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NextGen Magazine

 
 

Wage Gains Eaten Up By Inflation

By:
Chris Gaetano
Published Date:
Jul 10, 2018
Inflation

While June saw an 2.7 percent growth in hourly wages from last year, the gain was largely offset by inflation, which was reported in May to have increased by 2.8 percent, according to the New York Times. This, noted the Times, is despite strong demand for labor that economists believe should eventually translate into higher wages.

This phenomena was earlier pointed out by Fed Chair Jerome Powell, who admitted he found it puzzling that economy-wide gains have not translated into even gains for workers across the U.S. Other research has said that the increase in low-wage service jobs, as well as the increasingly large presence of gig economy work has played a large role in this situation. 

Another thing to note, though, is that while overall inflation grew by 2.8 percent, the prices of many specific goods and services have grown even higher. Both healthcare prices and college tuition have outpaced inflation several times in the past and are doing so again in the present. Home prices, too, are rising faster than inflation. Beyond these big ticket items, though, many more mundane expenses are also rising faster than the economy-wide rate. Cable TV costs, for example, are rising faster than inflation, as are water bills, retail drug prices, and construction materials