Wyoming state Sen. Troy McKeown, R-Gillette, doesn’t believe Vice President Kamala Harris’ call for a federal ban on “price gouging” for groceries is going to work.
Along with being a state legislator, McKeown is also a grocer. He owns Don’s Supermarket stores in Gillette and Wright, and said the worst thing Harris could do is get involved with regulating this industry more.
“She might come up with a plan to slow grocery store price increases, but if you don’t cut (government) spending you’re (consumers) going to spend it somewhere else,” he said.
In a news release earlier this month, the Harris campaign proclaimed, “To combat high grocery costs, VP Harris to call for first-ever federal ban on corporate price-gouging.”
The economic proposal, her first of the campaign, lacked many specific details.
“Many of the big food companies are seeing their highest profits in two decades,” Harris said in a speech earlier this month. “And while many grocery chains pass along these savings, others still aren’t.
“Look, I know most businesses are creating jobs, contributing to our economy and playing by the rules, but some are not, and that’s just not right. And we need to take action when that is the case.”
Much Opposition
Many Republicans have denounced the proposal as “communist,” and as former President Donald Trump put it, “SOVIET Style Price Controls,” warning that it would lead to federal price-setting in the marketplace.
The plan would likely be used during emergencies and would be modeled off dozens of existing state laws prohibiting price gouging, according to The New York Times. These are the types of laws that prevent stores from quadrupling the price of snow shovels right after a blizzard hits.
The proposal may be misdirected however, as grocery stores are historically known for low profit margins on the products they sell. Price increases can often be a response to other supply chain issues or problems related to other industries.
Inflation Factor
Rampant inflation has impacted nearly every industry in some way since the COVID-19 pandemic.
According to Forbes, grocery store prices are up 30% since 2019, while unit volumes are flat. What that means is consumers are spending more money while coming home with the same amount of groceries. When considering average median household income has dropped since 2019, that’s a serious hardship.
Even though beef unit volumes are down 14%, prices have gone up more than 50% in the past four years.
But growth of inflation has already fallen dramatically since the early days of President Joe Biden’s presidency, from 9% in mid-2022 to just under 3% this July.
McKeown views inflation as a hidden governmental tax.
“Every market the government has been involved in has witnessed ridiculous inflation,” he said. “And the ones they haven’t been involved with have normal inflation.”
At his stores, McKeown said profit margins usually range from 1% to 5%, but since the pandemic, it’s been on the lower end of that range. After paying his more than 40 employees, McKeown said there’s not usually much left.
“We’ve seen a recognizable drop in our margins and profits,” McKeown said. “There’s not much to give there.”
But some big box grocery stores did reap enormous profits in the years following the pandemic.
McKeown considers three of these corporate grocery stores — Albertsons, Walmart and Smith’s — his main competitors in Campbell County, and said he regularly checks what prices they are selling their products for.
The smaller size of his stores afford him and other independent owners the flexibility to keep prices as low as possible by stocking many American and Wyoming-made products.
Winners And Losers
McKeown has a more nuanced perspective and believes Harris’ solution won’t do anything to solve the real problems at hand. He believes the plan amounts to the government picking winners and losers based on who raises their prices more than others.
He takes a free market perspective to the situation and believes stores should price however they want if customers are willing to pay the costs.
“If they don’t want to pay they won’t. That’s the beauty of a free market,” he said.
Difficulties arise, however, when a small number of sellers work together to keep prices elevated.
Regulation
Reducing government regulation, McKeown believes, is the only way to truly reduce inflation and prices.
“I can drive 10 miles from my house and go get a cow and cut it up and put it on the shelf,” he said. “But I can’t do that right now.”
The Federal Meat Inspection Act requires that all meat sold commercially be inspected and passed to ensure that it is safe, wholesome, and properly labeled. The USDA Food Safety and Inspection Service is responsible for providing this inspection.
McKeown gave the example of a truck driver delivering goods to his store recently had to stop about 5-6 miles outside of Wright when the driver reached his maximum allowed driving distance for the day.
“He just had to wait,” McKeown said.
McKeown also said the decades-long reduction of domestic meat processing plants has also contributed to the rising grocery prices, allowing the few ones that still exist to keep their prices higher due to the decreased competition.
In a similar vein, he also noted how more domestic food produced in the U.S. is being exported out of the country at a much higher rate than in the past.
“That puts a lot of pressure on the food market,” McKeown said.
Reserving price caps for emergency situations, McKeown said, also doesn’t put him at ease.
“If the town is in an emergency situation, so am I,” he said. “You just want to transfer money from my account into everyone else's?”
Contact Leo Wolfson at leo@cowboystatedaily.com
Leo Wolfson can be reached at leo@cowboystatedaily.com.
