Chart of the Day: Inflation Keeps Going Up, But Wages Are Going Down

Inflation in July rose 2.9 percent, its highest level in seven years. Core inflation, which doesn’t include food and energy, rose 2.33 percent, its highest level in ten years.

This is not cause for panic, but there’s unquestionably some acceleration in the inflation numbers now. This means two things. First, the Fed is now more likely to tap on the brakes a little harder, which will cause the economy to slow down. Second, since employers seem to have no intention of ever raising nominal wages more than about 2 percent, the real earnings of blue-collar workers are going to continue to fall behind. Here this is in chart form:

No matter what the inflation level is, employers raise wages between 2-2.5 percent. They seem to be stuck on this as a “reasonable” number after experiencing years of the great moderation during the 90s and aughts. But as inflation goes up, this means that workers are getting no real wage increases at all. Or, even worse, they’re getting effective pay cuts, as they did in June and July.

Think about this. The economy is growing at its fastest rate in years. Unemployment is below 4 percent, its lowest point in years. Corporate profits are breaking records. By any normal measure, this is a very high-pressure economy. And yet blue-collar workers have gotten a pay cut over the past two months. Anyone care to explain that?

THE TRUTH...

is the first thing despots go after. An unwavering commitment to it is probably what draws you to Mother Jones' journalism. And as we're seeing in the US and the world around, authoritarians seek to poison the discourse and the way we relate to each other because they can't stand people coming together around a shared sense of the truth—it's a huge threat to them.

Which is also a pretty great way to describe Mother Jones' mission: People coming together around the truth to hold power accountable.

And right now, we need to raise about $400,000 from our online readers over the next two months to hit our annual goal and make good on that mission. Read more about the information war we find ourselves in and how people-powered, independent reporting can and must rise to the challenge—and please support our team's truth-telling journalism with a donation if you can right now.

payment methods

THE TRUTH...

is the first thing despots go after. An unwavering commitment to it is probably what draws you to Mother Jones' journalism. And as we're seeing in the US and the world around, authoritarians seek to poison the discourse and the way we relate to each other because they can't stand people coming together around a shared sense of the truth—it's a huge threat to them.

Which is also a pretty great way to describe Mother Jones' mission: People coming together around the truth to hold power accountable.

And right now, we need to raise about $400,000 from our online readers over the next two months to hit our annual goal and make good on that mission. Read more about the information war we find ourselves in and how people-powered, independent reporting can and must rise to the challenge—and please support our team's truth-telling journalism with a donation if you can right now.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate