Many Americans have recently gotten raises. But the bigger paychecks are an illusion
In the last year, 61% of U,S, workers have gotten a raise in the last year according to a new NPR/PBS Newshour/Marist poll. But that doesn't necessarily mean all people's financial situations have gotten better.
Take Donna Dunn, 49, of Booker, Texas.
"We're really in the middle of nowhere," she said of her town, where she is the office manager of a healthcare clinic.
Dunn gets a 3% cost of living raise every year, but the actual cost of living has been rising a lot faster than that. Recent data shows inflation is running nearly three times that rate, at 8.3%.
When people see their wages go up, but prices are rising faster, economists call it 'the money illusion.' Paychecks might look bigger, but it's an illusion. Simple math shows you are getting paid less.
In fact, if you adjust for inflation, U.S. workers have gotten one of the biggest pay cuts on record over the last year.
This was not surprising to Dunn, who has has five kids, a tight budget and has developed an encyclopedic knowledge of food prices.
"I used to be able to get a dozen eggs for $2.69. That exact same dozen eggs just today was $4.89," she said. "The large boxes of Hot pockets, the 36 count box, used to be $8.99. Now that same exact box–and it only has 24 in it–is $13.90."
To try and deal with the rising prices, Dunn made swaps: pork instead of beef, PB&J instead of deli sandwiches and no more eating out. Even then, her family food bill went from around $700 a month to more than $1,600 and Donna was drowning. She's reluctantly choosing which bills to pay, and not pay.
Her employer offered raises to help with inflation, but the money wasn't enough. More than a third of those polled said their finances had gotten worse in the last year and an increasing number report falling behind on bills.
Dunn has found some workarounds. Actually, she's grown them in her vegetable garden and on her mom's farm.
"I'm on a trade system with one of the other farmers," she said. "She has chickens and brings me the eggs and I give her tomatoes and zucchini and cucumbers."
One way around the money illusion? Don't use money.
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