To fight effects of rising prices, fight for cost of living protection

By Brian Williams
January 24, 2022

Rising prices — especially on food, gas, rent and other necessities — are wreaking havoc with the lives of millions of working people. Strikes and other struggles by workers and their unions today for wage raises include demands for cost-of-living adjustment clauses in contracts and benefits to counter the effects of rising prices on workers’ real wages.

The boss class is pushing to defend its markets and profits from competitors by worsening the conditions and wages of the working class.

The fight for COLA was one of the key demands in strikes waged by 10,000 members of the United Auto Workers at John Deere agricultural and construction equipment plants, and by 1,400 Bakery, Confectionery, Tobacco Workers and Grain Millers unionists at Kellogg’s cereal plants last fall, where they made gains. At Kellogg’s the bosses agreed to regular cost-of-living adjustments of up to $3 an hour through 2026.

“The Return of the Wage COLA” lamented a Dec. 24 Wall Street Journal editorial, begrudgingly acknowledging the gains made by these strikers. The Kellogg’s agreement “is another sign that the 2021 inflation surge will have damaging economic consequences,” the editors wrote. That is, damaging for the boss class they speak for, as workers wrest wage gains out of bosses’ profits.

More workers are using union power — from United Mine Workers on strike in Alabama to United Steelworkers locked out by ExxonMobil in Texas — to fight boss attacks and prevent real wages plummeting. This points a road forward for all working people.

Inflation figure at 39-year high

Government inflation figures rose to 6.8% for the 12 months ending in November, the largest yearly increase in 39 years. But the consumer price index downplays the much larger increase in basic goods and services that working people use the most. Meat, poultry, fish and eggs, key sources of protein, are up by 13%, and gas prices jumped 58%.

Average wages rose by 4.7% last year, but rising prices meant real wages fell. In November wages declined 2.3% from last year.

There’s more. If inflation was “measured by the model economists were actually using in June 1982, inflation is actually at a 74-year high,” says an article in the New York Sun — 14.9%!

A number of additional changes were made under the Democratic Party administration of Bill Clinton in 1997 that substantially reduced official inflation figures. One was to fiddle with the real world. As the price of steaks rose, government number crunchers would assume workers would switch to cheaper cuts. So they replaced steak prices from computing the CPI and substituted lower hamburger prices. Voila!

Clinton’s White House also introduced something called “hedonics” to their calculations. This scheme claims to measure the satisfaction workers and others get when they buy something new, like a computer or a car. If you buy something that gives you “more pleasure,” the cost is calculated down.

These were all ways to try to mask the reality facing working people that we see every time we shop.

The government ballyhooed that they raised Social Security benefits starting in January by 5.9%. But that’s still below rising prices. At the same time they jacked up the Medicare premium by 14.55%, which is deducted from your monthly Social Security, so recipients will in fact be getting less.

Food and energy prices are rising worldwide, to their highest level in a decade, according to the United Nations Food and Agriculture Organization.

“We spent almost two years risking our lives on the front line,” Julieta Irureta, a 27-year-old nurse from Buenos Aires, Argentina, told the Journal, “and now, on our wages, it’s getting harder to eat.” From Brazil to Turkey, millions face the same conditions.

For workers in the 19 EU member states that have adopted the euro as their currency, consumer prices rose by a record 5% last year. In Turkey, the government’s consumer price index soared by 36%.

Raises don’t mean higher prices

The bosses and the capitalist media falsely contend that rising wages and COLA protection automatically lead to higher prices. But that isn’t true. Rising wages simply mean a greater share of the wealth produced by workers’ labor power — the source of all wealth under capitalism — goes to the working class instead of into the bosses’ pockets. It means the relationship of class forces has shifted in our favor, so we can boost our wages at the expense of the bosses’ profits.

Karl Marx, a founder of the modern working-class movement, explained this in Value, Price, and Profit. “If wages fall, profits will rise; and if wages rise, profits will fall,” he wrote, “but all these variations will not affect the value of the commodity.”

Of course, this doesn’t mean the bosses aren’t always looking for ways to chisel out an extra buck — from cutting the size of your cereal box to filling a bigger box with less cereal.

Inflation appears when “governments and banks crank out money in various paper forms, eventually far outstripping the output of commodities that could be purchased with that money,” wrote Jack Barnes, national secretary of the Socialist Workers Party, in New International no. 10. “Under such conditions, competing capitalist commercial interests bid prices up and up and up and up in an ultimately self-defeating effort to reap surplus profits.”

Because of the decadeslong downward trend of profit rates today, the ruling capitalists more and more use their accumulated riches to speculate on fictitious capital, like stocks and bonds and bets on bitcoins, other cryptocurrencies, and now made-up NFTs, “nonfungible tokens,” instead of expanding manufacturing plants, stepping up production and creating new jobs.

The road forward for working people is to organize and use our unions to take action to defend our class interests. This includes fighting for cost-of-living protection in our contracts and for all those living on government programs, from Social Security to food stamps. And we have to act to extend solidarity with all of today’s labor struggles, to increase the chance of victory.