Wages lag behind inflation in the US

COVID-19 is not going anywhere. As the pandemic rages on, US workers remain concerned about the future of work and the economy.

According to a survey of more than 5,000 workers by the New York Times and Momentive, 35% said the jobs and economy were the most important issue, followed by healthcare (19%).

This is not surprising given that US inflation, as measured by the Consumer Price Index, grew by 6.8% in 2021, while wages only increased 4.8%.

Also, the New York Times/Momentive study found that only 17% of US workers’ wages kept pace with inflation last year.

While 57% said they had gotten a pay rise, 40% noted that this lagged behind inflation. In addition, 33% said they had received no raise and 8% took a pay cut in the past year.

Workers are worried about inflation

US employees are clearly concerned that the escalating pandemic and its impact on the economy could make their finances even tighter.

88% told the New York Times and Momentive that they were concerned about inflation; 60% were very concerned. These concerns were expressed across the different demographics (generation, race, gender and voting preference) surveyed.

37% said that inflationary rises were already having a major negative impact on their finances, while 44% said it was having a minor effect.

The respondents also discussed what they would do if inflation continued to increase. Some said they would buy less (57%) or buy cheaper versions of current products (37%), while others said they would work more hours or seek out additional employment (29%) or ask for a raise (11%).

While the survey did not offer the option that they would quit if their wages continued to lag behind inflation, 17% of respondents noted they would look for a new job offering a 5% rise, while 14% said they would move for better benefits.

Employers need to be aware of financial worries of their staff and the impact it might have on their future at that company.

The ‘Great Resignation’ isn’t going anywhere in 2022, so now is the time to think about wages, as well as benefits, and to reassure employees they will be able to pay their bills at the end of the month.