Two-thirds of American workers say pay not keeping up with inflation
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On Friday, core personal consumption expenses price index (the latest inflation reading from the government) showed that although prices might be beginning to decrease from records, financial stress for workers, despite the high inflation of four decades, remains elevated.
American workers believe their pay is not up to inflation. Accordingly to a new CNBC|Momentive Workforce Survey.
Sixty-six% of employees believe that inflation has outpaced their previous salary increases over the past twelve months. Only 19% said their salary growth has about equalled inflation while 13% stated their salary has increased above inflation.
As more American workers at multiple income levels give voice to a frustration that the economic data has been signaling throughout this year — that price gains continue to outpace wage gains — the squeeze is particularly high among middle-income workers. The survey found that those earning between $50,000 and $150,000 were more likely than low-income, high-income workers to claim their income hasn’t kept pace with inflation.
An online poll of 9254 American workers was carried out between May 10-16, 2022.
CNBC|Momentive poll say they are “well paid” or “very well paid,” that is tied for the lowest level in the survey’s history, while the 28% who say they are not well paid is at an all-time high.
39% of workers have said that they are seriously considering quitting their job in the three most recent months. It is higher than the level recorded in 2018, and higher than 6% since November.
According to a survey, the number of people who consider quitting work is at an all-time high.
Momentive Workforce Survey|Momentive Workforce Survey
Laura Wronski (senior manager, research science at Momentive), stated that inflation is a major driver of worker turnover. Workers who claim their salaries have outpaced inflation in three months are less likely to report that they are considering quitting work. Workers who state inflation has exceeded their wage increases are more likely to seek a job.
The latest inflation readingWhile peak inflation might have passed with some hope, an easing of prices does NOT mean that high inflation has gone away.
Real wage growth across the wage distribution is down, and it is the middle-income workers that are in a worse position than they were pre-pandemic — the lowest-wage workers, by contrast, while struggling with inflation have seen the biggest wage gains. Heidi Shierholz is president of The Economic Policy Institute which addresses the needs of Americans of lower and middle income.
Microsoft, Apple, and other companies announce pay raises for workersThis month both salaried and unemployed people are affected. in Apple’s caseShierholz stated that workers at its retail outlets where the first unionization drives have been launched are well aware of one key data point which frustrates them, and are pressing for more: increased corporate profits.
According to her, “We are certain that a significant part of the price increase has been due to employers’ increased profits.” Workers are now paying higher wages and employers make more. This is a major imbalance. The potential exists to increase. It is possible to choose. She said that these profits are being used to increase profitability and employers have the option of making a different choice.
The quit rate is higher across all wage levels, however, the record number of workers considering quitting does not directly correlate with the middle-wage worker shortage. This is because the lowest-wage jobs have the most openings.
“Low-wage employees can jump from one job to another, landing new positions at higher pay levels. Wronski explained that workers with high incomes, such as those who earn $150,000 per year or more, will be more inclined to work in positions that are able to increase salaries the most. This means even if their wages have not increased, they can find new opportunities at higher wage levels.
Covid Economy’s quit rates show that the largest spikes are in low-wage areas like retail or food services. Knowledge worker jobs tend to be more concentrated in the upper income bracket.
“People were expecting a lot more workers to jump ship when the big raises didn’t come, and they didn’t,” said Rucha Vankudre, senior economist at labor market research firm Emsi Burning Glass.
This is the right time to ask for more information from employers, as the market’s current level of wage growth and job opportunities are not sustainable. The labor market will see a decrease in quit rates and fewer workers as the overall number of jobs continues to increase.
Shierholz stated that as we move closer to full employment, job growth and job openings will slow down.
Covid is moving further backwards, which will mean that more workers are coming back.
She said, “That’s bad for workers.” We are now in an extraordinary time of greater worker bargaining power due to some exceptional circumstances surrounding the Covid recovery. These won’t be around for long.
A growing economy adding more than 500,000 jobs per month, as well as as many in the first four months this year, cannot keep up this pace. This means that workers won’t be able to get higher wages and move their jobs.
It will remain a constant awareness for workers that they have the ability to join forces and ask more from their employers in terms of pay, benefits, company values. Shierholz explained that this awareness would not disappear.
Microsoft and Apple have recently increased their pay rates to reflect the increasing power of employees at the companies making the most profit. The inflationary fact that workers in Apple retail stores will earn $22/hour three years down the road is still true. While wage increases won’t decrease, inflation will still be a constant. It is a constant thing. This is not a victory lap. Shierholz stated that there is much more to do.
There are two jobs for each worker. This means that power is still vested in the workers. Economists find it difficult to imagine a scenario in which the employers have all of the power they lost in recent years.
We don’t have enough people to fill these jobs so employers may have to step in. Vankudre explained that the company has never seen this much job openings before.
Although employers have become more flexible in hybrid work conditions and the benefits and training offered to employees, real inflation is still not being met by pay.
“There was an expectation of everyone being there.” [employers]Vankudre claimed that Vankudre promised market adjustments, which didn’t actually happen.
The clock ticks on record-breaking job recovery.
Shierholz declared, “Now’s the time to increase your earnings if you have not already.”