The economic landscape has been marked by rising inflation, leading to concerns among employed consumers about their wages keeping up with the cost of living.
In the latest “Consumer Inflation Sentiment Report,” PYMNTS Intelligence drew on a survey of nearly 2,300 U.S. consumers to better understand their perceptions around wages and jobs following nearly two years of high inflation rates and recession concerns.
Findings captured in the study showed that 72% of employed consumers think their wages have barely kept up with inflation or have not kept up with inflation. The sentiment is not new and reflects a long-term trend of nominal income levels failing to keep pace with inflation.
Forty percent of employed consumers said their current salary does not meet their expectations, with nearly half of those earning less than $50,000 annually expressing this sentiment.
While consumers expect inflation to drop back to pre-2021 levels by January 2025, consumers’ purchasing power is still 11% lower than it was two years ago. To counter the erosion of their purchasing power, consumers are actively seeking additional work or even switching jobs to find better salary prospects.
The survey revealed that 41% of employed consumers have picked up extra work, with Generation Z and millennials leading the way. Even those earning higher incomes, including those above $100,000 per year, are not immune to concerns about inflation and rising prices, prompting them to seek additional employment.
Among employed consumers whose current job does not meet their salary expectations, 16% said they do not see themselves staying with their current employer in six months, an indication that the phenomenon known as the great resignation shows no sign of abating. This trend is particularly evident among those earning between $50,000 and $100,000 annually, including millennials and bridge millennials.
But while switching jobs may seem like a viable solution, not all income groups and professions have equal opportunities. Companies that have downsized in recent years tend to eliminate higher-income and white-collar roles, making it challenging for employees in these positions to find comparable alternatives.
However, the survey revealed that 37% of consumers believe they can find a position that meets their qualifications and salary expectations within the next three months.
Overall, consumers’ sentiments regarding inflation are slowly improving, but the impact of inflation on their spending habits and income perceptions remains. To retain talented workers, employers must consider employees’ priorities, including adjusting wages to account for the rising cost of living and inflation.
Offering growth opportunities, a flexible work environment, meaningful work and work-life balance can also help attract and retain employees — a cost-effective alternative to the time and expenses associated with recruiting and training new candidates.
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