The headlines Friday mentioned that employee compensation grew at a report tempo on this 12 months’s first quarter, based on the Labor Department. That can be good—if it weren’t for the inflation that’s wiping out these hefty nominal features.
Wages and salaries rose 5% for personal employees within the 12 months by March, and advantages rose 4.1%. Private employers are paying much more to maintain employees, who’ve bargaining energy amid a labor scarcity.
That sounds higher than it’s, nonetheless, as a result of inflation has erased the buying energy of these raises. Inflation-adjusted non-public wages and salaries fell 3.3% for the 12 months by March, and inflation-adjusted advantages fell 4%. Employees are making extra however they will purchase fewer items and providers with it. This is what economists imply once they name inflation a tax.
A separate report Friday, this one from the Commerce Department, discovered that actual private disposable revenue fell 0.4% in March and has fallen in 5 of the final six months. To put that in greenback phrases, in April 2021 disposable revenue per capita was $48,641 in 2012 chained {dollars}. In March this 12 months, that quantity had fallen to $45,997—a decline of $2,644. Ouch.
To adapt
Ronald Reagan,
are you higher off than you have been a 12 months in the past?
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Appeared within the April 30, 2022, print version as ‘The Inflation Tax Bites.’
Source: www.wsj.com”