You’re Worth Less Today Than Yesterday
By David Fisher. Filed in life |Tags: dollar, economy, inflation, money, paycheck, wages, weak
What do you make at your job? I actually don’t care, but you should perhaps realize that it’s worth less today than it was yesterday. Surely that’s only a few pennies you say? Let’s figure that out.
In the US, we work an average of 1777 hours per year. Let’s say you’re making $30,000 a year, a fairly average amount for someone in the US. So you’re at 16.88 or so per hour for ~222 days a year (8 hr days). Our average inflation is 3% a year on average. Sometimes this is higher. For example, thus for in 2008 we’ve seen right around 4% inflation if not higher. Some items increase far more in cost, such as oil and health care costs. The consumer price index can show us this. For simplicity’s sake let’s choose 3%, as I don’t think anyone will say that the number is too high on average.
Very simply put, you’ll have to have 30,900 in wages after a year to equal 30,000 of the prior year. So you got a raise to 32,000 maybe? Only really 1,100 of that was a ‘raise’ on your abilities, extra work, experience, etc.
Let’s say you didn’t get the raise however. That $900 difference in purchasing power is huge. You work 222 days a year. That is $4.05 less daily that you can purchase that you work. That latte in your hand? Tomorrow you’ve made that much less in purchasing power. That’s something you can tangibly see.
If you make a bit more, its really startling if you aren’t getting your yearly raises as you should. Make 100K? That’s $67.50 less per week in purchasing power. That nice dinner you were going to have? Forget about it now.
So what’s my point? My point is this, if you aren’t getting raises (which in today’s economy you likely aren’t) you are getting kicked in the balls. It’s not just that you are making the same money, you’re making less money.
My suggestion for responsible employeers is this: offer continous cost of living increase raises. If you pay 24 times a year, increase each paycheck by 0.125%. Then your “raises” that you make yearly can be based on merit, not on economic inflation and stress. When I worked at State Street, I actually put this as a small quote on my monitor, “You are worth $4.05 to your employeer than yesterday”. They didn’t like that much.