The Fight Over Affordability

The Fight Over Affordability The Fight Over Affordability We’re living in a period of excess business pricing power, not overbearing workers. “Affordability” is the primary rallying cry of American politics today, as households struggle with the increasing price of food, housing, and energy. The rising cost of living is not new but has been made worse after years of inflation that began in the wake of the pandemic and hit low-income households hardest, outpacing wage gains for many. While most politicians say that they want to help Americans afford their lives, what really matters is how. Affordability is a malleable term: Its use covers many competing agendas even within political parties, including substantively regressive ones that threaten working people. As we seek solutions that systematically help all people meet their needs, we can learn from history. When the United States last faced a sustained affordability crisis in the 1970s, important segments of both parties blamed working people and specifically unions for spiraling price increases, initiating a systematic effort to weaken labor power to restore price stability. While inflation cooled by the mid-1980s, the Federal Reserve triggered a deep recession and helped transform the country’s political economy into one more favorable to capital and hostile to working people. Certain policymakers in the Trump administration and commentators associated with the so-called Abundance movement are again calling for affordability on the backs of workers. But instead of further slashing wages and making work more precarious and unsafe, we must target the oligarchs in the U.S. economy: the executives and financiers who control corporations and raise prices for profit. Our affordability crisis is not due to pampered workers, but corporate power. Understood in this way, a real affordability agenda unites stronger antitrust and other forms of business regulation, direct public provisioning of necessities, and policies that raise wages. In the mid-1970s, an oil shock and recession prompted a period of high inflation and unemployment, or “stagflation,” that shook the U.S. political-economic consensus. The American flavor of Keynesianism that had ushered in economic growth and security in the postwar period had ready fixes for demand-driven unemployment or inflation, but it appeared to be out of ideas for dealing with them in combination. A pernicious narrative filled the void, as corporations and a new generation of economists in the Carter administration blamed stagflation on unionized workers. The logic was that labor sought aggressive wage and benefit increases in collective bargaining that contributed to higher prices. This in turn prompted additional wage demands from workers and motivated corporations to raise prices to maintain profits, perpetuating a “wage-price spiral.” For nonunionized workers without collectively bargained cost-of-living adjustments, this dynamic meant higher prices without higher wages. While expanding unions to cover more workers outside the industrial North and Midwest was one potential solution to this problem, leading officials in the Carter administration believed that breaking the labor movement to bring the wages of union workers down to that of their nonunion peers was the right policy. In 1978, Charles Schultze, chairman of Carter’s Council of Economic Advisors, encouraged businesses to tolerate strikes instead of accepting unions’ demands for wage increases. The anti-inflation program of the late 1970s had both macroeconomic and microeconomic prongs. At the macroeconomic level, Federal Reserve Chairman Paul Volcker sought to drive down aggregate demand in the American economy with a dramatic increase in interest rates. For prospective homeowners, the average rate for a thirty-year fixed-rate mortgage increased from 11 percent in the summer of 1979 to more than 18 percent in November 1981. Meanwhile, at the microeconomic level, the Carter administration and Congress worked in concert to dismantle public regulation in industries like airlines, railroads, and trucking. Economist Alfred Kahn, whom Carter appointed to lead the Civil Aeronautics Board, was unequivocal that his target was powerful unions like the Teamsters. As part of the New Deal, the federal government had enacted rate regulation and entry and exit restrictions for transportation and other key sectors in an effort to balance consumer interests and business viability. In the 1960s and 1970s, federal lawmakers and regulators assailed these arrangements, in part for unduly enriching regulated firms and their employees to the detriment of the public. The public justification for this deregulation was to help consumers. While inflation did eventually come down, this approach had devastating effects on working people in both the near and long term. The Federal Reserve’s rate hikes depressed consumption and investment and triggered the worst recession since the Great Depression. Sectors like construction and manufacturing in particular were badly hurt, generating popular outrage against Volcker’s Fed. Unemployment soared from around 6 percent, when Volcker took office in the summer of 1979 to more than 10 percent by the end of 1982. Among other ill effects, high interest rates strengthened the U.S. dollar and undermined the competitiveness of American exports around the world, accelerating the relocation of manufacturing jobs to foreign countries. The consequences of deregulation were especially severe for truckers. Taking advantage of the market stability delivered by New Deal regulation, the Teamsters had organized most interstate truck drivers. By the late 1950s, they represented an overwhelming majority of truck drivers and, as historian Steve Viscelli has written, trucking used to be “one of the best blue-collar jobs in the US.” Deregulation, however, unleashed destructive competition, fulfilling Kahn’s desire to tame the Teamsters and turning much of the industry into what economist Michael H. Belzer calls “sweatshops on wheels.” With