For many, part of the American Dream is seeing our children do better than we did.
Among other things, this means we work hard to ensure they have a good education.
That doesn’t have to mean college.
Plenty of opportunities don’t require college.
But whether they graduate from high school or college, we want them to land a decent job.
While we hope they enjoy their work, that’s not always where our interests lie.
We want them to get paid well.
A solid job includes pay raises over time, allowing workers to increase their standard of living.
Those raises help our children earn more than we did over time.
That’s been the case for most of history.
But like so many other economic principles, that’s not what we’re seeing now.
Less Frequent Pay Raises Bad News for Workers
Raises are lagging behind inflation and have been for 18 months.
The chart below shows the year-over-year change in average wages less the rate of inflation.
Values above zero indicate wages are growing faster than inflation.
18-Month Wage Slump for Workers
It will take time for inflation to fall or for wages to grow enough to overcome inflation.
Workers will likely endure more than two years of inflation-lagging wage growth before this is over.
They are already responding by using credit cards more.
Credit Card Activity Soars as Inflation Rises
Outstanding balances are also growing.
So is the percentage of accounts being charged interest.
That value rose to a 26-year high.
There are other signs of financial stress. The longer the pressures remain, the more distant the American Dream becomes for many.
During the recession that began in 2008, wage growth lagged inflation for 12 months.
Bottom line: This time is worse.
That’s important to consider.
This time is worse than in 2008 — the greatest economic crisis since the Great Depression.
And this time, workers are falling further behind than they did then.
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Michael Carr is the editor of True Options Masters, One Trade, Precision Profits and Market Leaders. He teaches technical analysis and quantitative technical analysis at the New York Institute of Finance. Follow him on Twitter @MichaelCarrGuru.