Wage Worries

We’ve been hearing a lot of rosy predictions about the economy over the last few years, yet people don’t seem very comfortable about their own financial conditions. Maybe it’s because, overall, our wages have been going down.

If you look at raw wages, things seem OK.

U.S. Wages (Raw)

But those are just the raw numbers. What counts is now how much we earn, but what we can buy with the money we earn.

At the same time wages are going up, so are the cost of things like food, gasoline, electricity, housing, etc.

These numbers come from the U.S. Bureau of Labor Statistics. In addition to the raw wages above, the Bureau also publishes them adjusted for inflation, in this case by using constant 1982 dollars:

U.S. Wages (Adjusted for Inflation)

It’s a much different picture and it explains the problem. Adjusted for inflation, Americans are making less this year than they were in 2002. And that’s just factoring in general inflation.

In some sectors of the economy, costs are rising even faster than the overall inflation rate. The cost of medical care has been rising rapidly, even as general inflation has been low and wages falling.

The data on medical costs comes from a study published in the journal Health Affairs and the general inflation numbers are from the Bureau of Labor Statistics.

Inflation Rates

And here’s the kicker, the amount we pay for health insurance has been going up even faster than medical costs. A study by Families USA discovered that in Colorado over the last four years the average price for health insurance premiums went up three times faster than average earnings. Put it all together and it’s quite a crisis for people who work for a living.

That’s why we’ve been putting such an emphasis on lowering health care costs in Colorado.