wage growth vs inflation ( Has united states wage growth kept up with inflation? )


Consumer prices continued to rise in May despite the Fed’s most aggressive interest rate increase since 2000, fueling concerns that inflation may be out of control. The Consumer Price Index for All Urban Consumers (CPI-U) rose 8.6% over the previous 12 months prior to seasonal adjustment, according to the U.S. Bureau of Labor Statistics, which is the highest figure since December 1981.

Before Russia invaded Ukraine, supply restrictions caused by COVID and robust consumer spending, which was aided in part by hefty stimulus cheques, had already increased pricing pressure. An inflation concern has become a global catastrophe as a result of the war’s significant influence on gasoline and food costs.

Inflation has now been exceeding nominal wage growth for 14 months in a row, as seen in the following figure, which means that despite nominal salary increase, Americans can now afford less than they did a year ago. Over the preceding 12 months, average hourly wages increased by 5.2 percent, from $30.36 to $31.95; however, consumer prices rose by an annualized 8.5 percent, which led to a three percent fall in real hourly earnings.

It is unsurprising that inflation is at the top of many Americans’ list of worries because, as anyone who has ever taken a pay reduction knows, there are few things more discouraging than putting in the same amount of labor for less money.

Wage Growth ( Salary ) vs inflation

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