by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Our era is known for deluging consumers in more information than they can thoughtfully intake, and the Biden White House is counting on you to glance past the record-breaking bad inflation numbers that keep revealing the dangers of Congress’s high-dollar spending. You might give only a cursory look to a list of percentages from the Labor Department, but apply those numbers to your own paycheck, savings, and expenses, and the numbers start to sound a lot bigger and more painful.
The average annual wage earned by American workers was $53,383 for the year 2020, according to the Social Security Administration. Take 7.9 percent of that — the year-over-year inflation rate for February — and you have $4,217. So, for that average American salary to maintain the same value it had a year ago, it would have to increase by just over $4,200; if it hasn’t, inflation has cost you roughly $4,200 in depreciation of your salary’s value.
To compare, the average annual pay raise employees are expected to receive in 2022 is 3.4 percent — less than half of the past year’s inflation rate. Using the previous average wage, even if you got a 3.4 percent raise (adding $1,815 to your yearly income), you’d still be down more than $2,400. And that’s with an average raise that’s already higher than pay bumps in previous years; in 2021, the average employer gave out 2.8 percent raises.
Not only does inflation mean you’re effectively getting paid less, it also means that in many sectors, you have to spend even more of those dollars to purchase the same amount and quality of goods. Some goods, like the cost of food, have a comparable rate of inflation to the overall rate of 7.9 percent, but other commodities have jumped far more drastically.