Great Lakes Wire

Despite the state's robust job growth, this week's report that inflation was at 9.1% revealed the sharpest real wage decline in several decades.

Even with the presence of a strong job market, typical workers in Michigan and across the nation are ending up financially worse off with each month that passes. Meanwhile, consumer sentiment is falling quickly.

The U.S. Bureau of Labor Statistics (BLS) reported on Wednesday that real average hourly earnings decreased 3.6%, seasonally adjusted, from June 2021 to June of this year and decreased 1% from May to June.

The BLS also released the Consumer Price Index (CPI) data for the 12 months ending in June. The data showed a 9.1% all-items annual increase, which represents a 1.3% climb from last month and the highest number in over 40 years. The largest contributor was the increase in the index for gasoline, followed by the food and shelter indexes.  

"Real (inflation-adjusted) hourly earnings declined at the steepest [rate] in four decades in June," Joel Griffith, research fellow and economist at the Heritage Foundation, said on Twitter. "For a couple earning $100,000 last year, this is a $3,600 pay cut in 2022."

The average pay for non-managerial workers was down 2.7% over the last 12 months after subtracting CPI inflation. That was the steepest drop since 1980 (except for a single month at the start of the pandemic, when data was distorted), Axios reported.

Wage increases for workers in Michigan have been stymied by the surge of inflation in the products they consume. Average hourly earnings for private-sector workers are up 2.2% since December 2021, according to Axios. The website said that would typically be ideal for a six-month period; however, consumer prices rose 5.4% in that same span.

Consumer sentiment during June was reported at an all-time low. There was a -41.5% year-over-year change in the Index of Consumer Sentiment, according to the University of Michigan's Surveys of Consumers results. The index also saw a -14.4% change from May to June.

President Joe Biden's leadership has been criticized for months as Americans continue to disapprove of his job performance. The latest New York Times/Siena College poll revealed that the president's approval rating is now at 33% among Americans. As more than three-quarters of registered voters said that the United States is moving in the wrong direction, The New York Times reported that "pessimism spans every corner of the country, every age range and racial group, cities, suburbs and rural areas, as well as both political parties."

The mean household income in Michigan is $78,400, according to World Population Review. When adjusted for inflation, this number drops by $2,822 to bring the annual income to $75,578.