Inflation leaves Illinoisans with $2,230 pay cut
Consumer prices rose 8.6% in May. Illinois wage growth hasn’t kept up, leaving the average worker over $2,200 worse off.
New inflation data released June 10 by the Bureau of Labor Statistics project that average prices rose 8.6% from May 2021 to May 2022. After a slight decline in April, the new data suggests inflation is now back at the high levels seen in March 2022.
Illinoisans are already feeling the pain of the highest inflation rates in 40 years. While the average private-sector worker in Illinois saw a pay bump of more than $3,408 over the last 12 months, prices have been rising far faster. To keep up with inflation, the average worker in Illinois would have needed wages to rise by $5,635.
Thanks to inflation, Illinoisans’ $3,408 pay bump was actually equivalent to a $2,228 pay cut as the rise in pay failed to keep up with the cost of living.
When you add up all the price increases due to inflation, Illinoisans are paying $4,386 more for the same goods and services this year compared with last year.
On an annual basis, the average Illinois worker will shell out $1,122 more for gasoline this year, $910 more for housing, $504 more for groceries, and $280 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 $4,386.
In many cases, there’s little Illinoisans can do to avoid the inflation tax. Gasoline is up 49% in the past year; Grocery bills are up 12% on average; energy services are up 16%. 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 due to rising interest rates.
Neither scenario will be friendly; however, they appear unavoidable as record spending and widespread federal stimulus coupled with supply chain disruptions and pent-up demand from COVID-19 have created our current inflationary environment.