By: Macy Dennon, Ashir Rao, Esha Bagora
Local News Editor, Public Relations Manager, Public Relations Manager
According to year-over-year price growth, 2022 has experienced the highest inflation rate in four decades at 9.1 percent. It has wreaked havoc on Americans, especially the less well-off, by drastically driving up prices. As a community it is imperative to recognize our privilege when it comes to economic conditions, while raising awareness about the demographic groups inflation affects. We should understand that inflation results from factors beyond the supply chain that have widespread effects on everyone in our community, and that individuals need to be compassionate to one another, and participate in voting and sustainable shopping.
It is not possible to explain inflation simply by supply and demand, regardless of what we learn in economics and history classes. Major contributors to the inflation crisis that individuals fail to address include the war in Ukraine and the pandemic, crises that continue to affect the Los Gatos community in many ways every day.
In February, Russia invaded Ukraine with intent to claim ownership of the country. Much of the Western world, including the US and the European Union, condemned Russia’s behavior in the war and levied intense embargoes and sanctions against Russia. This war has also created severe limits on oil trade. There has been a 40 percent increase in fuel prices in the US, with crude oil going from 76 dollars a barrel in December 2021 to 93 dollars per barrel in February.
COVID is also a contributor to inflation as it exacerbates existing difficulties in the supply chain. Additionally, as a result of the lockdown, many people lost their jobs, making money scarce and influencing individual spending habits. One anonymous LGHS student recounted that lay-offs “took a toll on [their] family.” The student explained how inflation played a role: “As we lost our income, everyday items started costing more and more. Inflation did not help our situation, to say the least.”
Despite price hikes, minimum hourly wages remained constant. An anonymous student mentioned, “It’s a little frustrating to see my paycheck be cut for taxes when I’m barely making money.” Junior Alix Kerebel, who works as a barista, echoed this sentiment, declaring, “ I can’t buy as much anymore. I’m mostly reliant on my parents, so it affected them a lot more than it affected me.”
Freshman Lukas Reef detailed, “I think the minimum wage should be leveled with the amount of inflation. So instead of having a 3 percent inflation increase, it would only be like 1.5 percent.” The federal minimum wage is currently not linked to inflation. In fact, according to Forbes Advisor, if the minimum wage was adjusted for inflation to what it was in 1968, it would be 12 dollars, and not the 7.25 dollars it is today. Therefore, the minimum wage worker is able to afford much less than before. Although the California minimum wage is $14, California is a more expensive state to live in, so that $14 has less purchasing power than in other states. Costs are especially high in the Bay Area, and Los Gatos is no exception.
Living in such a well-off community, there is a range in how fluctuating inflation impacts families. Many are not heavily affected, especially juxtaposed with residents of the cities surrounding us. The rising inflation has forced the Milpitas Unified School District to ask parents to rent out rooms in their houses to teachers who cannot afford to live in the community given their current salaries. In the last year, shelter, gas, and food prices have ju mped 6.8 percent in the Bay Area.
Both in Los Gatos and in other places, small businesses have taken a hit. Freshman Samantha Gruetter added, “I just started shopping and buying things myself. I never really experienced the economy before this, so I’m just getting familiar with the prices. I think that people should support less businesses like Amazon and shop from smaller, local places to regulate things more.” Smaller businesses tend to be disproportionately affected by inflation due to their smaller size and workforce. Supply-chain issues caused by inflation force small businesses to deal with increased operating costs, and thus have to increase prices, making their goods less accessible to all. According to the US Chamber of Commerce, 53 percent of small business owners cite inflation as their most costly challenge. Already operating on razor-thin margins, we must support small businesses over large, less affected corporations.
Inflation has also affected The Town of Los Gatos’ finances. It is estimated that Los Gatos will remain in debt for at least five years. A 10.25 percent salary increase for town employees and the police department has created this financial strain. The town plans to get themselves out of this financial hole by relying on a property tax levied against the top-earning businesses of Los Gatos. Council candidate Rob Moore also proposes to get “funding for [projects] from government grants… there’s a lot of money that we could go after that would fund some of these initiatives that we’re trying to [implement] without affecting the town budget.” This could allow the Los Gatos government to fill in the gap in finances caused by inflation.
With the upcoming midterm elections in November, staying informed, aware, and educated is more important than ever. Many LGHS seniors will have the opportunity to make a difference in people’s lives by voting. Educate yourself through reliable news sources and track causes of inflation through the monthly consumer price index report to make informed decisions. When it comes to what our generation does about rising inflation, the more information we learn and absorb, the better-informed decisions we will make about who to elect.
(Sources: CNBC, Wall Street Journal, Nextadvisor, Money.com, Investopedia, ABC7 News, UD Chamber of Commerce, Forbes Advisor, San Jose Spotlight)