Washington, D.C. — Following reports that U.S. corporations are seeing their profit margins soar to the highest level in over 70 years, the American Economic Liberties Project released the following statement.

“The glaringly obvious takeaway from this new data is that market power is a key driver of rising prices,” said Sarah Miller, Executive Director of the American Economic Liberties Project. “Policymakers need to use this new information — which confirms what working families across the country know all too well — to attack concentrated corporate power immediately and aggressively across the board. That means levying excess profits taxes, ensuring big penalties for price-fixing, and resourcing enforcement agencies to prosecute price-gouging and other forms of corporate abuse. And it means banning large mergers, stock buybacks, and “payoffs for layoffs” to help build durable market power for working people and consumers and level the playing field for small businesses and entrepreneurs.”

“These are ideas that Americans across the ideological spectrum embrace,” Miller added. “Policymakers should wholeheartedly embrace them too.”

Bloomberg’s reporting indicates that as corporate profit margins reach highs not seen since 1950, including an economy wide 6.1% adjusted pretax profit increase in the April-to-June period, “companies overall have comfortably been able to pass on their rising cost of materials and labor to consumers.” In April, Economic Liberties released model legislation designed to respond to this price spiral by stopping large corporations from illegally colluding to raise prices or keep wages down.

Nearly every industry in the United States is controlled by a few dominant firms that can engage in coordinated price hikes and wage suppression without triggering obvious alarm among antitrust enforcers. These cartels are effective at keeping prices high and wages low. Indeed, the best modern scholarship shows that cartels raise prices by an average of 49% while a recent report from the U.S. Treasury Department found concentrated power has suppressed workers’ wages by roughly 20% on average, and by almost 30% for lower wage workers. These dominant firms are rarely held accountable; even very conservative scholars believe that antitrust enforcers catch only 20% to 30% of illegal cartels in the U.S.

To learn more, see “How Policymakers Can Stop Monopoly Price Hikes” here.

Learn more about Economic Liberties here. 

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.