Troubling Trends: We’re Still Spending More and Earning Less
Since the recession’s end in summer of 2009, hard-working Americans have hoped for a stronger recovery – including better quality jobs, increased educational opportunities, improved housing markets, and smaller price tags at the bottom of our receipts. Today, the Bureau of Labor Statistics (BLS) released monthly updates to both the Consumer Price Index (CPI) and Real Earnings information. Unfortunately, the two releases from the BLS show disappointing news on both fronts – as prices go up on a range of common household items, our wages and earnings still continue to plateau. The lackluster “˜recovery’ continues.
It is important to note that any one monthly release from the BLS reflects just a snapshot of the economy at that given moment – which is why we have examined the trends over time (see charts below). Earlier this summer, we commented on how this trend of an increasing CPI is extremely troubling for Latino families in particular: higher prices on basic goods affect lower income earners more acutely, and Hispanics also spend a greater percentage of their income on groceries.
According to the latest CPI release, over the past year all items on average increased 1.7%. For food in general, that index jumped by 3.1%. And for food at home specifically there was an increase of 3.3%, representing the largest 12-month increase since April 2012 – again, more bad news for home cooks. Fresh fruits and vegetables – endorsed by the First Lady as an essential part of a healthy and balanced diet – rose .9% in October alone. According to the BLS, these price increases completely offset the reductions in energy prices that households have recently enjoyed due to increased domestic energy production.
This is devastating news for families that already live paycheck to paycheck. Compounding this information, the real earnings report was also released today, indicating that real average hourly earnings for all employees rose .1% this month, after falling last month by .2%. Two steps backwards, one step forwards. When prices go up, and wages remain stagnant (or even fall), the real wages decline.
This is why it is vital Washington gets its policies correct – a message that voters across the country made clear this past Election Day. Although the past 6 years have been plagued with failed policies under the current administration, the president still has a chance to listen to the public, work with Congress, and find solutions to real problems like the cost of living increases. It is often easy to get lost in vague and abstract discussions of “˜the economy’ and how laws and regulations impact its health — but the CPI is what the health of the economy actually looks like in real life. Instead of burdening future generations with additional debt caused by reckless government spending, and hitting small businesses with new regulations, the focus should be on creating a better economy in which we see the more quality jobs, increased wages – and relief for families who continue to struggle.