Chris Lange, FISM News
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Inflation is being blamed for the biggest pay cut American workers have faced in a quarter century, according to newly released wage and price data published by the Federal Reserve Bank of Dallas.
“While the past 25 years have witnessed episodes that show either a greater incidence or larger magnitude of real wage declines, the current time period is unparalleled in terms of the challenge employed workers face,” the Federal Reserve Bank of Dallas said in a press release about the data, calling the wage decline “unparalleled.”
The report confirms what many of the nation’s top economists have been saying for months: inflation is far outpacing wage growth in the U.S.
“We find that a majority of employed workers’ real (inflation-adjusted) wages have failed to keep up with inflation in the past year,” the bank continued in its report. “For these workers, the median decline in real wages is a little more than 8.5 percent. Taken together, these outcomes appear to be the most severe faced by employed workers over the past 25 years.”
According to the report, more than half of American workers experienced wage decreases over the last 12 months.
The bank noted that 53.4% of workers experienced “negative real wage growth” in the second quarter of 2022, showing a median decline of 8.6%. By comparison, the average median decline in the preceding 25 years was 6.5%, during which real wage declines fell between 5.7% and 6.5%.
The report references the Bureau of Labor Statistics August Consumer Price Index, which has soared to its highest rate in four decades under the Biden administration, exceeding 8% in the past 12 months, with some consumer goods reflecting even larger increases.
Grocery prices jumped 13.5% between August 2021 and August 2022, marking the largest 12-month increase since 1979. Energy costs rose 23.8% in the same period. In fact, price increases were seen in every single category of consumer goods.
The bank noted that even workers who received a pay raise this year did not bring in enough income to offset inflationary price hikes.
“Despite the stronger wage growth due to the tightness of the labor market, a majority of workers are finding their wages falling even further behind inflation,” the report said.
FISM recently reported that American workers have lost about $4,200 in annual earnings when factoring in historic inflation and rising interest rates, since Biden took office, based on an assessment from The Heritage Foundation.
These numbers are not only bad news for Americans but likely for Democrats as well. A Monmouth University survey released this week shows that 82% of Americans say the economy and inflation is their top concern heading into the midterm elections next month.
This article was partially informed by a report by The Center Square.