Highest inflation in 40 years deals Illinoisans $2,900 pay cut

Highest inflation in 40 years deals Illinoisans $2,900 pay cut

Wages have failed to keep up with inflation, dropping Illinoisans’ purchasing power by $2,900 on average.

The average Illinoisan needed a pay raise of $5,920 to keep up with inflation during the past 12 months. That worker only got a little more than $3,057.

So, that $3,057 pay bump was actually the equivalent of a nearly $2,900 pay cut.

When you add up all the price increases from inflation, Illinoisans are paying $4,675 more for the same goods and services this year compared to last year.

On an annual basis, the average Illinois worker will shell out $1,483 more for gasoline this year, $929 more for housing, $523 more for groceries, and $387 more for utilities. By the time you add up all the different ways inflation nickels and dimes you, the total cost adds up to more than $4,675.

The most recent inflation data, released July 13 by the U.S. Bureau of Labor Statistics, projects average prices rose 9.1% from June 2021 to June 2022. The latest inflation figures come as bad news, because experts previously thought inflation might have plateaued. Prices continued to rise beyond expectations in June.

Illinoisans are feeling the pain of the highest inflation rates in 40 years. In many cases, there’s little Illinoisans can do to avoid inflation.

Gasoline is up 60% in the past year; grocery bills are up 12% on average; energy services are up 19%. Workers can’t just stop their daily commute, buy less food for their family, or stop heating and cooling their homes. A large portion of these expenses are necessary, so high inflation means Illinoisans are gritting their teeth and paying higher bills. That leads to cutbacks in other recreational and leisure activities and reduces savings, which ultimately lower Illinoisans’ quality of life, today and in the future.

With many economists forecasting a prolonged period of high inflation, the Federal Reserve will likely be prompted to continue interest rate hikes. For Illinoisans, this presents an unpleasant tradeoff: continued high inflation or an increase in unemployment because of rising interest rates.

Neither scenario will be friendly for Illinoisans, however they appear unavoidable as record spending and wide-spread federal stimulus coupled with supply chain disruptions and pent-up demand from COVID-19 have created our current inflationary environment.

Illinois faces an additional economic challenge from a proposed amendment to the Illinois Constitution. Public worker unions are pushing Amendment 1, which would make union power nearly untouchable in Illinois and is projected to increase average property taxes $2,100 or more as a result of taxpayers being forced to fund greater government union demands.

Voters Nov. 8 will decide whether to grant union powers no other state allows, or whether to curb their property taxes.

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