Inflation is Erasing the Monetary Gains of Most Americans, Research Group Says

The struggle of employers to keep up with inflation is affecting the long-term well-being of the American workforce


The most significant inflation rate in nearly 40 years is eroding wage gains for most Americans.

The Brookings Institute found that the surge in inflation has obliterated almost half of the average wage gains for employees of the country’s 13 largest and most profitable retail, grocery, and fast-food companies.

All but two of the employers in the study gave their employees sizeable raises since January 2020. However, the wage increase has been negatively impacted by the current inflation rate. In November, the government reported that consumer prices were up 6.8% from 2020, the fastest pace since June 1982.

According to the analysis since January 2020, inflation has risen nearly 8%. Wages have risen much slower, an average of about 3%, in the same time frame. The average pay increase would have been 10% were it not for the rate of inflation over the past year.

The report by the Brooking Institute shows that Kroger gave a wage increase of $1.25, making its base pay $16.25 per hour in October 2021. Compared to January 2020’s rate of $15 per hour, this is roughly an 8% raise. However, based on the nation’s inflation rate, Kroger employees would need to earn $16.08 in October 2021 to have the same purchasing power they did in 2020. This translates to a minimal wage increase for Kroger workers of only 17 cents an hour, a raise of merely 1%.

“Over the course of a month, this difference adds up. For a full-time Kroger employee working 36 hours per week, a $1.25 per hour nominal increase equates to a monthly increase of $180. Adjusted for inflation, the real monthly pay increase for this Kroger worker is less than $25,” said the report from the Brookings Institute.

The living wage, touted as a standard in the United States as a base rate of pay, allows a full-time worker in a household with two working adults and two children to afford only basic necessities. The living wage leaves workers with no margin for savings or emergencies. When you adjust for inflation, a living wage in today’s economy would be $17.70 per hour. 

Amazon, Walmart, Starbucks, Macy’s, Chipotle, McDonald’s, Target, CVS, Walgreens, Kroger, Best Buy, Gap and Lowe’s were included in the analysis. Only Amazon paid a living wage, according to the report.

As of the publishing of the study, Amazon had given employees a living wage increase from $15.75 per hour in January 2020 to $18.50 per hour in October 2021. 

Walmart came in second to Amazon, paying workers $16.40 per hour, a 9% pay increase given to employees in the fall of 2021. However, Walmart simultaneously ended its quarterly bonus program, which averaged $1,400 in 2020. The actual wage increase was only 2% when accounting for the bonus loss and inflation rates.

The 13 companies combined employ more than 5 million Americans across all 50 states. 

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