Source: NYT > Business (paywall)
Real wage erosion is becoming a structural feature rather than a temporary shock. Workers saw purchasing power gains from 2023-24 evaporate as inflation re-accelerated, leaving many worse off than they were pre-pandemic even after nominal pay increases. Wage negotiations remain reactive rather than predictive—workers fight yesterday's inflation while employers anchor to backward-looking benchmarks. For consumer-focused brands, this means sustained pressure on discretionary spending among middle and working-class households, forcing continued trading down and heightened sensitivity to price increases even in allegedly "value" categories.