There are three things we can say about income with a degree of certainty:
- You’re earning less than you did before the financial crisis.
- You are overdue for a raise.
- You are unlikely to get a raise anytime soon.
If these three statements fit your personal circumstances, you can take some consolation in knowing that you are not alone and that there is likely not much you can do about it. Using the financial crisis that began in 2007 as a baseline, the Economic Policy Institute found that wages have dropped by an average of up to 5.9%, depending on the category of worker to which you belong. Employees with advanced degrees are the only group that didn’t see its income drop, but that group didn’t see its income rise, either.
While the rate of inflation has been low throughout that period, it is still eroding your purchasing power and affecting your standard of living.
Why is income lower today than it was in 2007?
Lower Profits. A major reason you’re earning less—and why you’re unlikely to get a raise anytime soon—is that your employer is earning less. (more…)