Wage increases are not keeping up with inflation


U.S. wages are increasing, but not nearly enough to keep up with the soaring cost of gasoline and rent, according to a new analysis by the Urban Institute.

 Low-income households — disproportionately people of color — are likely to feel the squeeze the most, writes senior research associate Yonah Freemark in the organization's Urban Wire blog post.

  • Higher prices for gas and rent are shrinking these families' budgets for other daily needs, like food.

 Most low-income workers commute by car — as do 3 out of 4 Americans — but despite the pain at the pump, the price of an electric vehicle is out of reach for many, even if they'll save on fuel in the long run.

  • Families under the federal poverty level are also much more likely to rent their homes than to own them, meaning higher housing costs as landlords raise rents.

The U.S. inflation rate reached 7.9% in February 2022, the highest level since 1982.

  • Housing and transportation are the two largest expenditures for most households, often accounting for at least half of families' overall spending.
  • Gas prices increased by almost 40% between February 2021 and February 2022, says the Urban Institute, citing U.S. Bureau of Labor Statistics data.
  • By January 2022, rents in the average metropolitan area zip code had increased by 15% over the prior year.
  • Hourly wages rose only about 5% over that time, Freemark writes.

 Policymakers at the local, state, and federal levels could ease the burden for low-income families with rent stabilization programs and more affordable and accessible public transportation options.

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