the abolition of the regulatory system that had helped deliver universal service, carriers engaged in frenzied rate competition. Loosening price discrimination rules also allowed large retail and manufacturing customers to pressure truckers for special discounts. Carriers competed by cutting workers’ pay and converting much of their workforce from employees to independent contractors. Truck driving became largely nonunion, poorly paid, and precarious. As a result, turnover is notoriously high, with around 50 percent of new drivers leaving within twelve months of joining truckload carriers. While trucking was an extreme case, similar stories played out in airlines and construction. The new paradigm exacerbated inequality and unaffordability in the long run, as workers lost the ability to secure fair wages and corporations accumulated great power. High-ranking members of the Trump administration and commentators associated with the Abundance movement again believe we should deliver affordability by making jobs worse for a portion of American labor. This is despite the multidecade stagnation in real wages: Prices for healthcare, childcare, food, and housing have all risen over 60 percent since the year 2000, while wage growth has not kept pace with increases in productivity since 1980. Workers’ share of economic output is at its lowest since the Bureau of Labor Statistics started tracking it. Union density, meanwhile, has declined from 25 percent in 1975 to only 10 percent in 2025, including less than 6 percent in the private sector. In the 1970s, Kahn could plausibly accuse the Teamsters of being too powerful because they were, as Dan La Botz has observed, “a genuine continent-spanning industrial union that conducted national bargaining for entire transportation industries.” That type of labor strength, however, is a distant memory after decades of anti-worker law and policy. Today, the building trades are again a common target. Their pay and work rules are blamed for thwarting expansions of infrastructure and housing. In their 2025 book Abundance, Ezra Klein and Derek Thompson suggest that construction safety rules are too strict and are responsible for the sector’s stagnant productivity. These occupations, however, remain among the most dangerous in the United States. Between 2020 and 2024, at least 700 construction workers were killed each year on the job. In the name of lowering food prices, the Trump administration has also targeted some of the most vulnerable and underpaid workers in the country: farmworkers and meatpackers. By their own admission, the Trump administration’s immigration crackdowns threaten farmworkers, food production, and food prices. Their solution, however, is to let farmers pay lower wages to guest workers on H-2A visas: Last October, the administration drastically changed the way the Department of Labor calculates minimum wages for H-2A workers, which could cut wages by as much as 26 to 32 percent. Last week, a federal judge determined that this interim rule was unlawful and ordered the Department of Labor to rewrite it without vacating the rule. The Trump administration will likely appeal this decision. In meatpacking, the Trump administration also wants to lower production costs by increasing already dangerous line processing speeds. Secretary of Agriculture Brooke Rollins asserted that lifting these limits will help “keep groceries more affordable for every household.” Yet USDA-sponsored studies found that increasing the number of animals any worker must process in a minute, or their “piece rate,” will increase their already high risk of injury. Finally, the public sector, an area of relative strength for labor organization, is also facing attacks from Abundance-aligned commentators like law professor Nicholas Bagley and former Obama and Biden administration official Robert Gordon. Unions representing public employees are accused of prioritizing their members’ parochial interests over high-quality, affordable public services. This simple story, however, is grossly incomplete and misleading. As a basic matter, public-sector workers, on average, earn lower total compensation than their private-sector counterparts. Unionized public-sector work has mitigated longstanding inequalities in this country. Public employment helped create a Black middle class, and public sector unions have shrunk racial and gender wage gaps. Critically, the interests of public-sector unions and the public are often aligned: Public-sector unions want fully funded public services with fair wages and benefits, which can promote high-quality services by creating a loyal, committed workforce. A lower wage, high turnover workforce, as in trucking, entails significant hiring and training costs and can undermine the delivery of education, transportation, and other services. Under the “bargaining for the common good” framework, public sector unions have fought for lower classroom sizes and increased transit investment that promote employment for members and help the public. They have also been a bulwark for existing state capacity. As the Trump administration seeks to destroy certain parts of federal capacity, the National Treasury Employees Union and American Federation of Government Employees have also led the defense of agencies like the Consumer Financial Protection Bureau. Attacks on workers undermine the purchasing power of some families and ignore the root cause of rising prices and stagnant wages. The reality is we’re living in a period of excess business pricing power, not overbearing workers. For many essentials, corporations’ relentless pursuit of short-term profits conflicts with the public interest and makes life unaffordable. Antitrust enforcers in Republican and Democratic administrations alike have taken a mostly hands-off approach to stopping mergers and acquisitions. They have allowed a handful of dominant corporations to concentrate control over critical food and farm industries, resulting in price-fixing conspiracies and brittle supply chains, whose disruptions food giants abuse to