big proponents of asking for a raise at work. Best case they say yes, worst case you get credit for taking initiative. If Senator Warren has taught us anything, just ask.
For Your Weekend
This is where we’ll post a round-up of essays, podcasts, and streaming shows to check out over your weekend. We cast a wide net so you don’t have to.
Read:
How Your Family Tree Could Catch a Killer by Raffi Khatchadourian (The New Yorker)
On Thanksgiving morning, 1987, Rick Bart, a homicide detective in Snohomish County, Washington, got word that a pheasant hunter had discovered a body in a field beneath High Bridge, an overpass spanning the Snoqualmie River. Bart was preparing to spend the day with his family, but he went anyway. He was one of only two homicide detectives in Snohomish—a jurisdiction, just north of Seattle, that covers more than two thousand square miles. He was familiar with the crime scene. It was near the Monroe Honor Farm, where inmates milked cows to provide dairy to the state prison system. The bridge was secluded enough to be private, but accessible by a country road. Teen-agers drank there.
When Bart arrived, morning fog was clinging to trees along the riverbank. The body was partially shrouded by a blue blanket. Lifting it revealed signs of a brutal death. The man’s head had been struck with a rock. A clump of hair, ripped from his scalp, was in the grass. A ligature, made from plastic twine and two red dog chokers, was around his neck. An autopsy later revealed that he had been gagged with a tissue and a pack of Camel Lights.
“We had no I.D.—didn’t know who he was,” Bart recalled. “We didn’t know when he was put there, at all. There was nothing.”
The Real Reason That Crazy Wheel of Time Pilot Was So Awful by Kevin MacFarland (Wired)
This article is from 2015 when a hastily constructed Wheel of Time pilot aired in the middle of the night on FXX - starring Billy Zane, inexplicably. What happened?
MUCH AS YOU might expect from an all-but-unannounced pilot running during the wee hours of the night, it was abysmal. The CGI during the opening exposition sequence recalls the opening to Peter Jackson’s Lord Of The Rings trilogy run through a PlayStation 2; the performances are histrionic. No one but Wheel Of Time superfans would have any reason to be interested in this, and fewer still would come away hopeful for a full series. But quality aside, this was a stealth adaptation of one of the most beloved genre sagas of all time, running on an otherwise respected network—how the hell did it come to pass?
Chuckle:
