Why Your Raise Feels Like a Pay Cut
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Why Your Raise Feels Like a Pay Cut
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About this listen
You got a 4% raise. Rent went up 8%. Groceries cost 12% more. Your paycheck grew, but you're poorer. This is the real wage trap.
We trace how nominal wage gains disguise purchasing power loss. A worker earning $50,000 gets a $2,000 raise—but inflation runs at 6%, meaning real wages decline 2%. Housing costs jumped 30% in three years while wage growth averaged 3.5% annually. The gap compounds.
Then the systemic forces: Federal Reserve interest rate hikes slow wage growth to control inflation, but corporate pricing power keeps prices high. Housing supply constraints drive shelter costs faster than income gains. The wage-price spiral means every raise triggers price increases that erase the gain.
But some approaches work: indexed wage contracts that adjust to real inflation, union bargaining for cost-of-living adjustments, policy interventions targeting housing supply.
An investigation into why raises feel like pay cuts, how inflation erodes purchasing power, and what it takes to actually get ahead.