I have spent most of my career communicating about personal finance, income insecurity and embedded inequality.
Given the viral reaction on social media, it’s clear that a recent column of mine focused on specific ways households could combat rising prices did not fully convey my thinking on two of those broader issues. In trying to offer suggestions for people coping with inflation, I left readers with a “let them eat cake” (or lentils) impression, for which I and Bloomberg Opinion were lampooned (and worse).
I feel I should offer more context on why I spoke of eating lentils and deciding against pet chemotherapy—and, more important, of the bigger challenges facing the American working class.
Both those suggestions arose from my own experience. In the financially straitened house where I grew up, higher inflation meant less to eat and the need to find cheaper nutritious foods. More recently, it was my own family that had to weigh all the costs of treating an aging and beloved dog.
More generally, in writing specifically about ways for families at or below the national mean income of $50,000 to save money here and there, I was not forgetting the more fundamental challenge facing American workers: People need raises, and greater wherewithal to get them.
Spiking prices shine a spotlight on persistently low incomes. The problem is easily seen in the national wage and price data.
The federal minimum wage of $7.75 is, in real terms, at its very lowest, because it has fallen so far behind inflation. Last year, earnings rose 5.4% but inflation hit 7.9%. In 10 out of 12 sectors, raises failed to keep up with price increases. (The exceptions were construction and leisure and hospitality.)
With profits up and quit rates at near record levels, this would seem to be a good time to boost worker pay. But employers rarely do that voluntarily.
And while this may seem like a good time for a worker to ask for a raise, most can’t credibly threaten to leave their jobs if they don’t get one. Very often, depending on the location, there is only one employer that makes sense for a worker. What’s more, corporate concentration has enabled employers to keep wages down, according to a Treasury Department report. Combined with the decline in unionization, employers’ greater bargaining power has held American workers’ pay 20% lower than it otherwise would be.
While others, including my fellow Bloomberg Opinion columnist Allison Schrager, would disagree, being in a union is the best way for workers to get a wage increase or an adjustment in hours and other benefits.