For the first time in 26 months, the wages of workers in the United States begin to match the inflation that since last year has caused purchasing power to plummet in the face of constant increases and cost reductions by companies.
According to data released this week by the Bureau of Labor Statistics, wages increased by 0.6% in June, one point below the 0.7% in 2020. This figure is easing as inflation shows signs of cooling.
Although many wage adjustments had already been announced since January, last month some states and localities in the United States increased their minimum wages for workers, the average was between $18 dollars an hour.
Nonetheless, William Ferguson, the Gertrude B. Austin Professor of Economics at Grinnell College in Iowa noted that “The big problem for most consumers is that when wage increases don’t keep pace with inflation, then we lose real purchasing power and that is actually what hurts people,” he said.
Currently, inflation remains moderate, but has not yet reached the objectives of the Federal Reserve that in 15 months develop a series of increases in interest rates to control the inflation rate and bring it to 2%, also putting pressure on the labor market, which has been strong in recent months.
On the other hand, the professor of finance and economics at Loyola Marymount University and chief economist of SS Economics, pointed out that there is a growing fear of the “wage and price spiral”, said who also explained that when wages increase, prices do the same and a feedback is generated making wage growth ephemeral.
However, former Federal Reserve Chairman Ben Bernank indicated that wage gains have little effect on the inflationary cycle.
For Bernank, these gains “will feed spending, and I think it will be something that will keep inflation at a floor that is above the Fed’s 2% target, but let’s see how it evolves over time. I don’t want to rush out and say absolutely that this is something the Fed needs to squash.“, said.
Source: La Opinion