Inflation and Higher Wages: A Look at the Effect of Extra Income Though every inflationary period tends to be unique, it can be valuable to compare your current paycheck with rising inflation rates.

By The Epoch Times

This story originally appeared on The Epoch Times

More than 80 percent of Americans are concerned about inflation, according to a survey by Skynova. The survey also indicated that 61 percent feel inflation will negatively impact their lifestyles. The findings coincide with rising costs for some goods and services, and a sense of uncertainty stemming from an economy recently hit with a pandemic.

If you've noticed prices have gone up in your area, you may also be looking at pay deposits or checks to see if your income has fluctuated. "In economic theory, as prices rise, wages should be rising with them," David Frederick, Director of Client Success and Advice at First Bank Wealth Management in the St. Louis, Missouri, area, told The Epoch Times. "However, this relationship between inflation and wages is not automatic and just because inflation is rising does not mean that a boss is going to offer his or her employees automatic raises."

Even when wages increase, the overall impact can vary.

"If workers push for higher wages, this increases operating costs for companies," David Peters, a financial advisor and owner of David Peters Financial Group in Richmond, Virginia, told The Epoch Times.

To cover the higher expenses, companies often charge more for their products and services. This can continue in a cycle, as workers may see the rise in prices and ask again for a wage increase.

Though every inflationary period tends to be unique, it can be valuable to compare your current paycheck with rising inflation rates. The process may provide insight, spur you to action, and enable you to create a financial roadmap for upcoming economic shifts.

Adjusting to Higher Levels of Inflation

If you've been with the same employer for months or years, and have not had a significant pay increase, it could be concerning to see living expenses move upward. You might find it harder to maintain your current lifestyle with the same set of dollars coming in each month. To tighten the budget, there may be areas where costs can be reduced, such as eating out less often or foregoing entertainment-related expenses. If you're paying off a home loan, consider the interest rate you have and explore options to reduce it. "The time to refinance the mortgage is now," Frederick said. "Mortgage rates are still amazingly low, even as inflation rises. Sooner or later, whether by the action of the Fed or by effects of the market, the mortgage rates will likely have to rise." If you can lock in at a low rate before rates rise, you could save in future years as you pay off the mortgage.

Seeing inflation rates increase could also be a motivating factor to seek higher levels of income. "Employees who want to actively and aggressively protect their finances may find benefit in shopping the job market, looking for new positions, and leveraging new offers to get pay raises from current employers," Frederick said. If you see a job opening in your area of specialty, the hiring company may be willing to pay a premium or offer a signing bonus if they are looking to fill the position quickly or are struggling to find workers.

When Wages Increase

There is no exact formula for how wages will rise since a pay increase depends on many factors. Some industries tend to experience higher wages when inflation rates escalate. "Real estate is generally positively affected by inflation because rent is higher during higher inflation times and costs are often fixed," Peters said. "Insurance may see more revenues from looser underwriting standards and increased investment income." Companies focused on commodities often have higher revenues during inflationary times, but if their expenses also increase, there may not be much net impact.

A study by AdvisorSmith indicated that between 2019 and 2021, the sectors with the highest wage increase included business services, retail, and medical services. These were followed by automotive retail and services, construction, and home services.

The industries topping the list had workers see an average hourly wage increase of slightly above 25 percent during the two-year period.

If your salary does increase, a good review of current inflation levels and forecasts of what lies ahead may help direct financial decisions. "Many people took withdrawals from retirement accounts during COVID," Peters said. If you took out of long-term accounts and now have extra funds, it could work to pay back the amount withdrawn. "It is also a good time to replenish emergency accounts," Peters said.

In addition, it can be worthwhile to evaluate savings and retirement plans. "If your wages increase, be sure to increase the amount of money you save and invest every month," Gregory Rozdeba, founder of Dundas Life, told The Epoch Times. You might consider options such as stocks, real estate, mutual funds, and other assets to create a diversified portfolio.

By Rachel Hartman

The Epoch Times, founded in 2000, is headquartered in Manhattan, New York, with a mission to provide independent and accurate information free of political bias or corporate influence. The organization was established in response to censorship within China and a lack of global awareness regarding the Chinese regime's repression of the spiritual practice Falun Gong.

The Epoch Times is a widely read newspaper that is distributed in 33 countries and is available in 21 languages. The publication has been critical in providing balanced and detailed reporting on major global events such as the 2003 SARS pandemic and the 2008 financial crisis. Notably, the organization has played a key role in exposing corruption inside China.

Aside from its human rights coverage, The Epoch Times has made significant contributions in a variety of fields. It has received praise for its in-depth analysis and expert perspectives on business, the economy and U.S. politics. The newspaper has also received praise for its broad coverage of these topics.

A series of editorials titled "Nine Commentaries on the Communist Party" appeared in The Epoch Times in 2004. It asserts that freedom and prosperity in China can only be achieved by eliminating the Communist Party, which violated China's cultural and spiritual values. In addition, the organization led the Tuidang movement, which resulted in over 400 million Chinese citizens quitting the Communist Party. In spite of this, 90% of websites referring to the "Nine Commentaries" were blocked by the Chinese regime.

The Epoch Times has been at the forefront of investigating high-level corruption cases within the Chinese regime, with its reporters taking significant risks to uncover these stories. The organization has received several awards for its investigative journalism.

The organization has received several awards for its investigative journalism. For more, visit

Editor's Pick

Related Topics

Side Hustle

Anyone Can Start a Passive Income Side Hustle For Easy Money — But Only If You Know These 5 Essential Tips First.

The rise of digital automation technology has made starting a passive income side hustle easier and more accessible than ever before.

Side Hustle

He Launched His Creative Side Hustle Out of a Garage. Now It's Worth $225 Million.

Tom Humble, CXO and founder of E.C.D. Automotive Design, followed his passion for custom auto design into big business.


Don't Just Babble on LinkedIn — You Need to Carve Out Your Own Niche. Here's Why.

To ultimately unlock the full potential of your LinkedIn experience, you need to establish yourself as a thought leader in a specific niche. This is why (and how).

Growing a Business

How an Executive Coach Can Help You Set Better Goals — And Transform Your Business

Ways to enhance your competitive advantage — and psychological wellbeing — with the assistance of a seasoned, results-focused professional.

Business News

This Company Promised to Transform Drive-Thrus With AI — But the Secret Powering Its Tech? Humans.

Presto Automation Inc., one of several major players in AI-ordering tech, has made headlines for using off-site employees in places like the Phillippines.

Business News

An Hermès Heir Wants to Give Half His $12 Billion Fortune to His Gardener—and Lawyers Are Going Nuts

Nicolas Puech, the grandson of Hermès' founder, intends to legally adopt the 51-year-old former groundskeeper as his son, ensuring he inherits his billions.