The Stop Community Food Centre has a problem. The Toronto food bank can’t keep up with the growing number of people arriving hungry at its doors and has been forced to claw back how much food it gives to each person.
The centre’s three locations currently serve about 400 meals a day—a 40 per cent increase from 2019. Through the pandemic, it allowed families to gather groceries twice a month, but they’ve been forced to change that practice.
“With food costs and an increase in new clients, this became harder and harder to maintain so now we are back to once-a-month access per household,” says Maria Rio, The Stop’s director of development and communications.
“This puts organizations in a place where we have to choose between serving more people in need, or the future sustainability of our programming.”
For poor workers and people on fixed incomes—especially income supports not indexed to inflation—price hikes have forced many to choose between food and rent.
Meanwhile, Canadian Centre for Policy Alternatives (CCPA) economist David Macdonald found that grocery stores “booked $7.3 billion in pre-tax profit in 2021.”
That’s “more than double what they were clearing the year before the pandemic,” Macdonald says.
“We are seeing more and more people turn to us for help due to COVID fallout, inflation, unaffordable housing, and stagnant social assistance rates and wages,” Rio explains.
62 per cent of The Stop’s visitors spend more than half their income on housing, and 67 per cent are on social assistance. Half of that latter group are on the Ontario Disability Support Program.
“There needs to be systemic public policy changes that would meaningfully address the issues people living in poverty experience,” Rio says. “Poverty isn’t inevitable. It’s a policy choice. With bills piling up, debt accumulating, and people being unable to make ends meet, Toronto is in a quickly deepening crisis.”
Central bank slacking or corporate profiteering?
A debate swirls around the source of inflationary pressures. On one side, Conservative leadership candidate Pierre Poilievre says the problem should be laid at the feet of the central bank. His campaign takes aim at Bank of Canada Governor Tiff Macklem, who Poilievre pledges to fire in light of Macklem’s delivery of “30-year-high inflation.”
“Justin Trudeau wanted to spend a fortune and couldn’t find the money,” Poilievre said in a recent campaign video. “So he had the central bank print it. More dollars chasing fewer goods bids up the price of all of those goods and makes your life more expensive.”
“That’s why you can’t afford gas, groceries, or—God forbid—even a house. It’s a transfer of wealth from the have-nots to the have-yachts.”
On Poilievre’s last point, left-wing economists will agree: we’re indeed seeing a massive transfer of wealth from the poor to the rich. But their explanations for the frenzy of inflation—and what’s to be done about it—couldn’t be more different.
For economists like Jim Stanford, director of the Centre for Future Work and a longtime union researcher, Poilievre’s solution to Canada’s inflationary woes is way off base. Responding to soaring inflation by imposing “monetary and fiscal austerity,” Stanford argues, will leave workers holding the bag for corporate profiteering.
Hikes to interest rates typically reduce business investment, increasing unemployment and decreasing the capacity for workers to fight for higher wages. Cuts to public spending, meanwhile, weaken the welfare net the working class depends on while attacking good public sector jobs. In this policy response, regular people—not the beneficiaries of high inflation—are enlisted to make sacrifices for the “greater good” of the economy.
“If we buy the right-wing argument that workers just have to put up and shut up and accept a decline in their living standards,” Stanford tells The Breach, “all we’re doing is facilitating a gigantic transfer of wealth from workers to the owners of the energy companies, the property developers, and the grocery store chains who’ve actually benefited from this.”
Stanford adds that the surge in inflation since mid-2021 is largely tied to the pandemic, and to the subsequent reopening of the economy.
“Most important have been disruptions in some global supply chains, such as semiconductors and autos, credit-fueled jumps in housing prices, and the oil price shock that has followed the invasion of Ukraine,” he says.
Some “demand-side” factors, such as increased household savings, have added some pressure as well.
But Stanford underscores that corporations are using the panic to boost their profit margins “above and beyond” what higher gas and supply chain costs would call for.
He says it’s “a sign corporations are ‘taking advantage’ of consumers,” but adds “that’s the whole point of capitalism: companies were invented to make the most profit possible for their owners, and that’s exactly what they are doing.”
In a recent talk that also featured Stanford, Canadian Union of Public Employees economist Angella MacEwan argued that grocery chains are key examples of this impulse in action.
“Low-income folks are having trouble making ends meet with the high price of food, but Loblaws saw their net earnings rise by 40 per cent in the latest quarter,” she said, adding “their profit margin was almost double. And at the same time that their profit margin doubled, they increased shareholders’ quarterly dividend.”
Of course, Loblaw isn’t the only one hiking prices. Every other major chain has squeezed their customers proportionately as well. The way prices quickly shot up across the board is because of tight corporate consolidation. Loblaws, Costco, Sobeys, Metro and Walmart represent over 60 per cent of retail market food sales.
“When one of them is increasing prices, that allows the other ones to as well,” MacEwan said.
These five companies control most of the market share in the grocery sector—a situation known in economics as an “oligopoly,” or more severely as a “cartel”—which insulates the big corporations from competitive pressure. In a more competitive market, companies might offer cheaper prices or higher wages.
But in an oligopolistic grocery market, the opposite has occurred. Instead of cutting prices, for example, grocery chains collaborated to fix the price of bread for 14 years. And instead of seeing permanent wage hikes, their workforces saw a $2-an-hour pandemic bonus cut—by all the companies, all in the same week.
Now, amidst the inflation frenzy, they’re moving in lockstep again to hike food prices, using “higher inputs” and “supply chain disruption” as cover.
Getting unaffordability under control
For the federal NDP, the CCPA, and other economists, an excess profits tax might be one tool when it comes to creating a more effective policy response to inflation. Historically, these taxes have been used during wartime to discourage war profiteering. They target companies whose profits have grown well in excess of what they would normally grow during a crisis—like a war or pandemic.
As the NDP proposes it, the tax would be a temporary measure levied against corporations like grocery stores or energy companies. The money would then help fund redistributive measures, such as social programs, to lessen the pandemic’s financial burden. It’s not an outlandish idea: Canada’s 2021 federal budget actually introduced an excess profits tax, if a modest one, on banks and insurance companies.
Some economists also argue for bigger interventions into the labour market. Sectoral bargaining and policies that ease unionization can make a lasting impact on workers’ finances by winning them a larger share of the pie. But these shifts will take time and effort to win—if they’re won at all—giving workers little reprieve from current soaring prices.
A more immediate response to inflation would be indexing all wages and income supports. Currently, social assistance—already meager in most provinces—is only indexed to inflation in Quebec, New Brunswick, and Yukon.
“Wages can and should be increased to keep up with inflation,” Stanford says. “That would protect the real incomes of workers, while the true causes of this inflation—supply chain issues, energy prices, housing costs—are addressed.”
Still, inflation is only one component of a growing unaffordability crisis: in addition to soaring gas and grocery prices, housing costs have run red-hot for a decade—something that Poilievre has made his hobby horse.
Although his policies, like contracting public spending and hiking interest rates, would hammer the “have-nots,” his programme is sure to resonate. Where other politicians only obliquely criticize the status quo, his campaign directly validates people’s palpable frustrations, channeling that anger toward specific institutions, bureaucrats, or politicians.
Poilievre’s populist messaging puts pressure on the NDP and labour movement to offer a comparable alternative to his programme—not just for addressing inflation, but the growing unaffordability of everyday life.