HOUSTON, TEXAS – JUNE 09: Employees speak together at a Chipotle Mexican Grill on June 09, 2021 in Houston, Texas. Menu prices at the Chipotle Mexican Grill have risen by roughly 4% to cover the costs of raising its’ minimum wage to $15 an hour for employees. The restaurant industry has been boosting wages in the hopes of attracting workers during a labor crunch. (Photo by Brandon Bell/Getty Images)
Brandon Bell | Getty Images News | Getty Images
Inflation has increased as the U.S. economy recovers from the coronavirus pandemic, pushing up prices on goods such as food, gasoline and cars.
In September, consumer prices rose 0.4%, more than expected, and pushed the year-over-year gain to 5.4%, nearly hitting a 30-year high, according to the latest data from the Bureau of Labor Statistics.
The uptick in inflation has already hurt consumers, who are likely feeling the higher costs of certain items on their wallets. It also prompted a 5.9% cost-of-living increase for people on Social Security, the largest jump in 40 years.
Especially at the end of year, people may be wondering if recent inflation is eroding their pay. If they don’t get a 5.4% raise in the next year, is that technically a pay cut?
While pay raises are getting back to pre-pandemic levels, they might not keep pace with inflation in the next few years – the budgeted median U.S. salary increase for 2021 is 3%, according to data from The Conference Board. The group also projected that cash for raises will be about 3% in 2022 as well.
“Companies looking at their budgets realize that [raises] are probably not going to meet inflation,” said John Dooney, a human resources manager with the Society for Human Resources Management. “But what we see is more strategies around really rewarding high performers.”
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Not a pay cut
There is some good news for workers worried about their earning power being eroded by inflation – economists generally say that getting a less than 5% raise this year isn’t the same as taking a pay cut.
“It’s a lot more nuanced than that,” said AnnElizabeth Konkel, an economist at the Indeed Hiring Lab. “It depends on your basket of goods as a consumer.”
While inflation has jumped overall, the consumer price index considers an array of things, a few of which have contributed more to rising costs than others.
“For most people, prices of the things …….