Wagflation, a word combination referring to two coinciding macroeconomic events – stagnant wage growth and rising inflationary pressures.
In the 1970’s, the United States experienced a new phenomenon called stagflation, which was the combination of rising inflation and stagnant job growth. However, the U.S. economy in the first decade of the 21st century has been experiencing rising prices as well as relatively stagnant wage growth. In real terms, mostly middle- and low-wage workers are experiencing an environment where inflation is exceeding the annual growth of their earning power or wage improvements are quickly eroded away by the higher cost of living.
The Bush Administration has argued that the average earnings of Americans has been rising, however, the data suggests that in reality the rise is coming from the top income earners. Statistically, the data suggests a positively skewed distribution. On average incomes may show increases, however, those increases are the result of the average being ‘pulled’ up by a small number of wage earners accounting for the highest level of wage growth.
I am very interested in this particular combination, which is I why I’ve decided to give it it’s own name. I’ll continue to add to this as my research continues. I invite feedback or additional input.
