Rising Inflation Immediately Offsets Slow Pace of Pay Raise

Amid the pandemic, Americans who are getting a pay raise are finding it difficult to cope with the rising inflation. 

That’s because surging prices immediately offset the impacts of any raises.

Insignificant pay raises put American workers in chaos

Ty Stehlik, a hotel worker in Milwaukee, Wisconsin, asked for a raise since the pandemic began.

His application was just approved; he was given an extra $1 per hour, but according to him, this is next to nothing.

Stehlik, the Washington Post reported, is a 23 year old student who works in a hotel, alongside his roommate.

According to the worker, he has student loans to pay, while his roommate has medical bills.

Not only this, but he also reported his many colleagues work multiple jobs, and still, they are not able to make ends meet.

The Washington Post noted wage growth is in high demand, especially in the wake of the great resignation crisis; this is putting workers in the drivers’ seat in most situations.

However, the media outlet reported these gains are complemented with high inflation, which is ultimately reducing the purchasing power of Americans.

As per the Labor Department data, overall wages fell by 2.4 percent on average in 2020, despite the 4.7 percent rise in hourly wages.

Hospitality and leisure is the only industry in which the latest pay raise outpaced the rising inflation.

These workers had the lowest pay, and they saw an overwhelming increase in their wages during the pandemic.

After a 14 percent increase, the industry’s average hourly wage is now $19.50, compared to the pre-pandemic times of $17, as per the Labor Department.

Most of the workers have reported even after getting as much as a 33 percent pay raise, in some cases, they are living hand to mouth.

Many workers even indicated they are working two jobs at a time to cover their expenses.


These expenses are likely to rise dramatically, once the student loan payments resume in May.

Even 20 percent pay raises are not enough

The Washington Post reported another story of a culinary arts high school teacher who is making $47,500 a year, after a recent 20 percent increase in his pay.

However, he stated he is unable to find affordable housing and, therefore, seeking a roommate at the age of 37.

As the news of supply chain disruptions and labor shortages made headlines last year, inflation rose by almost seven percent, the highest level in the last four decades.

This resulted in the rise of gas prices by almost 50 percent, compared to 2020; the prices of other commodities including fish, meat, and eggs also went up significantly.

While many economists have indicated increasing wages are a contributing factor to the mammoth inflation, Federal Reserve Chair Jerome H. Powell suggests otherwise.

According to him, he is not seeing any evidence of a “wage-price spiral,” an economic phenomenon that results in inflation with a wage increase.

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