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While the inflation rate is declining, almost three-quarters of employees still believe it is undermining their hard work, according to a recent survey by personal finance company WalletHub.
Consumers are still stuck with much higher prices for just about everything they buy, despite inflation slowing, said Texas A&M University economics professor Jim Lee in response to WalletHub’s findings.
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At the same time, workers have begun to have less bargaining power when it comes to wages. And in order to give employees a raise, employers may need to raise the prices of their products, potentially creating an upward wage-price spiral that is difficult to reverse, Lee explained.
The report, which looked at how the current economic environment has impacted Americans’ finances, is based on a nationally representative online survey of 200 respondents.
The survey also found that 67 per cent of people believe they are working harder this year than last year, and 93 per cent want a raise to keep up with inflation and make ends meet.
Michael Leeds, an economics professor at Temple University in Philadelphia, told WalletHub that people have an inflated sense of their own worth, and think they deserve higher pay because they are good workers.
“‘Inflation is evil because it erodes my hard-earned gains.’ Unfortunately, that is often not the case,” Leeds said, paraphrasing the survey results. He added that pay raises are often part of the broader inflation.
Lee at Texas A&M said the survey outcome indicates that most people do understand they will fall behind if their wages don’t increase to keep up with inflation. However, he noted that, at the national level in the United States, the average worker has stayed ahead, despite historically high inflation. Since 2019, the hourly wage rate has risen by about 25 per cent, while the consumer price index has jumped by about 23 per cent.
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Cathy Carey, a professor of economics at University of Southern Indiana, said there is not a lot workers and employers can do individually to reverse the rate of inflation. To stay afloat, they can rein in excess spending, save in ways that take advantage of higher interest rates and market returns, and hold off on more significant purchases until wages catch up or prices fall, she said.
She noted that employees can stand out so that when the benefits of hard work pay off, they pay off bigger, particularly in occupations that are commission-based or use merit pay.
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Carey also suggests employees seek additional training or education to enhance their skills, which can lead to internal promotions and pay raises, allowing them to keep pace with inflation.
“This is not a time to lose hope and give up on hard work. Quite the contrary,” Carey told WalletHub.
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