Kamala Harris’ first major policy proposal as the Democratic presidential nominee is a whopper – a proposed law outlawing “price gouging” by grocery stores.
Harris is right: we’re paying more at the grocery store these days. According to the Federal Reserve, food prices are up about 20 percent compared to when Harris became vice president.
But when looking for a culprit for rising food prices, economists suggest Harris should look in the mirror – the Biden-Harris administration’s overspending triggered this runaway inflation.
“When Biden took office, inflation was below the Federal Reserve’s 2% target, with prices rising a mere 1.4% over the prior 12 months,” says the Heritage Foundation’s E.J. Antoni. “After a year and a half of Biden’s runaway government spending and borrowing, prices were rising almost that fast in a single month, with annual inflation reaching 9.1% — 6.5 times the rate Biden inherited.”
“Blame Bidenomics for inflation,” say the researchers at Americans for Prosperity, “because Bidenomics spent and printed record amounts of money over the last four years.”
But there’s more to the story as we document in our new Pacific Research Institute book. The policies that Gov. Gavin Newsom calls “the California Way,” and which are inspiring the Harris policy agenda, are a central driver of grocery prices. Poor government policies, many of which originated in Sacramento, are adding up to higher prices at the checkout stand.
Take retail theft, for example. Keith Knopf, CEO of the Raley’s Companies, which operates more than 235 grocery stores in seven states, told a PRI audience at its 2023 policy conference that the company loses $60 million annually to retail theft.
“This is money that is not available to lower prices so people can afford more food … this is money for nothing,” he says.
Consider Proposition 12, the voter-approved initiative imposing minimum-space standards for pork, egg and veal production. According to U.S. Department of Agriculture economists, pork products affected by Prop. 12 have seen an average 20% price increase since July 2023. Pork loin prices are 41% higher than before the measure was implemented.
Meanwhile, Raley’s stores “lose a dollar now on a carton of eggs,” according to Knopf.
Thanks to a 2023 Supreme Court ruling, Prop. 12 is not only the law of the land, but pork, egg and veal producers nationwide are now subject to California’s mandate.
Then there are the state’s numerous green mandates that burden Californians with steep electricity and gas prices, both of which impact retail prices.
“Energy and the costs of energy is an input into every single thing,” Knopf says. “You can’t drive up the costs on energy and then expect prices to come down. It doesn’t work that way.”
Labor costs are another factor in inflated prices. California’s $16.50 per hour (and higher in some counties) minimum wage and the “hero pay” mandates forced on grocery stores during the pandemic are part of the overhead costs that, says California accountant Alec Kellzi, “inevitably trickle down to retail pricing on store shelves.”
Kellzi further noted that “stringent environmental regulations and dealing with recurring droughts that strain agricultural supply chains” – and are too often man-made in California – also contribute to our grocery bills.
Yet another factor is the Private Attorneys General Act, or PAGA, which “authorizes aggrieved employees to file lawsuits to recover civil penaltieson behalf of themselves, other employees” for Labor Code violations. Raley’s was hit by eight PAGA class-action lawsuits over the past 15 years.“They are serving the lawyers and they’re serving the state, it’s another form of a tax, another form of a few people making a lot of money, 60 percent of the settlements don’t go to the people that they claim are harmed,” Knopf says.
Thankfully, PAGA was just reformed by Newsom and lawmakers.
Finally, there’s the state’s misguided policies – we could list them among Kellzi’s “stringent environmental regulations” – that starve farmers of the water needed to grow the crops that feed the world, making California-grown agriculture scarcer and more expensive.
Federalizing grocery prices is no way to whip inflation. Doing so will only cause shortages, long lines at the register, and scorching price hikes that will emerge after controls are lifted.
Kerry Jackson and Tim Anaya are the co-authors of the new Pacific Research Institute book, The California Left Coast Survivor’s Guide. Learn more at www.leftcoastsurvivorsguide.com.
