Price Have Gone Up A Lot, But Most Workers’ Income Has Increased Even More

Whether you’re shopping for groceries or a new car, you’re probably expecting some sticker shock. Even though the inflation rate has slowed considerably in recent months, prices remain much higher across the board than they were a few years ago.

But if you take a look at the bigger picture, there’s some good news to report.

Wages are keeping up

The economy is a complex system and inflation doesn’t only impact consumer prices. Income traditionally increases at the same time, meaning most household budgets can absorb the added expense.

And in this inflationary cycle, the Treasury Department confirms that the average American worker is actually coming out ahead so far.

Here’s how the statistics break down, as of July:

• The Consumer Price Index increased by about 21.7% between the end of 2019 and mid-2024.
• During the same period, median pre-tax weekly wages were up roughly 24%.
• That means a typical worker can afford the same goods and services now as compared to 2019 … with $1,400 left over per year.

Your mileage may vary

There’s a big difference between citing median wage growth and declaring inflation to be no big deal. Many workers haven’t seen their income increase while many others have lost their jobs as prices keep rising.

Blue-collar workers were more likely than their white-collar counterparts to receive a significant pay bump, with an average increase of about 3.8% beyond the rate of inflation.

Nevertheless, focusing on the broader trend allows us to take some comfort in the realization that the American economy might emerge from these tumultuous few years relatively unscathed.

As Treasury Department researchers concluded: “This solid increase continues to reflect an improvement in the purchasing power for the median worker since before the pandemic and is good news for American households.”

Chris Agee August 29th, 2024

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