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Wage Inflation Calculator

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How your wage is doing relative to CPI

The Consumer Price Index (CPI) is a measure of price changes in consumer goods and services and is the most widely used measure of inflation. Unfortunately, CPI is not a good indicator of inflation for most people because it does not measure the prices of many of the goods and services they buy. For example, it does not measure the prices of real assets like houses, stocks, bonds, and commodities. Historically, these asset prices have increased at substantially higher rates than indexed consumer prices.

Since 2013, CPI has increased by 32.06% while your wage has increased by 0%, giving you an adjusted increase in purchasing power of 0% relative to CPI.

Relative to CPI, your current real wage is $ 0.00.

How your wage is doing relative to S&P 500

The S&P 500 is a list of the 500 largest US companies ranked by market value.

Since 2013, S&P 500 has increased by 202.74% while your wage has increased by 0%, giving you an adjusted increase in purchasing power of 0% relative to S&P 500.

Relative to S&P 500, your current real wage is $ 0.00.

How your wage is doing relative to Housing

The housing market is booming due to low interest rates and high demand. Most investors purchase housing with the goal of selling the house at a higher price than the original purchase price.

Since 2013, Housing has increased by 66.80% while your wage has increased by 0%, giving you an adjusted increase in purchasing power of 0% relative to Housing.

Relative to Housing, your current real wage is $ 0.00.

How your wage is doing relative to Gold

The original money. Gold is a metal that has been mined for thousands of years. It is one of the most valuable metals in the world.

Since 2013, Gold has increased by 21.92% while your wage has increased by 0%, giving you an adjusted increase in purchasing power of 0% relative to Gold.

Relative to Gold, your current real wage is $ 0.00.

How your wage is doing relative to Bitcoin

A form of digital currency which allows for peer-to-peer transactions without the need of a bank or other financial institution. Bitcoin is the future of money.

Since 2013, Bitcoin has increased by 28557.78% while your wage has increased by 0%, giving you an adjusted increase in purchasing power of 0% relative to Bitcoin.

Relative to Bitcoin, your current real wage is $ 0.00.

The Purpose of Our Wage Inflation Calculator

Our Wage Inflation Calculator serves as a valuable tool for assessing wage inflation and measuring the purchasing power of your salary over time. Inflation can be likened to a hidden tax that gradually diminishes the value of your income, hindering the achievement of your long-term financial goals if left unattended.

By utilizing our wage inflation calculator, you can accurately evaluate the true worth of your salary and develop effective strategies to enhance your financial growth over time.

Instructions for Using Our Wage Inflation Calculator

Using our fast and user-friendly inflation calculator is a breeze. To get started, simply enter your initial salary, the year you commenced employment, and your current salary. The calculator will then provide you with insights into how your wage has grown in relation to various inflation metrics. It is important to note that even if your wage has increased nominally, its real value may have declined relative to the average inflation rate.

What Is Inflation and How Does It Work?

Inflation refers to the reduction in the purchasing power of a currency, which occurs when the supply of currency outpaces the supply of goods and services. With more currency available, the value of each unit decreases. The average inflation rate quantifies the extent to which the currency has lost value within a given year.

Inflation erodes the value of your income and savings, necessitating a higher income to afford the same goods and services. This can pose challenges in achieving your financial objectives.

Learn more about inflation here.

What Is Actual Inflation?

Actual inflation represents the rate at which prices for goods and services are rising. While various measures of inflation exist, actual inflation holds significant relevance for consumers. Economists frequently employ the consumer price index (CPI) as a measure of inflation. However, it is important to note that CPI has faced criticism for its failure to account for changes in the quality or quantity of goods and services.

Are Inflation Calculators Accurate?

Many inflation calculators rely solely on the consumer price index as a measure of inflation. While the CPI is effective for measuring inflation related to certain living costs, it does not consider the price changes of other assets that may appreciate more rapidly than consumer prices.

For instance, if you have invested in real estate, its value could increase significantly compared to the relatively modest rise in the consumer price index over the same period. Therefore, experts often recommend considering asset inflation alongside CPI to gain a more comprehensive understanding of your purchasing power.

Our calculator calculates inflation by comparing the purchasing power of wages to various sources of inflation data, including equities, real estate, gold, and bitcoin, in addition to the official inflation data measured by CPI.

Why Use a Wage Inflation Calculator?

There are several compelling reasons to utilize a wage inflation calculator:

  1. Salary Negotiation: When negotiating a new salary, an inflation calculator can assist you in determining the actual value of the wage and help you mitigate the impact of inflation.
  2. Cost of Living: To stay ahead of inflation and rising prices, a wage inflation calculator can provide insights into the necessary income increase required to keep up with the cost of living and food prices.
  3. Home Buying: If you are considering purchasing a home, an inflation calculator can help you assess how much your wage needs to grow to match the escalating cost of real estate.
  4. Retirement Planning: An inflation calculator is invaluable for retirement planning, enabling you to estimate the amount of savings needed to counteract inflation after you retire.

How to Protect Your Wage From Inflation

Safeguarding your wage from inflation involves two key strategies:

  1. Negotiate Ongoing Pay Raises: By proactively negotiating regular pay raises with your employer, you can ensure that your income keeps pace with the cost of living. This helps protect your wage from the erosive effects of inflation over time.
  2. Invest your Money: Another way to safeguard your wage is by investing a portion of your income or savings. Investing allows you to mitigate the loss of value caused by inflation. Moreover, if you make prudent investment choices, your savings can grow at a rate that outpaces inflation, thereby preserving and even enhancing your purchasing power.

Learn more about investing here.

Data Sources for Wage Inflation Calculation

To ensure accurate calculations of wage inflation and assess the impact of different factors, our wage inflation calculator utilizes the following data sources:

  • FRED | St. Louis Fed: FRED provides key economic data, including the Consumer Price Index (CPI) data, which is a widely used measure of inflation. It also offers data on housing prices, enabling analysis of the impact of inflation on real estate.
  • Nasdaq Data Link: Nasdaq Data Link provides access to financial data, including the S&P 500 index, which serves as a benchmark for equity market performance. By incorporating equity prices, the calculator considers the potential effects of asset inflation on wages. Additionally, Nasdaq Data Link offers data on gold prices, allowing for an assessment of inflation hedging through this precious metal.
  • CoinGecko: CoinGecko specializes in providing data on cryptocurrency prices. While cryptocurrencies have unique dynamics, including potential inflationary aspects, the calculator incorporates this data source to provide a broader perspective on inflation trends.

Additional Resources for Understanding Wage Inflation

To deepen your understanding of wage inflation and its implications for personal finance, you can refer to the following external resources:

  • Bureau of Labor Statistics (BLS): The BLS offers comprehensive labor market data, including wage inflation statistics, industry-specific information, and regional wage trends. It provides valuable insights into the dynamics of wages and inflation within various sectors.
  • National Bureau of Economic Research (NBER): The NBER publishes research papers and analyses on various economic topics, including wage inflation. Their studies can offer in-depth analyses and empirical evidence to further enhance your understanding.
  • Financial News Outlets (e.g., Bloomberg, Financial Times): News outlets specializing in finance and economics provide up-to-date analysis and commentary on wage inflation trends. They often feature expert opinions and insights from economists and financial analysts.

By utilizing these data sources and external resources, you can access reliable information, stay updated on inflation data, and gain a more comprehensive understanding of wage inflation's impact on personal finances and the broader economy.