Who Does Inflation Hurt The Most?
Published on: 02/08/2022
In this edition of Chart Talk, Tony Ogorek and Jeff Viksjo discuss inflation and whether it impacts everyone the same.
Welcome to another edition of Chart Talk. I’m Tony Ogorek. I am here with Portfolio Manager Jeff Viksjo. And today, Jeff, we’re going to be talking about inflation, and specifically, does inflation impact everybody the same? Interesting question. So, we’ve got a chart here, which is produced by the Gallup Group, and you are going to see that they segmented incomes into three categories. The first category is people making $40,000 or less, the second category is people making $40,000-$99,000, and the third category is people making over $100,000 a year. So, looking at this chart, Jeff, what kind of insight can we pull away from.
Yea Tony I think it’s very clear that the less you make, the more you’ve been impacted by inflation. And if you put inflation in terms of something very practical, like gas prices, you know gas prices up 40-50%, what does that do to your budget? Well, we all pretty much spend the same amount of money on gas, no matter how much you make. So, if you are in the lower tax bracket that percentage increase in gas is really hurting you. It’s taking up more of your budget. Whereas, if you make a lot of money, you don’t spend that much on gas anyways, in terms of your budget, and so a little increase isn’t going to bother you. So, we are really seeing those lower income brackets being hurt the most.
Interesting Jeff. So, you know, we’ve seen a lot of wage increases at the lower end, for a lot of the service jobs. We have also seen the great resignation where people are leaving the job market, you know, primarily at the lower end. Do you think that this inflation, with its pernicious impact on lower income people, is driving some of that great resignation out there?
Yea, I definitely think it’s related as the cost of working go up, say just the gas to go to work go up, or childcare. It makes it less likely that they’re gonna go to work at all. It’s not going to be worth it. So, we’ve seen wages go up, which is good, hopefully we will get them back into the workforce, but it’s gonna take some time.
Ok Jeff, thanks for the insights. And thank you for joining us for this edition of Chart Talk.
PLEASE SEE IMPORTANT DISCLOSURE INFORMATION HERE.