Paychecks Flounder as Inflation Soars

Physician's Money Digest, April 2006, Volume 13, Issue 4

US News & World Report

Despite the good news that the economyis churning and unemployment is low,wages have not kept pace with inflation. Anarticle in statesthat the consumer price index (CPI) for2004 was 2.7% while average hourly earningsgrew only 2.1%. Workers experiencedthe same 0.6% negation in 2005 when theCPI reached 3.4% vs 2.8% for earnings.What's worse, it looks as if the majority ofcompanies are not set to boost wages anytimesoon. According to a Salary.com survey,only 30% of companies have budgetedto raise salaries in 2006.Why the hesitancy?Employers want to get a strong reading ofprofits this year before opening the companywallet. Companies are also taking onmore expenses, including health care costs.In 2006, health insurance will increase9.9%, up from 9.2% last year. An employeewho makes $40,000 will see 23% of theirraise go to health care contributions. Factorin the escalating CPI—up 1.3% from2002—and many employees'paychecksjust aren't cutting it.