A new study published by the Ludwig Institute for Shared Economic Prosperity (LISEP) notes that most occupations in the US experienced a decline in purchasing power in the last 20 yearswhen adjusted for the rising cost of basic necessities.
The analysis included a review of median salary and salary levels for more than 60 professions in the US from 2001 to 2021adjusted according to LISEP’s real cost of living index (TLC), which unlike the Consumer Price Index (CPI), the TLC is a measure of price changes of the adequate minimum needs required to maintain a level of basic life, while the CPI is based on a diverse basket of more than 80,000 items.
TLC focuses on the basics: housing, food, health care, child care, transportation, technology, and miscellaneous household and personal care items: the expenses that eat up nearly the entire budget of most American families. And in the CPI, many items – such as car rentals and hotel rooms – have little or no relevance to most households.
Lost in terms of wages during the period 2001-2021:
Adjusted for the increase in the cost of living, the secondary school teachers lost about 13% of their income. (approximately $9,000 in 2021 dollars)
· The nurses lost about 6% ($4,000 in 2021 dollars) during the period.
· Accountants, engineers, architects and even doctors and lawyers saw their effective purchasing power erode, some up to 20% of their incomeaccording to LISEP.
The occupations with the largest percentage drop include firefighters, whose adjusted wages fell about 12%from $80,444 to $70,000, and dental assistants down 16%from $35,587 to $35,000.
Those with the highest earnings are the CEOs and legislators/public administration, jumping 56% from $77,316 to $120,150; dentists, with a 40% increase from $89,381 to $125,000; and podiatrists, who increased from $85,806 to $144,231 during the period.
“It is important to note that the impact on purchasing power is not just a worker problem, it is not just a problem among low-wage workers: it is a problem for virtually every household, from low-income families to upper-middle income familiessaid LISEP President Gene Ludwig.
One obvious takeaway from the study, Ludwig said, is that the earnings gap is real and growing, has been growing for more than two decades, and virtually no one is immune: “Now we see that even among professions that are considered stable and well-paying, households are losing purchasing power, and this has been progressing for more than two decades. It’s no longer ‘someone else’s problem.’”
For more details on LISEP’s findings, click here.
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