When it appeared the threat of the COVID-19 pandemic was starting to wane, the economy opened up and wages rose as demand for workers increased. In fact, there was a record high number of jobs available, and the competitive labor market forced companies to pay more in order to attract workers. As a result, between March and June of 2021, there was a 2.8% increase in compensation.
This seems like good news. But the increase in compensation does not adjust for inflation. And despite the fact that wages are rising, inflation is outpacing wage growth. In fact, an analysis by a Harvard University economics professor revealed that, in real terms, average compensation is below what Americans were making in December of 2019 after accounting for the effects of inflation.
hat means Americans’ raises have disappeared due to the increased cost of goods and services. So the typical American is actually making less than they were before the COVID-19 pandemic, once inflation is taken into account.
Read on to see why Americans may not be able to keep as much money in their bank accounts due to inflation.
► ‘I really had sticker shock’: Does a reopening economy mean surging prices for Americans?
Rising prices mean Americans can buy less even with higher wages
Over the past year, the Consumer Price Index saw a 5.4% increase, which is the largest increase that has occurred since the middle of 2008. Just in June alone, there was a 0.9% increase in the Consumer Price Index. This index…
