Philly-Area Wages Not Adjusting To Devastating Inflation: Latest Stats

PHILADELPHIA, PA — Historic inflation remains a stubborn and sometimes crippling reality for many Americans, as Pennsylvania prices decreased slightly in December but remained astronomically high, according to the latest inflation report from the Bureau of Labor Statistics. The statistics showed a 6.5 percent consumer price index (CPI) nationally, suggesting a gradual recovery from inflation but leaving millions unprotected from the worst impacts of the economic crisis.

The CPI in the Philadelphia-Wilmington-is 6.4 percent higher than it was in Dec. 2021. While it's 0.1 percent lower in December, than it was in November, wages for average workers have not come close to meeting sky high costs in nearly all sectors.

In the Philadelphia area, wages increased by an average of just 4.4 percent over the past year, according to federal statistics, falling well short of compensating for a drastically shifting economic environment and leaving the average worker to bear the brunt of the impact.

"We must recognize that we live in a period of more income and wealth inequality than at any time in the last hundred years," U.S. Sen. Bernie Sanders wrote in a Guardian op-ed this week. "While the very rich become richer and three people now own more wealth than the bottom half of American society, 60 percent of American workers live paycheck to paycheck and millions are trying to exist on starvation wages."

Nationally, "real" wages, when adjusted for inflation, decreased by about 1 percent in 2022, the first time that's happened in decades, according to the International Labor Organization.

In Pennsylvania, things are particularly grim for minimum wage earners. While the minimum wage rose in 23 states and Washington, D.C. on New Year’s Day as new laws and updated wages took effect, Pennsylvania's 63,800 minimum wage workers saw no change. Despite inflation and scores of studies demonstrating that minimum wage does not get most people out of abject poverty, Pennsylvania's minimum wage remains at $7.25 an hour, with a tipped wage of $2.83 an hour.

More than 100 hours a week are required in some areas for individuals making the minimum wage of $7.25 an hour, data from the National Low Income Housing Coalition shows. Fair Market Rent for a two bedroom apartment in the state is $1,087 (it's $882 for a one bedroom). Even though this is just the 27th highest rate in the nation, it still means that a minimum wage worker would need to work 115 hours a week for a two bedroom and 94 hours a week for a one bedroom

Most costs are increasing across the board. The average price for a gallon of gas in Pennsylvania is $3.63, down slightly over the past month from $3.77. While this overall trend may appear to be helping consumers in the short term, increased production and consumption of natural gas is an unsustainable solution both environmentally and economically, according to scientists.

Energy costs, meanwhile, remain persistently high around the nation. All energy costs saw a 7.3 percent year-over-year increase. Natural gas and electricity costs soared 19.3 percent and 14.3 percent, respectively.

Companies continue to profit off those skyrocketing costs, too, while the average citizen suffers. The US Energy Department projects natural gas bills across the nation will jump by 28 percent this winter over last winter, heating oil bills will go up 27 percent, electricity will be 10 percent higher, and propane will cost 5 percent more. The price of natural gas spiked to record highs in Pennsylvania over the past year.

Prices remain nearly as high as they've ever been in nearly all other sectors. Costs of food are up 13.1 percent and costs of housing are up 9.1 percent in the Philadelphia-Wilmington-Camden area, according to the most recently available statistics published by the government in October.

December food prices remained well above the year-over-year inflation rate, at 11.8 percent higher than in December 2021. The price of eggs jumped the most, costing 11.1 percent more than at the same time the previous year, due to unresolved pandemic-related supply chain issues and a widespread bird flu outbreak the Agriculture Department said wiped out 44 million egg-laying hens.

The softer readings in the report add to growing signs the worst inflation in about 40 years is gradually waning. Still, the Fed doesn’t expect inflation to slow enough to get close to its 2 percent target until well into 2024. The central bank is expected to raise its benchmark rate by at least a quarter-point when it next meets at the end of this month.

That’s the lowest such expectation in nearly 18 months. Over the next five years, consumers expect inflation to average 2.4 percent, only barely above the Fed’s 2 percent target.

Still, in their remarks in recent weeks, Fed officials have underscored their intent to raise their benchmark short-term interest rate by an additional three-quarters of a point in the coming months to just above 5 percent. Such increases would come on top of seven hikes last year, which led mortgage rates to nearly double and made auto loans and business borrowing more expensive.

The Associated Press contributed reporting.