Inflation is not under control
Unless you’re a Baby Boomer, I guess. I am so tired of the phrase “inflation remains under control” in all the tentatively optimistic economic pieces that have come out. Inflation is not under control. Prices are under control. Inflation — which, in my mind, is the relationship between earning power and purchasing power — has been out of whack for 15 years, and continues to slide out of control.
The Boomers who enjoyed America’s economic rise to power have come to view inflation as the change in purchasing power only. That is because, by and large, they still live in the paradigm of career-length jobs with salaries and benefits that were dictated by single-income families. As women entered the work force en masse, they famously were subjected to lower salaries than their male counterparts. This has been decried as sexism (which is certainly at the root of the difference), but it’s also a force of economics: more workers need to share the same amount of capital, and so salaries decrease for the newer workers in the mix. Increased spending habits (conspicuous consumption), the need for outsourced day care (pumping more spending into the economy again), and a greater acceptance of personal debt have largely kept the world looking similar for older women, that first generation to pioneer full-time careers on a mass scale.
But what about those who have graduated and started working from the late 1980s to now? An employer is always looking for ways to save money on labor costs, and younger generations have become inured to the idea of working for less, or for free. (Ask your parents and grandparents about the internships they did; they didn’t do any. Now ask a recent college graduate; it’s now common to do more than one internship before attaining entry level employment.) Just as women were paid less for the same work, younger people are now paid tremendously less than their parents at the same stage in their careers. The salaries (adjusted for inflation) might actually be similar, but the rapid erosion of company benefits must be factored in. Even without factoring in inflation and benefits, I know many people who happily work for a smaller numerical salary than their parents did at the same age. The marketplace has adjusted to a two-income household, which means each individual makes substantially less money than before.
This makes some sense — one worker doesn’t need to make as much money when they’re not trying to support another adult and some children on the salary. But consumer goods have not gotten cheaper, and therein lies the hidden inflation.
If you want to see the real inflation, look at items that Baby Boomers do not purchase: college tuitions (student loan debt) and rent. These areas have experienced across-the-board, year-to-year, highly noticeable increases in cost. Salaries have not risen to meet those costs. Gen X and Gen Y are getting pummeled by inflation. And just wait until the ‘inflation bomb’ the Boomers have lit under health care costs finally comes to bear on their aging children. (Hell, even Boomers complain about the cost of health care and health insurance.)
The population explosion of the mid-20th century has done some funky things, demographically, to our economy. For the most part, it’s been a great ride financially, do to all that labor and creativity. But here in the twilight, as fewer children attempt to support both the triumphs (Social Security) and mistakes (um, Social Security?) of their numerous elders, the sense that inflation has been under control will surely drop away. We are, and will continue to be, poorer than our parents. I suppose you could blame us. Or the economy. Me? I blame inflation.
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