Burrito Economics, Robert Reich
June 15, 2021.
House Republicans are blaming Democrats for the rise in Chipotle burrito prices. You heard me right. The National Republican Congressional Committee issued a statement last week claiming that Chipotle’s recent decision to raise prices on their burritos and other menu products by about 4% was caused by Democrats. “Democrats’ socialist stimulus bill caused a labor shortage and now burrito lovers everywhere are footing the bill,” according to NRCC spokesperson Mike Berg. Republicans have finally found an issue to run on in the 2022 midterm elections. Apparently, Dr. Seuss and Mr. Potato Head weren’t getting enough traction.
The Republican’s tortured logic is that the unemployment benefits in the American Survival Act have caused workers to stay home rather than seek employment, resulting in labor shortages that have forced employers like Chipotle to increase wages, which has required them to raise their prices. Hence, Chipotle’s more expensive burrito. This isn’t just loony economics. It’s dangerously loony economics because it might be believed, leading to all sorts to stupid public policies. Start with the notion that $300 per week in federal unemployment benefits is keeping Americans from working. Since fewer than 30% of jobless workers qualify for state unemployment benefits, the claim is that legions of workers have chosen to become couch potatoes and collect $15,000 a year rather than get a job.
I challenge one Republican lawmaker to live on $15,000 a year. In fact, evidence suggests that workers are holding back from reentering the job market because they don’t have childcare or are still concerned about their health during the pandemic. Besides, if employers want additional workers, they can do what they necessarily do for anything they want more of but can’t obtain at its current price – pay more. It’s called capitalism. Republicans should bone up on it. When Chipotle wanted to attract more workers, it raised its average wage to $15 an hour. That comes to around $30,000 a year per worker – still too little to live on but double the federal unemployment benefit.
Oh, and there’s no reason to suppose this wage hike forced Chipotle to raise the prices of its burritos. The company had other options. Chipotle’s executives are among the best paid in America. So it would have been possible for Chipotle to avoid raising its burrito prices by – dare I say? – paying its executives less. But Chipotle decided otherwise. By the way, I keep hearing Republican lawmakers say the GOP is the “party of the working class.” If that’s so, the Republican Party ought to celebrate when hourly workers get a raise instead of howling about it. Everyone ought to celebrate when those at the bottom get higher wages.
The typical American worker hasn’t had a real raise in 4 decades. Income inequality is out of control. Wealth inequality is into the stratosphere (where Jeff Bezos is heading, apparently)...
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