Today, the Bureau of Labor Statistics reported that the Consumer Price Index (CPI), which is one measure of inflation, fell by 0.1% while workers' inflation-adjusted wages ("real wages") rose by 0.3% in December. Any month in which workers' real wages rise is a good month. But there are a few trouble spots in these two BLS reports beneath those headline numbers.
Broadly speaking, inflation is slowing, which is also very good news for working families. While the CPI for all items rose 6.5% during 2022, that's a deceptive number, and sadly the number that will lead news reports. In reality, the pace of inflation has slowed significantly over the last 6 months to an annualized rate below 2%. This means the value of workers' paychecks has not eroded significantly over the last half of 2022. Workers are better able to support themselves and their families with their rising wages.
So, while the headline numbers show that inflation is slowing, working families may not fully benefit from that improvement when they pay their bills and manage their family budgets.
The problems lurk beneath the surface. One important category --- gasoline prices --- fell almost 10% in December and more than 1% during 2022. That's remarkably good news for workers generally and transportation workers like independent truckers, in particular. Yet, prices for other goods and services that are important to working families are continuing to rise at a fast pace. Food prices, the price of "shelter" (e.g., rent), transportation costs, and energy service costs (e.g., home heating) all rose substantially more than the average price in December. These items consume a sizable portion of workers' family budgets. So, while the headline numbers show that inflation is slowing, working families may not fully benefit from that improvement when they pay their bills and manage their family budgets.
The more important question is, what should workers do? The answer is to continue fighting for the pay increases they deserve and need to build middle-class lives for their families.
Pundits in the media will ask: how will these latest inflation numbers affect the Federal Reserve's decision-making? The more important question is, what should workers do? The answer is to continue fighting for the pay increases they deserve and need to build middle-class lives for their families. If workers can't get a raise in their current job, they should take advantage of the abundance of jobs available in today's economy by finding a new and better paying job, quitting, and switching. Four million workers are quitting their jobs every month and many are getting pay increases as a result. If workers can't change jobs, or even if they can but prefer to stay and fight, the surest path to a real wage increase is to organize a union. You won't be alone. Worker organizing is rising as price inflation is falling.