As the United States continues to confront the coronavirus pandemic and related supply chain challenges, prices — and inflation — are rising.
Conventional wisdom suggests that as the costs of goods and services increase, people are able to afford fewer things with the same paycheck. Inflation is the term used to quantify the rate at which consumer buying power changes.
The Bureau of Labor Statistics estimates that between August and September of 2021, the cost of goods and services that the average American buys (known as the consumer price index) increased by 5.4%. Suffice to say, many Americans did not receive a 5.4% pay raise to keep up with these rising costs.
being that part-time workers are not fully attached to the labor force so looking at more regular, full-time workers gives you a better idea of the underlying trend in the marketplace,” he tells CNBC Make It. “And the Census Bureau reports on an annual basis personal earnings for full-time year-round workers.”
He points out that many part-time workers are not counted in these estimations of wage growth. He also notes that the consumer price index is an attempt to capture what the average American buys and that this may not hold true for all individuals. For instance, gas prices have risen sharply in recent months, which impacts the pockets of Americans with cars much more than those without.
Kochhar’s most recent research suggests that when adjusted for inflation, the median wage of all workers has remained relatively unchanged around $20 per hour over the past several years.
“Consumer prices increased 1.4% from 2019 to 2020, compared with 2.3% from 2018 to 2019. This helped sustain higher earnings for workers in 2020,” he writes. “However, inflation has ticked up recently, with consumer prices registering an increase of 4.8% in the second quarter of 2021 compared with the second quarter of 2020. Thus, the earnings of workers have eroded in recent months.”
