The numbers show consumer prices (especially for gas and groceries) are currently winning in their tug-of-war with wages. Despite a hot job market where pay increases are common, inflation has eroded consumer purchasing power. The inflation rate rose to 8.5% in the 12 months through March, the most since 1981. It’s worth noting that the sharp spike in inflation-adjusted wages early in the pandemic was the result of jobs lost, not pay raises. Most of the early layoffs occurred in the hospitality industry, especially restaurants, hotels, and the like, where wages tend to be low. But as the economy reopened and jobs returned, businesses found themselves short of people to fill them, and pay scales went up, enticing workers to come back. Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com. Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!
