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BigBang

Wage Inflation - Is It A Fair Measure?

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Many of the discussion threads on this site regarding inflation seem to end up with people saying that price inflation is much higher than official figures state but that wage inflation is low so debt lingers longer. However I want to challenge this assumption that take home income inflation is represented correctly by the official wage inflation rate.

Wage inflation is an interesting point. I don't know very much about it. Does it include bonuses or does it only include base salary? From what I can see many people earn a lot of their take home income in bonuses. Also many people change jobs to get large pay increases compared to their last job which I'm guessing aren't included in wage inflation figures. I reckon the real take home income of a lot of people over the last 10 years is a lot higher than the wage inflation rate. Wage inflation used to be a good indicator in a by gone era when people stayed in a job for 20+ years or their whole career. Now that many people change jobs for higher pay or are choosing self employment/contracting to move to where the best money is found, wage inflation has become an inadequate measure. If this really is the case it means income inflation does currently exist at much higher levels than many people believe from the wage inflation figures and income inflation is able to eat away at debt.

I’d be interested in any replies from people who have factual knowledge about wage inflation, how it’s constructed, and whether it still is a fair indicator of the increase in take home income.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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