Low earners were struck hardest by inflation as savings and pandemics aid reduce
Key takeaways:
- According to a statement issued by researchers at the University of Pennsylvania's Wharton School, increased living costs for the lowest earners were nearly triple their annual wage growth in 2021 — $1,837 versus $578, respectively.
- Middle and high earners nearly broke even or came out on.
- According to the JPMorgan Chase Institute, savings for the lowest-income Americans are growing but declining as they pay down federal advantages like stimulus checks and child tax credit payments.
Low earners are struck hardest:
The lowest-income Americans meet a financial problem: Inflation is eating into a significant part of their family budgets. At the same time, savings made up during the Covid pandemic are beginning to decline.
Meanwhile, federal supports like monthly child tax credit costs and a break on student loan payments have completed or will shortly expire. And officials have already alerted of delayed tax refunds, which low earners generally depend on more than higher-earning families.
Inflation
Consumer costs in January increased 7.5% from a year earlier, the fastest annual rate in 40 years.
However, families don't feel those cost surprises equally.
The lowest-income working households (which earn less than $20,000 a year) met the highest inflation rate of any revenue group in 2021, according to a study by researchers at the University of Pennsylvania's Wharton School.
These families directed more of their budgets to needs like energy and transportation, costs of which rose more rapidly than other goods and services.
High earners fare better.
Meanwhile, the lowest-paid employees were the beneficiaries of the most significant salary increase the previous year, as restaurants and other typically lower-paying employers competed for lacking talent.
But higher living prices for the lowest earners were almost triple their extra yearly pay — $1,837 versus $578, respectively.