Worker Pay Isnt Keeping Up With Inflation Once Again

Americans’ paychecks are losing ground to inflation.Again.Government data released this week showed that consumer prices rose 3.4 percent in July from a year earlier, outpacing a 3.2 percent increase in hourly earnings over the same period.That means that, for the fourth month in a row, Americans’ real wages — how many sandwiches, haircuts and gallons of gas they can buy with an hour’s pay — actually fell.Such declines are unusual.

In the years before the coronavirus pandemic, real wage growth sped up and slowed down with the ebbs and flows of the economy.But pay never fell outright for more than a month or two at a time.Then came the pandemic and the ensuing surge in prices, which led to the sharpest decline in inflation-adjusted wages since the 1980s.

From February 2021 to June 2022, the buying power of the average American’s paycheck fell more than 4 percent.The latest shock, driven by the jump in energy prices tied to the war with Iran, hasn’t been nearly as severe.But coming on the heels of the earlier decline in pay — and at a time when affordability and the cost of living remain top of mind for many voters — it has sent measures of consumer sentiment tumbling.“The real hourly wage is absolutely the fundamental building block of working Americans’ living standards,” said Jared Bernstein, an economist at the Stanford Institute for Economic Policy Research.

“When it’s falling in real terms, that’s a huge problem for folks who are already stressed by affordability concerns.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access.If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe....