He is not the only one who thinks this. US economist Josh Bivens, from the Economic Policy Institute, also pointed out this practice in a recent interview with the NPR television network. Bivens noted that neither wages nor rising input costs have had as much of an impact on rising prices as ever-higher profit margins.
“Normally corporate profits should be 12% of the cost of anything, while labor should be more than 60% (…). Since this recovery began, corporate profits account for 54% of the total price increase, while labor costs less than 8%. They are shifting costs, but they are also putting in a much larger profit margin than they usually do,” Bivens said in a television interview.
Bivens also points out that the spark of inflation that is experienced today in the United States, Mexico and much of the world was the result of a mismatch between supply and demand, the breakdown of supply chains and the shortage of certain inputs, after the covid-19 pandemic. But companies, he says, are passing on not only those costs, but also their ever-increasing expectations of profits.
