Inflation Hits Poor Hardest
Mar 21st, 2008 at 5:58 am by Susie
Yeah, there’s not a lot of fat there to cut:
Inflation is walloping Americans with low and moderate incomes as the prices of staples have soared far faster than those of luxuries.
The goods and services Americans consumed in February were 4 percent more expensive than they were a year earlier. But there is a big divide in how much prices are climbing between the basic items people need to live and get to work, and those on which they can easily cut back when times are tight.
An analysis of government data by The Washington Post found that prices have risen 9.2 percent since 2006 for the groceries, gasoline, health care and other basics that a middle-income American family has little choice but to consume. That would cost such a family, which made $45,000 on average in 2006, an extra $972 per year, assuming it did not buy less of such items because of higher prices. For a broad range of goods on which it is easier to scrimp — such as restaurant meals, alcoholic beverages, new cars, furniture, and clothing — prices have risen 2.4 percent.
Wages for typical workers, meanwhile, have been rising slowly. In that same time span, average earnings for a non-managerial worker rose about 5 percent. This contradiction — high inflation for staples, low inflation for luxuries and in wages — helps explain why American workers felt squeezed even before the recent economic distress began.
No shit, Sherlock.
Let’s see, your average McDonald’s worker earned about 5 gallons of gas per hour in 2002. Today that same worker earns about 2 gallons of gas per hour. I’m not an economist, but it seems kind of obvious to me who gets hit the hardest.