Currently, the rate of inflation in the United States has hit a staggering 7% and continued to climb, but many American companies are only expected to hand out pay increases in the range of 3-4%.
As reported in a new Willis Towers Watson survey, most American employers expect to hand out pay increases of about 3.4% for their employees in 2022. The reasons offered by the over 1,000 firms taking part in the survey included inflation and labor shortages, where 31% cited the former and 74% cited the latter.
“Inflation is an element of it, but that’s not the sole factor,” stated Lesli Jennings, the Willis Tower Watson senior director, reported CNBC. “I think the bigger piece is about this race for talent.”
Overall, the expected 3.4% wage increase would be entirely insufficient to maintain living standards from deteriorating due to the current rate of inflation, which has crested well 7% marking the highest rate in over forty years. As reported by data from the Bureau of Labor Statistics, “real average hourly earnings,” which takes in account the effects of inflation, dropped by 2.4% from December 2020 to December 2021.
“In what was the best year for wage growth that we have seen in many, many years, it still comes up as a loss for many households,” stated Greg McBride, the Bankrate chief financial analyst, to CNBC. “Their expenses increased even faster and chewed up all of the benefit of whatever pay raise they had seen.”
Old Uncle Joe has, instead, sought to obfuscate these concerns as he brushes off inflationary worries.
“Today’s inflation numbers show a meaningful reduction in headline inflation over last month,” he stated in the wake of the Bureau of Labor Statistics’ most recent inflation report. “We are making progress in slowing the rate of price increases. But there is still more work to do — I remain focused on lowering costs for families and maintaining strong economic growth.”
Despite this, most Americans just aren’t falling for Biden’s statements. As reported by a December survey from Fox Business, 47% of Americans think that Biden’s policies are “hurting” the economy, but just a measly 22% of people think that they are “helping.” In the same vein, 46% think that Biden’s social spending plans would “push inflation higher,” while a just as low 21% think it would “help lower inflation.”
During all this, the Federal Reserve has been pressed with the problem of slashing runaway prices while preventing yet another recession. In a recent report, Harvard economist Kenneth Rogoff stated that “it’s not so easy to raise interest rates to fight inflation when public and private data is high, when the stock market is high, when housing prices are high, when the economy is still weak.” Any central bankers willing to go through with that would have “a lot of stomach.”
“And I think the question is: How much are they going to have to step on the brakes to really slow inflation down?” claimed Rogoff, stating that the Federal Reserve will most likely be conservative in their rate increases.