The rise in wages has been steadily falling behind inflation despite stronger wage growth due to the tightness of the labor market. With no stimulus checks scheduled from the federal government, a majority of workers are experiencing a decline in their real wages in the second quarter of 2022. The median decline stands at an alarming 8.6%.
Arising real wages allows workers to improve their standard of living. But vast numbers of Americans are finding that their living costs are rising way faster than the income that they take home.
A majority of employed workers’ real wages, adjusted for inflation, have failed to keep up with inflation in the past year. For such workers, the median decline in real wages stands at more than 8.5%. when taken together, such an outcome appears to be the worst that employed workers have faced in the past 25 years.
Economic Recovery Slowed By Rising Inflation
Despite strong economic recovery after the initial impact of the pandemic in the first and second quarters of 2020, inflation began picking up dramatically by the last quarter of 2021. Simultaneously tight labor situation led to stronger growth in wages across many sectors. But the real issue was whether stronger wage growth has been keeping pace with higher inflation. And that will present the true picture of how many workers are experiencing rising or falling wages in the real sense.
Data reveals that close to 45% of surveyed workers have experienced negative real wage growth over the past 12 months due to rising prices in all products and services. And the median decline has been harsh at 8.6%.
Despite the stronger wage growth with higher demand in the labor market, the majority of workers continue to suffer from a fall in real wages that has failed to keep pace with the rise in inflation.
States send inflation checks to keep up with the fall in real wages. Despite a drop in the rate of unemployment in September, the US Bureau of Labor Statistics has reported that inflation remained close to a 4-decade high.
This has forced many families to live paycheck-to-paycheck as a result. The IRS has initiated changes that could result in lower takes for many taxpayers in 2023, but there appear to be no chances of a stimulus check from the federal administration.
The number of states that have moved in with stimulus checks has swelled to over twenty and that will provide some sort of cash assistance to residents to tide over the immediate crisis.
But these payments are nowhere near the extent of support that was afforded by the federal government following the pandemic. it was more extensive and covered many aspects of the economy. But they will still be helpful to families to put food on the table and get some relief from the rise in the prices of gasoline.
Massachusetts has been issuing refund checks and direct deposits from its $3 billion budget surplus since the start of November. This is possible due to a law that links the state’s tax revenue to salaries and wages. And residents of South Carolina will receive refunds of up to $800 within the next two months.
California Residents Have Started Receiving The State Stimulus Checks
These are just two of the many states issuing tax refunds and stimulus checks to help residents cope with growing inflation. And millions of residents in California have already started receiving stimulus checks of up to $1,050 either through direct deposit to a bank account or as debit cards through the US Postal Service.
The state started issuing the Middle-Class Tax Rebate on October 7 and people who received the Golden State stimulus checks in 2021 were the first to receive the payments. Debit card payments have also started to go out and the whole process is expected to be completed by January 14, 2023.
The stimulus checks have been divided into three tiers with individual filers with a 2020 adjusted gross income of up to $75,000 will get a stimulus check of $350. For joint filers with an AGI of $150,000 or less, the total comes to $700 with $350 for each filer. For either individual or joint filers, a further $350 will be added if they include any dependent in their tax filing, irrespective of the number of dependents.
So for a joint filer, the total comes to $1,050 for families including dependents. This is the highest stimulus check payable under the Middle-Class Tax Rebate.
The second tier is for filers with an individual adjusted gross income between $75,001 and $125,000 while for joint filers it is between $150,001 and $250,000. The individual stimulus check amount comes to $250 for each filer plus the same amount for any declared dependent. The maximum amount possible in this tier is $750.
The highest tier is for individuals with an AGI between $125,001 and $250,000 and joint filers with an AGI between $250,001 and $500,000. The stimulus check payable to each filer is $200 plus another $200 for any dependent. The maximum possible under this scheme is $600.
Filers with a 2020 AGI above this limit will not be entitled to any stimulus check under the Middle-Class Tax Rebate.
The payments are expected to reach 23 million residents of the Golden State, nearly 60% of the population. Other than the stimulus checks, the $17 billion inflation relief package within the larger state budget includes a temporary suspension of state diesel taxes and support with utility costs and rent.
Gov. Newsom has desisted from withdrawing the gas tax levied by California. It is the highest in the US at 68 cents to the gallon. The budget however will include a suspension of state sales tax on diesel for a year starting October 1.
The state budget also contains several additional measures to relieve the impact of inflation on residents of the state. a $1.95 billion emergency rental assistance has been provided for qualified low-income tenants who requested assistance before March 31. Another $1.4 billion has been allocated to help residents cover pending utility bills.
Also part of the budget is a $14.8 billion package for transportation and infrastructure. Another $200 million in additional funding has been directed toward reproductive health care services.