Photo: US trucks at an interstate truck stop (Wikipedia Commons)
U.S. consumers would pay higher food prices under a proposed regulation
limiting truck drivers’ hours
The average American family is under a tremendous amount of financial stress in this economy. Once you adjust it for inflation, median household income in the United States has declined approximately 10 percent since December 2007.
Meanwhile, the cost of food, gas, health insurance and just about everything else a family needs has gone up significantly.
While the middle class’ slice of the income pie has become thinner, food prices have increased by 4.7% since September 2010 and are on track to go up by another 4.5% over the next year. For certain products, the rise has been even sharper: Eggs and oils, for example, have gone up by more than 11%, while dairy products and beef have increased by more than 10%.
When prices rise, it’s common to blame businesses and investors, but the recent cost inflation has been marked by a drop in profits. Nicole Wolfgang, director of finance and product development at financial information company Sageworks notes, “Our data shows that grocery stores over the past twelve months have seen a decline in profits.”
Competing for Food … and Jobs
Ultimately, the fall in middle-class wealth and the rise in food prices may share a common cause: globalization. One effect of offshoring has been a drop in domestic wages, as American workers have increasingly found themselves competing with labor in cheaper overseas markets. As Don Peck recently noted in The Atlantic, this process has accelerated: “The recession, meanwhile, has restrained wage growth and enabled faster restructuring and offshoring, leaving many corporations with lower production costs and higher profits — and their executives with higher pay.” Thus, as business leaders have paid workers less, they’ve been able to pay themselves more.
On the other end of the spectrum, as overseas workers have made more money, they have spent more of it on food, driving up prices, a point that the Department of Agriculture acknowledged, noting that “cost pressures on wholesale and retail food prices due to … strengthening global food demand, have pushed inflation projections upward for 2011.” In other words, food prices are going to keep growing for the foreseeable future, as American families compete with people in other countries for jobs and food.
Having a stockpile of freeze dried food or emergency food is the wisest insurance that American families can have against unemployment and rising food costs.