The Impact of Inflation on Wages and Purchasing Power in the US: Insights from Moneywise
If you’ve found it increasingly difficult to make ends meet over the past five years, you’re not alone. According to a new study by personal finance platform Moneywise, the situation is likely to get worse before it gets better. Analyzing data from the Bureau of Labor Statistics (BLS), the Federal Housing Agency (FHA), and Redfin, Moneywise found that 97% of occupation wages have failed to keep up with inflation over the past five years.
Overall Findings: Wages Lag Behind Inflation
The study revealed that average wages have fallen by 8.2% over the past five years, while house prices have surged by an average of 56%. This disparity highlights a significant erosion in purchasing power for most Americans. Of the 20 most common jobs in the US, only one — wait staff — is expected to see a wage increase after adjusting for inflation through 2028.
Nick Rizzo, a research analyst at Moneywise, warns, “If things don’t change soon, the pain and pressure of inflation, rising cost of living, and rising housing costs will lead to a significant reduction in purchasing power for Americans in nearly every occupation and industry.”
Jobs Most Affected by Inflation
Certain occupations are expected to experience a more pronounced decline in purchasing power. Here are the top five jobs that will see the most significant wage shrinkage:
- Primary School Teachers
- 2023 Median Salary: $64,290
- 5-Year Salary Change Adjusted for Inflation: -11.59%
- Projected 2028 Salary: $56,504
- Accountants
- 2023 Median Salary: $79,880
- 5-Year Salary Change Adjusted for Inflation: -10.51%
- Projected 2028 Salary: $71,485
- Administrative Assistants
- 2023 Median Salary: $46,010
- 5-Year Salary Change Adjusted for Inflation: -8.47%
- Projected 2028 Salary: $42,113
- Registered Nurses
- 2023 Median Salary: $86,070
- 5-Year Salary Change Adjusted for Inflation: -7.82%
- Projected 2028 Salary: $79,339
- General Maintenance Workers
- 2023 Median Salary: $46,700
- 5-Year Salary Change Adjusted for Inflation: -7.55%
- Projected 2028 Salary: $43,174
Jobs Least Affected by Inflation
While most occupations are expected to face declining purchasing power, a few jobs might retain or even increase their value. Here are the top five professions expected to fare better:
- Waitresses and Waiters
- 2023 Median Salary: $31,940
- 5-Year Salary Change Adjusted for Inflation: +1.73%
- Projected 2028 Salary: $32,493
- Food Preparation Employees
- 2023 Median Salary: $32,420
- 5-Year Salary Change Adjusted for Inflation: -0.36%
- Projected 2028 Salary: $32,303
- Retail Sales Employees
- 2023 Median Salary: $33,900
- 5-Year Salary Change Adjusted for Inflation: -1.25%
- Projected 2028 Salary: $33,476
- Cashiers
- 2023 Median Salary: $29,720
- 5-Year Salary Change Adjusted for Inflation: -1.48%
- Projected 2028 Salary: $29,280
- Customer Sales Representatives
- 2023 Median Salary: $39,680
- 5-Year Salary Change Adjusted for Inflation: -3.23%
- Projected 2028 Salary: $38,398
Future Outlook: Challenges Ahead
Although inflation has been cooling in the past year, this alone may not be enough to reverse the trend. Rizzo points out several factors that could exacerbate the situation: “Given the rising house prices, ongoing conflicts, stagnant wages, and job loss due to AI, the deck seems stacked against the vast majority of Americans getting back to where they were anytime soon.”
Furthermore, the rapid development and integration of artificial intelligence (AI) into businesses could lead to more job displacement, making it even harder for some professions to recover their purchasing power.
Conclusion
The findings from Moneywise paint a concerning picture of the future financial landscape for many Americans. While some occupations might see slight improvements, the majority are expected to continue struggling with declining purchasing power due to inflation and other economic pressures. As we navigate these challenges, it’s crucial to stay informed and consider proactive financial planning to mitigate the impact on our livelihoods.
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