Majority of U.S. employees say their income is not keeping pace with inflation
A new study reveals that the majority of U.S. employees struggle to afford basic costs as persistently rising inflation eats away at wage increases.
Despite pay growth reaching its greatest level in years during the epidemic, workers report that their incomes are not keeping up with the highest inflation in decades. According to Bankrate, 55% of respondents claimed their earnings had not kept pace with the growing cost of basic goods and services. This includes half of all Americans who received raises.
“It’s symptomatic of a high-inflation environment. The labor market has been very strong, the pace of wage growth is the best it’s been in about 20 years, but inflation is at the highest in 40 years,” Greg McBride, chief financial analyst for Bankrate, told CBS MoneyWatch. “So a lot of households are seeing pay raises that in normal times would look good but, but instead they are being swamped by higher expenses.”
Just under half of working Americans said they got pay raises in the past year. However, these raises have not been enough to keep up with rising household costs.
The 39% of employees who told Bankrate they had not gotten increases are finding it even more difficult to keep up with the growing cost of food and other commodities.
“Inflation is impacting everybody. Those who didn’t see a pay raise have seen even further squeezing of their buying power,” McBride said.
Only one-third of working Americans said that their income had matched or surpassed the inflation-induced rise in household costs. The study was conducted between August 17 and August 19 by YouGov.com, which surveyed around 2,500 individuals.
According to statistics released on Tuesday by the Bureau of Labor Statistics, consumer prices in the United States increased 8.3% in August compared to the same month last year, according to statistics. The cost of food, housing, and healthcare continued to grow. This rate dipped slightly from 8.5% in the previous month, but was above what economists had predicted.
Stunted purchasing power
It is not a surprise that increasing costs have impacted low-income employees the most. An investigation by the left-leaning Economic Policy Institute demonstrates that the federal minimum wage of $7.25 currently buys less than at any time during the preceding 66 years. The current value of the minimum wage in real dollars is the lowest it has been since February 1956, when the lowest wage in the United States was 75 cents — the equivalent of $7.19 in June 2022 dollars.
According to Bankrate, performance-based increases are the most prevalent type of recent raise for employees, followed by cost-of-living increases. Promotions or pay increases for assuming more duties were the least prevalent.
“Cost-of-living raises are the exception, rather than the rule,” McBride said.
According to a separate study from Salary.com, a supplier of pay tools and analytics, companies intend to provide employees with an average yearly rise of 4% in 2015, while many Americans reduce their spending and take on second jobs to deal with rising prices. This is about equivalent to the median wage increase received by workers in 2022.
“Inflation is impacting everybody. Businesses are facing higher costs, too, so their ability to increase pay for workers is dependent upon their ability to grow revenue at a faster pace than expenses,” McBride said. “The economy is slowing, and particularly for smaller businesses times are tight and getting tighter.”
