Cost of inflation cancels out worker wage increases, The Wall Street Journal Editorial Board said. | Paul Brennan/Pixabay
Cost of inflation cancels out worker wage increases, The Wall Street Journal Editorial Board said. | Paul Brennan/Pixabay
Georgians may be making more money at their jobs, but an editorial suggests the good news may be cancelled out by the high cost of everyday items because of record inflation.
The U.S. Department of Labor released its Employment Cost Index on April 29, which showed during the first quarter of the year worker compensation grew at a record pace. However, The Wall Street Journal Editorial Board said we shouldn't be too quick to celebrate.
"That sounds better than it is, however, because inflation has erased the purchasing power of those raises," the Editorial Board said.
According to a Department of Labor news release, wages and salaries for private workers increased by 5% in the year leading up to March 2022, which was 2% higher than the increase noted in the previous year. The cost of benefits also rose 4.1% up to March of this year, compared to 2.5% in March 2021.
"Inflation-adjusted private wages and salaries fell 3.3% for the 12 months through March, and inflation-adjusted benefits fell 4%," the Editorial Board said. "Employees are making more but they can buy fewer goods and services with it."
The Editorial Board said the increases don't mean all that much when inflation is factored in, and that employers were paying more to keep employees since bargaining power lies in the hands of the workers amid a nationwide labor shortage.
"This is what economists mean when they call inflation a tax," the Editorial Board said.
Investopedia.com refers to the Labor Department's Employment Cost Index as a quarterly economic series that details the growth of total employee compensation.
According to the Editorial Board, the Commerce Department released its own report the same day the Employment Cost Index came out. It found personal disposable income fell in five of the last six months, dropping 0.4% in March. In monetary terms, the April 2021 disposable income per capita was $48,641 in 2012 chained dollars. In March of this year, that amount had dropped $2,644, bringing the disposable income per capita to $45,997.
Meanwhile, the cost of a gallon of gasoline continues to highlight the inflation problem plaguing the nation. According to AAA, Georgians were paying an average of $3.79 for a gallon of gasoline as of May 6, which was $0.48 less than the national average, but $1.07 more than what motorists were paying in Georgia the year before.
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