Breaking the Bank: Eggs, Inflation, and the Unbearable Cost of LivingHow inflation is pushing inequality to new heights
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Eggs are EggspensiveThe cost of eggs is too high. Before the pandemic, the cost of a dozen eggs was $1.53 on average across the US. As of October 2024, the cost has more than doubled to $3.53. Even adjusting for inflation, the cost of eggs has gone up 50% in the last year. This one product seemed to be a rallying point for how expensive everyday goods had become in America (perhaps because Americans ate more eggs in this past year than they ever had before, at 279 per person per year). But certain regions in the US felt these rising costs more than others, and it might explain why some people’s views of the country are shifting. 8 of the 10 most expensive counties in America are major metropolitan areas. New York City. San Francisco. The DC area. You don’t need a data scientist to tell you that living in New York City is going to be more expensive than in Jackson, Mississippi. However, the Bureau of Economic Analysis just published this county level data mapped above for the first time ever, revealing what might be happening outside of our traditional views of the country.
New data and the view from MichiganThe new dataset looks at 3 categories of costs - housing, utilities, and goods and services. Goods include food prices by place and the average cost of a meal in that area. The researchers use a ‘basket of goods’ approach which basically looks like filling a giant shopping cart of groceries in every single county in America and figuring out how much the prices differ in each region (i.e. how expensive was this carton of milk, box of cereal, ground beef, in Mobile, Alabama vs. Anchorage, Alaska). The major categories of cost of living includes groceries, housing, education, childcare, and healthcare costs. We’ve done a survey of all of these in the past so today I’m just going to deep-dive into groceries and housing because they have become flashpoints in American politics. Leelanau County, Michigan has the lowest purchasing power of any county in America. Located at the pinky of the mitten of Michigan, this region of 22,000 residents is very difficult to get to, increasing transportation and import costs. These two factors are some of the most significant drivers of increased grocery costs across the US. Strangely enough, for all of the counties in Michigan north of Grand Rapids, Leelanau was one of only two to go for Kamala Harris in the 2024 presidential election. For many Trump-voting Americans, their purchasing power and the cost of living seemed to be the biggest factor behind their votes. Ty Wessell has been writing a column called ‘Invisible Leelanau’ for nearly a decade. Ty writes about people who are referred to as ALICE’s - Asset Limited, Income Constrained, Employed. The community has jobs, but 43% can’t afford a $1,000 emergency expense. Amidst the pristine blue lakes and expansive farms, young mothers and dads wait tables and repair cars to avoid slipping deeper into poverty. Cities swing RightIn the map above, we can see the cities have become far more expensive relative to changes in other parts of the US. This may explain why republicans saw double-digit gains in every major American city. 19 points in Miami-Dade County, 16 points in New York City, 14 points in Los Angeles County, 12 in Suffolk County (Boston), 11 points in Cook County (Chicago), 10 in Dallas County, and 9 in Wayne County (Detroit). Inflation, wages and the cost of groceries
Wages have grown faster than inflation on average over the last 14 years. However, during a brief 2-year period between 2021 and 2023, inflation spiked and that pain stuck with consumers for years. While the Federal Reserve and policymakers were able to bring that under control, the memory of it loomed large in Americans’ minds. This may be why 52% of Americans say they are financially worse off today than they were 4 years ago according to a recent Gallup Poll. They had apparently also forgotten about the tremendous wage growth during the pandemic.
But for low-income workers, those rising wages have not been sufficient. One of the most shocking statistics I have ever come across in this work is that the federal hourly minimum wage for workers who make tips is… $2.13. Before the pandemic, that could buy you a carton of eggs. But now, not so much. 43% of restaurant workers earn less than $30,000. When California increased the minimum wage for service workers in 2024, the day after the legislation was passed those same restaurants increased all the prices for their goods. This hurt those workers even more so because they typically rely on the cheaper fast foods at McDonalds, Chipotle, and Wendy's. Low-income families have been hit hardest by rising grocery prices. They spend 31% of their income on food, compared with 8% for wealthier families. Bill Gates has no idea what is happeningIf you’ve never seen this 2018 video of Bill Gates guessing the prices of regular supermarket groceries, it’s a must. It’s a fascinating snapshot into the disconnect that the ultra wealthy have from the cost of everyday goods. During a 1992 debate between George H. W. Bush and Bill Clinton, Bush had to admit that he had no idea what the price of milk was, a gaff that hurt his campaign for months. In the beginning, Ellen Degeneres explains that for every product he guesses correctly within a dollar, the audience will win a prize (applause from the audience), and if he guesses every price correctly, Ellen will pay off all of his children’s student loans. “No danger there,” Gates quips.  Corporate profits are not to blameOver the last 40 years, retail food prices had the largest increase that economists had ever observed. Prices rose 11% from 2021-2022. There is a strong debate about the role that corporate profits have played in this price increase. On one hand, operating profits of food and beverage retail stores rose from $14 billion in 2019 to $25 billion in 2023, a 79% increase. Two of the main drivers of this, according to researchers from the Federal Reserve, are rising commodity prices and people just buying more groceries. Commodity prices soared when supply chains with Ukraine and Russia were disrupted during the war, as both countries are among the largest wheat producers in the world. Grocery stores charged higher prices to respond to the rising costs of their inputs. At the same time, the pandemic created a groundswell of at-home chefs. People stopped eating out as much and learned to cook more. Instead of paying restaurants, they paid grocery stores. The number of customers shot up. But large corporate grocery stores aren’t taking advantage of geopolitical turmoil or the pandemic as we can see from their margins. Grocery store margins remained unchanged from 2019 to 2023. If grocery stores were making 1 cent per carton of eggs at a price of $1.53 before the pandemic, they were still only making 1 cent per carton of eggs at a price of $3.53 after the pandemic. Reports from the Federal Reserve and the White House Council of Economic Advisers found that even when margins did rise in some areas, they largely tracked overall inflation or weren’t meaningfully contributing to the overall rise in prices. Eggs won’t break the bank, but housing will
Housing is a much larger expense than groceries when it comes to cost of living, and this is really weighing on communities. 1 in 4 Americans spends more than 50% of their income on rent, despite the federal recommendation that no household spend more than 30% of their income on rent. 8 million people work multiple jobs and 400,000 work two full-time jobs, which still hardly covers the cost of a 2-bedroom in most states given the state minimum wage and the average rental cost. Groceries are an everyday pain, which can make rising prices feel bad. But eggs are unlikely to break the bank, especially since groceries are 13% of a person’s overall budget. The real culprit is housing. Housing unaffordability is both a legacy of COVID and a policy choice. When global supply chains seized up during the pandemic, housing construction plummeted and prices rose. Now that the US has brought more manufacturing onshore and opened up new trade channels, policy decisions to maintain single-family zoning, parking minimums, and insufficient affordable housing stock measures have still hampered a housing rebound. Renters have it the worst. Dennis Culhane, a professor of social policy at the University of Pennsylvania and specialist on housing spoke to us an shared, “Low income renters with severe rent burdens has reached record levels, affecting 8.5 million households. The problem is nationwide, but especially acute in areas like Seattle, Los Angeles, Denver, Miami and New York City.” The Path ForwardSeveral factors led to price increases which were largely outside of US public, private, or nonprofit sector control. The war in Russia and Ukraine. The COVID-19 pandemic. Supply chain issues like in the Suez Canal and US ports. We need to put more money into people’s pockets while bringing down the cost of groceries.
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