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Wages are rising, but inflation may have given workers a 2% pay cut

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Workers saw their hourly pay in June jump at the fastest clip in more than a decade. Yet some of them saw those gains erased by high levels of inflation.

"Real wages" — a measure of income after accounting for the cost of goods and services people buy — fell by almost 2%, on average, last month compared with 2020. Senate Republicans said Wednesday that Americans were getting a pay cut as a result.

"The staples of American life are increasing exponentially," according to Sen. Tim Scott, R-S.C., who cited examples like higher prices for gas, laundry, airfare, moving costs, hotels, bacon and TVs.

The thrust of the argument — that inflation eats into rising wages — is true, according to economists. Still, there are many nuances, they said.

For one, whether a consumer got a pay cut or not depends on their individual earnings and the things they buy.

"If prices are growing faster than wages, then people are getting inflation-adjusted pay cuts," according to Michael Strain, director of economic policy studies at the American Enterprise Institute, a right-leaning think tank. "Ultimately, this varies dramatically for every individual."

Plus, inflation has been volatile and may prove temporary — meaning a reduction in buying power could be short-lived, economists said.

Inflation and wage growth
Average hourly earnings rose 3.6%, to $30.40, in June compared with the same month in 2020. That's the biggest spike since January 2009, according to data compiled by the Economic Policy Institute.

Meanwhile, the consumer price index, a measure of inflation, jumped 5.4% over the same period — the most since August 2008.

Together, this amounts to a 1.7% loss in buying power, on average, when factoring in seasonal adjustments, according to the Bureau of Labor Statistics.

"Inflation is a tax," said William Foster, a vice president at Moody's Investors Service. "That's the best way to think about it."

Inflation most impacts lower earners, who spend more of their average dollar on gas, food and other items that may be rising in price, Foster said. Wealthier individuals, who tend to hold more financial assets like stocks or homes, may be better able to offset the impact of inflation, he added.

But not everyone necessarily got a pay cut as a result. The 5.4% jump in annual inflation is an average of many items — and households aren't necessarily buying the ones that are getting much costlier.

For example, the metric includes prices for used cars and trucks, which are up about 45% from June 2020 — their largest change on record. That price shock wouldn't hit someone's wallet unless they bought a used car.

Similarly, gasoline prices are up 45%. That extra cost would be borne by drivers, though perhaps not city residents who ride public transit.

By comparison, food prices are up just 2.4% over the same time, lower than the broader inflation measure.

CaptQuint wrote: ↑Wed Jul 28, 2021 11:46 pm

CHEEZY17 wrote: ↑Wed Jul 28, 2021 11:43 pm Democrats: results of their policies hurt lower income people the hardest.
Also Democrats: meh

CaptQuint wrote: ↑Thu Jul 29, 2021 2:07 pm Biker will be in shortly to mock all these "poors" complaining about gas and chicken prices.

Charliesheen wrote: ↑Thu Jul 29, 2021 2:59 pm No thanks. But before unchecked and mostly illegal immigration a man could earn a solid living working in a meat processing plant.

Ditto for a lot of agricultural jobs.

CaptQuint wrote: ↑Thu Jul 29, 2021 3:04 pm The Arizona audit results will be released any day now and Trump will be reinstated and will sign an Executive Order eliminating Social Security, Medicare/Medicaid, the Public School system, Amber Alerts, Disability insurance, farm subsidies. And this will lower the price of chicken parts and we will truly be free.

Animal wrote: ↑Thu Jul 29, 2021 3:15 pm

CaptQuint wrote: ↑Thu Jul 29, 2021 3:04 pm The Arizona audit results will be released any day now and Trump will be reinstated and will sign an Executive Order eliminating Social Security, Medicare/Medicaid, the Public School system, Amber Alerts, Disability insurance, farm subsidies. And this will lower the price of chicken parts and we will truly be free.

is that what Q Anon is saying?

Animal wrote: ↑Thu Jul 29, 2021 3:15 pm

CaptQuint wrote: ↑Thu Jul 29, 2021 3:04 pm The Arizona audit results will be released any day now and Trump will be reinstated and will sign an Executive Order eliminating Social Security, Medicare/Medicaid, the Public School system, Amber Alerts, Disability insurance, farm subsidies. And this will lower the price of chicken parts and we will truly be free.

is that what Q Anon is saying?

CaptQuint wrote: ↑Thu Jul 29, 2021 3:16 pm

Animal wrote: ↑Thu Jul 29, 2021 3:15 pm

CaptQuint wrote: ↑Thu Jul 29, 2021 3:04 pm The Arizona audit results will be released any day now and Trump will be reinstated and will sign an Executive Order eliminating Social Security, Medicare/Medicaid, the Public School system, Amber Alerts, Disability insurance, farm subsidies. And this will lower the price of chicken parts and we will truly be free.

is that what Q Anon is saying?

Ask Biker to check his feed. He's the audit expert.

Animal wrote: ↑Thu Jul 29, 2021 3:23 pm

CaptQuint wrote: ↑Thu Jul 29, 2021 3:16 pm

Animal wrote: ↑Thu Jul 29, 2021 3:15 pm

CaptQuint wrote: ↑Thu Jul 29, 2021 3:04 pm The Arizona audit results will be released any day now and Trump will be reinstated and will sign an Executive Order eliminating Social Security, Medicare/Medicaid, the Public School system, Amber Alerts, Disability insurance, farm subsidies. And this will lower the price of chicken parts and we will truly be free.

is that what Q Anon is saying?

Ask Biker to check his feed. He's the audit expert.

i don't think we need biker to post Q Anon updates. Not when we have Marjorie Green running your account.

Biker wrote: ↑Tue Jul 20, 2021 7:59 pm OK, now this is fucking whacked.

Biker wrote: ↑Sun Jul 18, 2021 3:38 pm

CaptQuint wrote: ↑Sat Jul 17, 2021 8:54 pm

Covering their asses

CHEEZY17 wrote: ↑Fri Jul 30, 2021 11:59 am Joe Biden now claims he used to drive an 18 wheeler.

Animal wrote: ↑Thu Jul 29, 2021 3:14 pm

Charliesheen wrote: ↑Thu Jul 29, 2021 2:59 pm No thanks. But before unchecked and mostly illegal immigration a man could earn a solid living working in a meat processing plant.

Ditto for a lot of agricultural jobs.

the surprising thing to learn is that it wasn't the illegal immigration that ended that. it was the fact that fewer and fewer men would do the work required for those jobs so the demand for their jobs attracted immigrants.