Price levels between August 2021 and August 2022 rose 8.3%, according to data from the Bureau of Labor Statistics. The reading marked a decline from the 8.5% rate seen in July 2022 and the 9.1% rate seen in June 2022, although core inflation — which factors out food and energy prices — continued to increase.
The poll from Bankrate found that 48% of American workers enjoyed a pay raise in the past year while 21% found a higher-paying job, including 8% who received both. Meanwhile, 39% of workers received neither — the lowest level in any prior iteration of the survey.
Inflation nevertheless appears to be outpacing earnings. Only 39% of respondents who received a raise or a better-paying job reported income that allowed them to adequately cope with rising consumer prices. A scant 33% of overall workers reported that their income has either exceeded or kept pace with inflation over the past year.
“Inflation that has run at the highest levels in more than four decades has stripped buying power away from households of all walks of life,” Bankrate chief financial analyst Greg McBride remarked. “Even half of those receiving a pay raise, getting a promotion, or taking on new responsibilities said that higher pay falls short of the increase in household expenses.”
Although nominal wages have continued to rise between August 2021 and August 2022, real average hourly earnings — which consider the impact of inflation — decreased 2.8% over the same period, according to another report from the Bureau of Labor Statistics. A decrease in the average workweek of 0.6% implied a 3.4% overall decline in real average weekly earnings.
Disregarding the negative aspects of the most recent inflation data, President Joe Biden claimed victory on Tuesday with respect to the “essentially flat” prices.
“It will take more time and resolve to bring inflation down, which is why we passed the Inflation Reduction Act to lower the cost of healthcare, prescription drugs and energy,” he said in a statement. “And my economic plan is showing that, as we bring prices down, we are creating good paying jobs and bringing manufacturing back to America.”
Former Treasury Secretary and National Economic Council Director Lawrence Summers, however, warned that the nation still has a “serious inflation problem.” The economist noted on social media that “core inflation is higher this month than for the quarter, higher this quarter than last quarter, higher this half of the year than the previous one, and higher last year than the previous one.”
Joblessness has remained low amid the falling wages and has been considered a bright spot in an otherwise troubled economy. The unemployment rate increased to 3.7% in August 2022 even as more Americans returned to work.
However, labor force participation rates have continued to lag over the past two years — worsening a decades-long trend of low engagement in the job market. The metric dropped from 63.4% in February 2020 to 60.2% in April 2020 alone amid government lockdowns and business closures, according to data from the Bureau of Labor Statistics. As of August 2022, labor force participation had climbed to 62.4%.