Moyo Studio/Getty Images
- Inflation is running higher than growth in wages.
- Unadjusted data shows US inflation was 9.1% in the year through June.
- At the same time, overall average hourly earnings in June had increased by a smaller 5.1% from last June.
While wages have been growing at a strong clip in the last year, inflation is yet again surpassing year-over-year growth in average hourly earnings.
Inflation climbed to the highest year-over-year rate since November 1981 in June. According to Consumer Price Index data from the Bureau of Labor Statistics, inflation rose by a non-seasonally-adjusted 9.1% in the year through June.
Even though average earnings have been rising in general based on data from the Bureau of Labor Statistics, these year-over-year raises have been below increases in the Consumer Price Index since the spring of 2021. However, as seen in the following chart comparing year-over-year growth in the Consumer Price Index and earnings, that wasn’t always the case.
One-year percent changes in average hourly earnings actually tended to be higher than that of the percent change from a year ago for the Consumer Price Index, meaning workers’ actual purchasing power was increasing. That has changed, and prices rising higher than wages indicates that real earnings are falling behind.
Taking a look at just the most recent month of data, average earnings for all total private employees was $32.08 an hour in June. That’s 5.1% higher than the $30.52 an hour in June 2021. However, inflation rose a seasonally adjusted 9.0% through the year in June. June data from the Bureau of Labor Statistics also shows real average hourly earnings fell 3.6% from the $11.26 an hour a year ago in June 2021.
This high inflation has been negatively impacting employees and employers alike. Small business owners and other employers have been figuring out whether they have to raise prices on their goods or services. They have been also deciding whether to raise salaries not only because of four-decade high inflation but because of staffing problems amid a labor shortage and the Great Resignation. And people are seeing rising prices from a year ago for different goods and services — from gas to various food items like cereal and bread.
Survey results highlighted in Joblist’s second quarter of 2022 report show that workers also say that pay gains haven’t been keeping up with soaring inflation.
“In our survey, we found that pay raises are common so far in 2022, but typically are not large enough to offset inflation,” Joblist wrote about its findings. “A large share of job seekers (41%) have already received a pay raise this year; however, only 28% of these received a raise that is higher than the roughly 8.5% inflation rate.”
In addition to some employers choosing to give pay raises, some workers are not waiting on their employers and deciding to work at multiple jobs, according to reporting from The Washington Post.
“There are people who want multiple jobs to make more money, and they find that opportunity when the labor market is stronger,” Nick Bunker, economic research director at Indeed Hiring Lab, told The Washington Post. “But I would say for many people, the urgency of finding more income or a second job or third job has intensified with inflation.”
Are you concerned that your pay isn’t keeping up with inflation? Are you getting a pay raise because of inflation? Are you a business having to make changes as a direct result of inflation? Contact this reporter at [email protected]