As if June inflation data reaching a 41-year high wasn’t enough Wednesday, here’s some worse news: Americans’ earnings declined yet again last month when factoring in rising costs.
While the cost of living climbed 1.3% from May to June according to the Bureau of Labor Statistics, it said the inflation-adjusted average hourly earnings actually declined by 1% in the same time period.
Last week, the June jobs report showed the average hourly wage was $32.08 across all industries, a 0.3% month-over-month increase.
When the 0.3% monthly increase in average earnings takes the latest CPI data into account, wages fell by 1% on the month.
“When the 0.3% monthly increase in average earnings takes the latest CPI data into account, wages fell by 1% on the month.”
That’s a 3.6% contraction in real hourly earnings year-over-year, paired against a 9.1% annualized inflation rate in June.
Year-over-year decreases in real hourly earnings have been occurring since April 2021, according to the Bureau of Labor Statistics.
Harvard University economist Jason Furman, who chaired the White House’s Council of Economic Advisers for several years during the Obama administration, tweeted
Wednesday that it was “another brutal [Consumer Price Index] report.” And the earnings data fared no better in his view.
Raises are one obvious solution. Employers are trying to entice and keep workers with pay increases, but employers have to grapple with rising costs too.
Across all sectors, nominal hourly wages grew 5.1% on the year, according to the June jobs report. Compared to the last decade, that’s a significant number — but it’s no match for current inflation rates.
During June, leisure and hospitality jobs were the one place where hourly wage growth was keeping up with inflation. There, hourly pay grew by 9.1% on the year, exactly the same percentage increase as the CPI.
“During June, leisure and hospitality jobs were the one place where hourly wage growth was keeping up with inflation. ”
Here’s the catch: the rate of pay for restaurants, bars and hotel workers was $20.16, below the going rate for many jobs.
Some critics say corporate America has been greedy with profits, at the expense of consumers and rank and file workers. The upcoming earnings season could shed more light on the issue.
In the meantime, waning purchasing power is grinding people down. It just takes a trip to the grocery store to remember that. The latest inflation data showed grocery prices climbing 1% month over month and 12.2% year-over-year, marking the biggest increase since 1979.