Paying more for food, housing and other living expenses has become part of the pandemic recovery routine, as inflation has grown faster than some incomes — and especially evident to those on fixed incomes.
That includes Marty Bruno, a retired Littleton resident who’s now 73. His wife will retire soon and move over to Social Security. At that point, her income will drop by half.
Their cars are aging teenagers. His 2005 Honda Pilot has 280,000 miles on it. The cost to replace it, even with a used car, is more than $20,000 (“No way we can afford that,” he said). He’s on Medicare but didn’t opt for the option with additional costs (“To be perfectly honest I just skip health care visits to avoid the expense,” he said).
“Even fast food lunches run about $10 these days, forcing me to order from the dollar menu at McDonald’s if I want to eat out,” he said.
Bruno’s comments, shared by email, provide a glimpse into one family’s reality with inflation. The January Consumer Price Index saw U.S. inflation rate jump to 7.5% in urban areas in the past 12 months, according to new Bureau of Labor Statistics data released Thursday. That’s the largest 12-month change since February 1982 and was higher than economists had expected. Before the pandemic, the inflation rate was under 2%.
The Denver metro area’s rate was even higher, at 7.9%. And that’s not a good sign as we’re still recovering from the COVID business disruptions, said Chris Brown, vice president of policy and research at Common Sense Institute, an economic think tank in Greenwood Village.
“High inflation erodes savings and increases the costs of daily commutes, groceries and other consumer goods. This threatens the financial health of Colorado citizens and the strength and swiftness of the state’s ongoing economic recovery,” according to CSI’s report.
Economic data can be unwieldy and difficult to make sense of what it all really means for consumers. But Common Sense Institute broke out inflation in handy charts and bullet points, like these:
- The average Colorado household spent $2,902 more on food, housing, transportation, medical care, recreation and education in the past 12 months than in 2020.
- Energy and transportation costs grew the fastest in the past 12 months, at 24.9% and 21.1% respectively. While both categories declined in 2020, the rebound goes well beyond any loss in the prior year, Brown said.
- Over the past two decades, the cost of higher education, housing, medical care and gasoline have all outpaced wage growth.
- Denver-metro area inflation in the past 12 months was 7.9%, or more than 2.7 times higher than the average inflation of 2.85% between 2010 and 2019.
A lot of the data, however, is Denver-centric. But prices must be going up all over the state. What are you seeing based on where you live?
Here’s one I’m sharing: My Xcel Energy bill. While The Colorado Sun has been reporting that prices will be rising (see our reporting here, here and here), it’s still a shocker to see the cost of gas jump 33.5% as costs go up even though my energy use did not.
→ Has inflation hit your wallet? Share examples, photos and anecdotes with What’s Working readers. >> Take the inflation poll
→ INFLATION SNIPPETS — After the latest BLS report, business reporters nationwide tried to make sense of what this all really means. Some highlights:
- Economists believe inflation will cool by the end of the year “as automobile prices climb at a more moderate pace and as supply chain problems hopefully ease,” The New York Times reports. But as the NYT notes: Economists thought price gains “would fade quickly in 2021,” but were proved wrong. >> STORY
- The average U.S. household spent $3,500 more on groceries and services last year compared to 2020, estimated economists at University of Pennsylvania’s Wharton School. That reporting comes from The Associated Press, which also mentioned a North Carolina grocery worker’s $100 budget for groceries used to fill a cart but now fills only half a cart. She switched to canned tomatoes after fresh tomatoes reached $5 a pound. (What? Where is she shopping? Not at King Soopers!) >> STORY
- The higher cost of goods caught everyone’s attention, but there’s also the price of services to consider. Excluding energy services, services were up 4.1% in January from a year ago, and the biggest increase since 1992. That’s notable because services inflation is driven more by wages than supply. “Your haircut doesn’t cost more because it got stuck on a slow boat from China,” reports The Wall Street Journal. >> STORY
→ WESTERN SLOPE CONCERNS — There was a higher rate of searches for “inflation” on Google in the Grand Junction-Montrose area than in Denver and Colorado Springs, according to Google Trends. >> VIEW
How does $65,000 sound?
Speaking of inflation, there is a link to higher wages, which on average have gone up in Colorado. As mentioned in previous columns, Colorado’s average hourly wage grew 8.2% to $33.28 in December, compared to the same month two years ago, according to the state’s labor department. The state’s minimum wage jumped to $12.56 in January, up 13.2% from two years earlier.
