If you get a $1,200 annual raise on the same day that your rent goes up by $100 a month, you don’t need an accountant to tell you that you didn’t actually make any financial progress. And while that’s an excessively simplified example, it’s nonetheless a pretty fair representation of what has been happening to most American workers over the past four decades.
Even though the official unemployment rate has been hovering around record lows in recent years, wage growth has stayed stagnant, a new study from Pew Research reveals. In fact, the real average wage, which Pew defines as “the wage after accounting for inflation” has roughly the same purchasing power as it did 40 years ago. And while some workers have seen gains, most of the increases have gone to those who were already the highest-paid.