Our Paychecks Really Are Shrinking

If you’ve been feeling as if your paycheck doesn’t go as far as it used to, you’ll want to check out the latest data from the government.

The June numbers from the government’s Bureau of Labor Statistics show that Americans actually got a pay cut from May to June.

That’s what happens when you take inflation into account, and calculate real earnings over time. It seems that the pay many Americans received was not been sufficient to keep pace with inflation.

Hence, we’ve gotten a pay cut, since our dollars simply don’t go as far as they used to.

According to BLS, real average hourly earnings for all employees decreased 0.4%from May to June, seasonally adjusted.

The better news is that hourly earnings increased 1.7%, seasonally adjusted, from June 2014 to June 2015.

Still, 1.7% is pretty measly. Many Americans are still getting an effective pay cut due to their consuming a higher proportion of expensive things than is usually assumed in the government’s inflation calculations. (Think of people over age 60, who consume a lot of prescription medicines and health care services).

It’s clear that working American needs a bigger raise than it is getting. Hopefully the tightening labor market will help to perk things up a bit in this important area.