For the first time in three years the Federal Reserve raised interest rates this month, claiming this will slow rising prices. This is “bad news for borrowers, good news for savers,” The Associated Press reported. They were obviously happy with the news that capitalist investors, speculators, bankers and the like will find themselves even richer.
But millions of working people, already saddled with large debts, will face even higher monthly interest payments on their credit cards, auto loans, mortgage rates and more.
Prices overall have soared more than 30% since the beginning of 2019, and most of them aren’t coming down. Beef is up by nearly 80%, bread by 40%, rents by 50% and daycare and preschool up 43%. Gas now costs $4 or more a gallon, diesel averages over $6 a gallon, a 70% increase from a year ago. The big-business press blames this all on the Iran war, but somehow the gas monopolies see record profits while our pockets are empty.
The high cost of diesel is battering truckers, but also hits farmers hard, who must now spend thousands of dollars more for planting, harvesting and hauling crops to market.
Mortgage rates have risen to 7%, more than double what they were four years ago. A difference of just a few percentage points like this could mean workers have to pay hundreds of thousands more just in interest over a 30-year loan on a one-family house, which now averages over $400,000.
This comes down especially hard on young people, making it virtually impossible to afford to move out on their own and start a family. In fact, a report by the Federal Reserve last year noted that “49% of adults under age 30 lived with a parent,” a rise of 12% since 2019.
To cover the high cost of necessities, from food to housing to healthcare and more, increasing numbers of workers are falling back on their credit cards to pay bills, and they’re falling deeper into debt. This means a profit bonanza for the giant banks that dominate the credit card business. Total credit card balances rose to $1.26 trillion in the second-quarter this year. Over the past 10 years banks have jacked up annual interest rates on unpaid balances from 12% to 22% or more. And they’re licking their chops at what they’ll be able to do with the Fed’s latest interest rate hike.
Workers’ wages are falling further behind with inflation. Jamie O’Brien, 25, who works at a botanical garden in Richmond, Virginia, told the Washington Post that he has received one pay raise since being hired almost two years ago, bringing his pay to $17 an hour.
“My expenses have gone up far more than that $1 could hope to catch up with,” he told the paper. “I pay a little over $1,000 for rent. When I started working at the garden I was living in the same apartment and my rent was about $670.” Workers there have voted to unionize to fight for higher wages, he said, but until they’re successful, he’s had to cut back on groceries.
For cost-of-living wage increases
What’s needed here and in many other workplaces is a fight for 100% monthly cost-of-living-adjustment clauses in union contracts, Social Security and other government benefits that we’ve won in past struggles. That way our wages automatically rise to cover price increases. Decades ago workers won protections like this in many union contracts, but over the years the bosses have fought hard to get them eliminated.
High prices are forcing more working people to cut back on food and other groceries. The Capital Area Food Bank reported in mid-September that over a third of households in the Washington, D.C., area lack access to adequate food supplies. And growing numbers of those lining up for assistance there are seniors or former federal employees.
“A lot of our seniors say: ‘I have to make a decision. Do I want to eat or do I want to get my medicine?’” Pastor Oliver Carter, who runs No Limits Outreach Ministries, told the Post.
Living in a different world are the ruling capitalist families and their nouveau-riche compatriots. “New York’s Top .001 Percent Have Grown Even Richer,” headlined a Sept. 2 New York Times article. The average annual income for these 50 families was $600 million in 2024, up from $315 million in 2019. The top 1% took home more than a third of all the income in the city.