We’re all feeling the pinch at the pump and with rising food prices. But the Bureau of Labor Statistics says that inflation is only up 4.2% for the year. But the BLS says it is because while gas and prices have risen dramatically, the price of other goods are dropping.
But the goods which are dropping, are things like digital cameras, tv, etc which are items which are less frequently purchased and rarely compared year after year. Also the article suggests that people with larger families will feel higher inflation pressures because they consumer more food and gas typically.
Another problem is while 4.2% is not high for inflation, wages for everyone have stagnated. This makes the effect of rising prices harder on everyone. The reality is that many jobs are being outsourced abroad solely because of cheaper labor costs. So how can we ask for greater raises when we are fighting against lower costs abroad?
So inflation right now is running at around 4.2%. Which means my DH’s raises of these past two years of 3% were below inflation rates. Myself, I have gotten 3% raise as well (on a much lower amount). And means that our income from 3 years ago had more purchasing power than we do now. This might explain why we feel so tight and I’m sure we’re not the only ones. But perhaps we’re on the lower end of raises, but like I’ve said before. We’re just happy to have jobs!
5 responses so far ↓
1 john // Jun 22, 2008 at 5:08 pm
the thing about jobs right now, is that no one is really being fired. Unemployment is still really low.
2 Barb1954 // Jun 23, 2008 at 12:00 am
said by someone who still has a job!
Talk to someone whose company has relocated to another and is, therefore, unemployed (me) or whose industry is in trouble and their plant is closing (the GM plant in Janesville, WI, and many others across the U.S.) or whose company is directly affected by higher fuel prices (the airlines are grounding about 1,000 planes including my local airline, Midwest Airlines), and I think you’ll hear a different story. Unemployement figures are just a number until it happens to you!
3 cinzea // Jun 23, 2008 at 12:17 am
Inflation in America is really at 16%. And rising.
4 chris // Jun 23, 2008 at 12:46 am
Another factor that decreases net spendable wages besides lower than inflation wage increases is the increasing burden companies are placing on employees for benefits.
Health care costs increasingly are being passed on to the employee through higher premiums, higher deductibles or switching to plans that don’t offer the comprehensive coverage of previous plans.
More and more companies are doing away with fully funded retirement plans and now require the employee to contribute to a 401-k or similar plan if they want any company money for retirement. And some companies are lowering the 401-k match or doing away with it all together. So smart people will contribute more to offset that loss.
That doesn’t make companies bad, especially if they need to take such actions to remain in the marketplace.
The only point is those two areas have squeezed even more from the take home pay of employees and have decreased their purchasing power.
5 LivingAlmostLarge // Jun 23, 2008 at 1:44 am
First, unemployment is only for people looking for jobs. MANY people are past getting unemployment benefits and thus no longer counted in the figure. I know many people who have been “laid-off” recently. Quite a few have relocated for work, moving their families. Better a job than no job right?
Second, yes I agree with Chris there is a huge increase in health insurance premiums being shifted to the employee. I can’t complain because our is super affordable but it still went up from $32/pay period to $40/pay period, a net increase of 25% in 1 year. Our income did not go up proportionately. Granted it’s cheap, but still ouch.
Third, yes no pensions. Two of our friends working for larger companies mentioned they no longer have pensions. One is J and J and the other is Dupont. All pensions are frozen. I doubt $500/month in 30 years will be worth much.
So I am sure we’re not the only ones feeling “squeezed” though supposedly inflation is only 4.2%.
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