I’m Mary Walden with economist MW, welcoming you to the economic perspective. Today’s program looks at judging your pay raise. Mike, the good news is that average worker pay is beginning to rise at a faster pace. But the bad news is that inflation is rising faster also. What does this mean?
- Think of it this way
- Inflation represents how fast the cost of living is rising
- So need a pay raise of equal amount just to keep even
- Therefore, the best way to judge if you are really getting ahead in your pay is to take your % pay raise and subtract the inflation rate
- So see, for this year, wage rate rising near 3%, but inflation is up to 2%, meaning average worker is getting ahead by 1%
- About the same as 5 years ago
And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.