The back-to-school shopping season is in full swing as parents eagerly anticipate schools reopening for full in-person learning. The excitement of picking out new backpacks and filling shopping carts with notebooks, colored folders and crayons may be tempered by the rising costs of those items. We can’t run from rising prices on household staples or fuel — or from buying those supplies children need for a successful school year. This added pressure and bite into the family budget is at least in part a result of policies coming out of Washington.
Last week, I took my rising fourth-grader back-to-school shopping and noticed the difference in prices on some backpack essentials compared to what I paid before the pandemic. I know I’m not alone. Parents nationwide are reporting price increases as they peruse the aisles of retailers or scroll online. One Texas mother remarked, “It’s kind of crazy just to see how the prices have gone up so exponentially.”
Shoppers are expected to spend not just more but record amounts on school and college supplies this year. According to the National Retail Federation, families are expected to spend nearly $60 (7.5 percent) more this year than last year on school items. The top three shopping categories: electronics, clothing and shoes. It’s not difficult to figure out why. After a year of virtual learning, children have outgrown their school wardrobes, and some schools are leaning into technology in the classroom. But it’s not just that people want to buy more; everything they are buying costs more.
Unfortunately, because of inflation, each dollar does not go as far as it did when parents went back-to-school shopping last year or in 2019. The Bureau of Labor Statistics (BLS) released monthly inflation data and found that consumer prices (excluding volatile fuel and food prices) rose 4.3 percent over the last 12 months. Prices for top back-to-school categories rose significantly as well: boys’ and girls’ apparel (up 2.6 percent and 5 percent, respectively), boys’ and girls’ shoes (up 3.6 percent), and electronics (up 3.6 percent). Even that first-day haircut will cost nearly 5 percent more this year than last year.
Clothing and crayons are not just more expensive because of the predictable rising demand around this time. Higher labor costs are driving inflation for all consumer goods and services. Employers are increasing wages to attract workers. Higher pay may sound good for those workers, but businesses must pass along those costs to consumers at higher prices. Those higher prices hit low-income families the most.
Labor costs are rising because businesses can’t find people who want to work. Today, there are a record 10.1 million unfilled jobs, despite over 8 million unemployed workers, many of whom are long-term unemployed. Workers are still choosing to sit out of the workforce. This is exacerbating a labor shortage that has affected some industries, such as manufacturing and construction, for years. The shortage of labor disrupts the supply chain. By slowing the production and delivery of raw materials (like wood for pencils) and finished goods, it drives up prices at each stage, including the finished product on the shelf.
As much as the White House and some lawmakers would like to argue otherwise, the generous $300 federal unemployment supplement and pandemic program contributed to the shortage of workers. About half of states have ended the benefits, forcing workers to resume their job searches, which will be better for those workers in the long run. To encourage workers’ transition back to work, many states implemented creative and substantial return-to-work incentives that will be a big financial boost for those workers. In addition, millions of families are receiving payments of up to $300 per child each month until the end of the year because of the expanded child tax credit. And there is no work condition to receive it.
It’s for the good of workers, consumers and our economy, that neither Congress nor the White House extends the generous federal unemployment bonus and programs. The administration recently said they would allow the benefits to expire, but they also clued states into how they could continue offering benefits and how Congress could make future benefit expansions automatic. The signal from Washington to sidelined workers seems to be that employment is not a priority and work is not important.
We know that work is critically important to men and women. It gives them a sense of purpose, meaning and value to society. We also know that long-term unemployment is associated with a host of negative outcomes including lower wellbeing among the workers, their families and their communities; more lost income; lower earnings once they obtain new jobs; and poorer health.
Consumers are now connecting the dots between generous government assistance, worker shortages and higher prices. Americans know that inflation drives up the cost of living and erodes their quality of life. Those who may earn more as wages rise, lose those gains to inflation. As a result, real earnings are actually falling now in contrast to before the pandemic when wages were rising but inflation remained low.
Inflation is an unwanted financial pressure on families this back-to-school season. More federal spending will only drive inflation higher and cancels out the help Washington claims to be offering. As students get back to school, it’s time we help workers get back to work as well.
Patrice Onwuka is director of the Center for Economic Opportunity at Independent Women’s Forum.