Tom Perkins
Fri 19 Jan 2024 06.00 EST
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Wholesale wood pulp prices soared by 87% between January 2021 and January 2023, but last year prices dropped by 25%.
Still, diaper prices have not come down with lower costs, the authors say. Groundwork examined earnings calls and found executives at both companies boasting of widening profit margins as input costs decreased. A drop in inputs accounted for about one-third of Kimberly Clark’s profits, company executives said.
P&G executives said in their July earnings call they expect $800m in windfall profits because of declining input costs, suggesting they won’t bring down prices.
Meanwhile, workers aren’t faring as well – corporate profits as a share of national income are up by about 29%, and workers’ share of corporate earnings is still down from pre-pandemic levels.
The Biden administration has taken steps to strengthen supply chains, Pancotti noted, and Joe Biden recently called on corporations to stop “gouging” consumers as input costs fall. But Pancotti and Weber called for stronger action, pointing to other nations with forms of price control in place.
In France, the government intervenes in price negotiations among retailers and producers. Earlier this month, with the government’s support, the supermarket chain Carrefour banned some PepsiCo products from its shelves because of “unacceptable price increases”.
Absent strong government intervention in pricing, the 2025 expiration of the Trump corporate tax cuts presents an opportunity to rein in corporations via the tax code, Pancotti said.
“We’ve decided as a country that we like to have very large, powerful corporations and we are OK with them being very profitable,” she said. “We need to take a really hard look at how our tax code incentivizes corporate profiteering and ask: ‘Do we as a country want to do something about that?’”
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