increase their profits and raise prices even higher. In the meat industry, corporations have paid hundreds of millions to settle lawsuits alleging that they shared detailed, sensitive data about their pricing and production plans to restrict supply and raise prices with the help of a data-aggregating consultant, Agri Stats. In the egg industry, the Department of Justice and seventeen states recently alleged that egg giants manipulated a price-index tied to most conventional contracts to inflate egg prices from 2022 to 2025. In electricity, weakly regulated investor-owned utilities regularly request and obtain unwarranted rate increases, systematically granting huge windfalls to owners of safe utility stocks. On top of this profiteering, utilities fail to build necessary infrastructure, like long-distance transmission lines, when it could threaten their market power. Worse, they act collectively through regional transmission organizations to protect lucrative market segmentation. In housing markets, landlords have been accused of conspiring to keep units empty and make more money through collectively higher rent with the guidance of software firm RealPage. Private equity firms purchase single-family homes and use bait-and-switch pricing tactics and skimp on property maintenance to boost revenues and cut costs. Business inaction also thwarts housing construction: Homebuilders hold onto undeveloped land when they do not project strong rent growth and sufficient profits. Accordingly, liberalizing land-use controls, in practice, has not necessarily delivered major augmentation of the housing stock. To tame corporate greed and deliver affordability, lawmakers and regulators should adopt the three-legged stool of public regulation, public investment, and raising labor income. First, regulation of business practices is essential for taming corporate power. Strong anti-cartel and anti-merger enforcement can check businesses’ pricing power and prevent them from enhancing market control. Vigorous prosecution of accused cartel managers like RealPage and Agri Stats, for instance, is critical to deter modern day collusion. Considering the high level of concentration among agricultural processors, states should not only prevent further consolidation but seek to unwind previous mergers. Stronger direct regulation of the prices of necessities is also important. Legislatures should increase resources for public service commissions and force them to exercise their full range of powers. Municipalities and states should also enact rent stabilization laws. Well-designed measures can protect tenants from abrupt rent hikes, promote housing stability, and tamp down on speculation in real estate, while also permitting landlords to make reasonable profits. Second, the public sector should directly supply and expand the provision of essential goods and services. To complement stricter public regulation in energy, lawmakers should empower communities that want to take over and run investor-owned utilities as democratic public agencies. And instead of trying to cajole corporations to build through assorted subsidies, governments can directly expand clean energy capacity and the housing stock, much like the New Deal state did. For instance, in 2023, the New York State Legislature authorized the state-owned New York Power Authority to build and operate large-scale renewable energy projects. In addition to augmenting the provision of necessities, such public market participation can also impose competitive discipline on private-sector rivals. Finally, the income side of the affordability equation cannot be neglected. Cheaper goods and services do not help those without the means to purchase them. Most pressingly, direct fiscal support is necessary for households with inadequate income to buy necessities. The Supplemental Nutrition Assistance Program (SNAP) is an excellent example of successful demand-side support that reduces hunger and poverty and improves health outcomes. Unfortunately, Trump’s One Big Beautiful Bill lowered average benefits, added more onerous work requirements for recipients, and forced states to bear more programmatic costs, which together will shrink federal SNAP funding by 20 percent over the next decade, the largest cut in the history of the program. Similarly, the Low Income Home Energy Assistance Program and Section 8 vouchers provide federal funds to disadvantaged households to purchase energy and rent housing. This widespread deficiency in purchasing power underscores a structural problem in the United States—low and volatile incomes. Tens of millions do not make enough at work and cannot get by without direct public assistance or, worse, predatory credit like payday and title loans. A genuine affordability agenda must focus on labor, and include raising the minimum wage and removing barriers to union organizing. To be sure, simulating demand can contribute to inflation in sectors like housing where supply can be limited. This risk shows that demand-side support is not sufficient, and must be paired with stronger public regulation of corporations and public provisioning of basic needs. In Pocketbook Politics: Economic Citizenship in Twentieth-Century America, historian Meg Jacobs examined how unionized workers, often in partnership with their spouses, once fought for increased household purchasing power through both fair wages and fair prices. They understood that work and consumption operated in tandem. Applying these workers’ wisdom, we should do better than attempt to deliver cheap goods and services by sacrificing the purchasing power of one segment of the working class. As always, tradeoffs are inescapable. That is no less true of what we propose. A universally affordable future will require the politically difficult but urgent work of reining in the oligarchs. Claire Kelloway is the food program manager at the Open Markets Institute. Sandeep Vaheesan is the legal director at the Open Markets Institute and the author of the book Democracy in Power: A History of Electrification in the United States.