Wages are rising at their fastest pace in years, but prices are rising even faster.
Americans have noticed.
Only 17 percent of workers say they have received raises that kept up with inflation over the past year, according to a survey of 5,365 adults conducted last month for The New York Times by Momentive, the online research firm formerly known as SurveyMonkey. Most of the rest say either that they have received raises that lagged price increases or that they have received no raise at all; 8 percent of respondents said they had taken a pay cut.
Nearly nine in 10 Americans say they are at least “somewhat concerned” about inflation, and six in 10 are “very concerned.” Worries about inflation cross generational, racial and even partisan lines: 95 percent of Republicans, 88 percent of independents and 82 percent of Democrats say they are concerned.
Government data shows that wage gains are outpacing inflation in some corners of the economy, particularly the service sector, where competition for workers has driven rapid increases in pay. But in the aggregate, prices have risen faster than pay in recent months: The Consumer Price Index rose 6.8 percent in November, a nearly four-decade high; average hourly earnings rose 4.8 percent in November, and other measures likewise show pay gains lagging price increases.
Worries about inflation are dragging down overall confidence in the economy, which is at the lowest level in the nearly five years Momentive has been conducting its survey. Republicans have been particularly pessimistic about the economy since President Biden took office a year ago, but in recent months, Democrats too have become more dour.
“Pretty much the only group of people who say they’re better of now than they were a year ago are people who’ve gotten a pay raise that matches or beats inflation,” said Laura Wronski, a research scientist at Momentive.
Despite their concerns, however, most Americans said inflation had not yet had a major effect on their finances — although low-income households reported having a harder time dealing with rising prices than other groups. And only 11 percent said they planned to ask for a raise if inflation continued. That could be comforting to officials at the Federal Reserve, who are watching warily for evidence of a “wage-price spiral,” in which rising prices lead workers to demand raises, leading employers to raise prices to pay for them.