Originally posted by forresthump2:
MD quotes: ""While average weekly wages (in CURRENT DOLLARS) has tripled since 1970, the
following table illustrates that when inflation is accounted for, real earnings IN
CONSTANT DOLLARS have decreased steadily over the past two decades. Weekly
wages have fallen 10%. Thus, even though 1998 paychecks have more zeroes on the
end, they don't go as far as a 1970 paycheck to cover living expenses." source: US
Labor Bureau"
I agree with forresthump, but to add to his point on inflation.
Inflation also increases the money people pay in taxes to the goverment. It is in the goverment's favor to allow inflation to occur. It increases there income in a couple different way. First, it effective lowers the standard deduction, since that deduction isn't adjusted by the rising rate of inflation. Second, by floating everyone salaries up, people gravitate towards higher and higher tax brackets, further increasing the percentage of income the goverment takes from you.