While it’s hard to pin down the single most destructive aspect of Joe Biden’s disastrous presidency, the massive inflationary spikes that are hitting middle America like a sledgehammer have to be far up the list. As RedState has reported previously (see here and here), we are feeling the effects of record-pace price growth in some sectors, specifically on products that are necessary for everyday living like gasoline, electricity, and groceries.
No worries, though. CNBC wants you to know that there’s a silver lining.
Inflation’s silver lining: higher salaries https://t.co/DmXuzKlX8z
— CNBC (@CNBC) July 8, 2021
Already, prices on some goods, like cars, are noticeably higher, stoking fears that a sudden uptick in inflation will decrease purchasing power over time.
Although consumers may pay more for everyday items, it’s not all bad news as far as household income and spending goes. Companies facing a labor shortage are also paying more to get workers to walk in the door.
Of note is that those two things are not really related. Wages are increasing on the very low end of the spectrum, not due to inflation, but largely because government benefits are paying people around $18 an hour to sit at home. Any increases in wages to counter that will be as temporary as the government benefits, which end in September.
Workers already saw a bump in their paychecks for June. As of the latest tally, average hourly earnings rose 0.3% month over month and 3.6% year over year, according to the Labor Department.
But as the article goes on to note, those wage increases are unlikely to keep pace with inflation, which essentially invalidates the entire premise being put forth by the piece. When wage growth is tied to artificial barriers to employment, that bubble will inevitably burst.
Regardless, even if we assumed that 3.6% was a new normal for wage growth (again, it’s clearly not), that’s still less than the year-over-year inflation rate of around 5% that we are seeing. In other words, even if you were lucky enough to get a raise over the last year, you are probably still coming out on the losing end in regards to inflation.
The reality is that Biden’s policies, which revolve around a naive, simplistic view of compensation, are throwing the economy into a cycle that is only deepening. Yes, some companies are paying more. They are also charging more. If you give an employee more money in wages, but they end up with a net decrease in buying power, they didn’t actually make more money. Democrats want to just latch onto raw numbers and proclaim victory over someone making more per hour while they ignore the actual consequences of their policies. In other words, water is wet.
This has to stop, but I don’t see how it does until after 2022. Democrats are going to ram through even more government spending via reconciliation later this year. That’s only going to push inflation even higher. Unfortunately, the pain is going to get worse before it gets better, and no amount of shameless media spin will change that.