While $33.28 an hour — or $69,222 a year — seems like a livable wage even in Denver, that’s the average of what everyone makes.
In places like Boulder, that includes the mean wage for surgeons at $287,700, or financial analysts in Grand Junction at $111,460, according to May 2020 data from the BLS Occupational Employment and Wage Statistics. Electronic engineers in Fort Collins earn a mean of $116,780 while pharmacists in Pueblo are at $128,990.
What’s Working readers responding to an informal survey on livable wages in their city concluded that it should be $65,000 on average. Most respondents were from the Denver or Colorado Springs region.
But lower-paid service workers have an amazing number of options, which has led to the Great Resignation label. Larger companies have upped their pay and bonuses for entry-level workers. I drove by a McDonald’s in Littleton that advertised $17 to $20 an hour. Amazon is now advertising “up to $21.55/hr” plus a $3,000 sign-on bonus at its Denver and Colorado Springs warehouses.
“Part of the increase in wages is it shows that workers are needing to have wage gains to keep up with inflation just so that their paycheck can buy them the same amount of goods that it was able to them last year,” said Luke Pardue, lead economist for payroll services provider Gusto in Denver.
“We’re also seeing additional wage gains in areas where this Great Reassessment, this upgrade, is happening. Most acutely, that’s in service sector jobs that typically command a lower wage. we’re actually seeing the fastest wage gains that are outpacing inflation.”
Service workers see largest wage gains
According to Gusto data, workers who made less than $15 an hour between August and January saw wage gains of 10% or more, which outpaced inflation. That was more than double the rate for workers who made $30 an hour or more.
More specifically, Colorado workers employed in the personal services industry saw their pay increase $2 to $24 an hour in the 12 months that ended in January. That compares to $19 to $21 nationwide. (It’s also a drop from December, when personal services were at $29, but Pardue attributes that uptick to year-end bonuses or overtime.)
“This pandemic has placed a spotlight on the financial security of the service sector workers,” Pardue said. “They are coming out of this pandemic with an eye on their wallet. And to the extent that they can improve their financial situation by switching jobs, that is ultimately what it comes down to.”
Unfortunately, he added, that puts small businesses in a difficult position. Many are financially strapped themselves and can’t absorb raises as much as larger companies can.
“They would if they could raise wages to the extent that the Amazons and the Walmarts can, or expand hours to the extent that all these larger corporations can,” Pardue said. “There’s so much uncertainty and inflation is rearing its head. It’s just not a financially viable position for these businesses to be in.”
But Pardue said small businesses are resilient and can make decisions fast about survival, such as reducing hours to retain more workers, or offer other non-financial benefits, such as paycheck advances or personal loans.
“This economy right now is tied to the pandemic and every new (COVID) wave that we see results in more pain for both small businesses and their workers,” he said. “But we’re seeing that small business owners are becoming more adaptable in how they adjust to each new curve that’s thrown their way.”
→ Mo’ ski money — Aspen Skiing Co. is spending $12 million to bump up the minimum wage to $20 an hour, reports The Sun’s outdoors reporter Jason Blevins. That effectively increases pay by $3 an hour. >> READ
→ $48 billion for restaurants — The Restaurant Revitalization Fund helped nearly 1,800 restaurants in Colorado by providing $480 million. But that money is long gone. Colorado’s U.S. Sen. Michael Bennet wants to restock the pot and is supporting the Continuing Emergency Support for Restaurants Act.
→ Real estate agent boom? The Great Resignation strikes again, this time on Google search results. CNET reports that the top “how to become” careers in the past 12 months were real estate agent, flight attendant and notary. >> TOP CAREERS
It’s that time of year again. Tax forms are being sent to those who collected unemployment in 2021. And unlike last year, I’m not hearing from anyone who suspects a fraudulent tax form (and if you got one, report it HERE), but I have heard from some folks who are still waiting for their 1099-Gs so they can file their taxes.
The response from the Colorado Department of Labor and Employment is that many, but not all, 1099-Gs have been mailed. If you haven’t received one, this may be why:
“The most common reason a claimant may not receive their mailed 1099-G form is because the address associated with their claim is not current. For example, claimants who are no longer receiving benefits may have moved but didn’t think to update their address with CDLE,” the agency said in an email.
To fix a bad mailing address, log into your MyUI+ account to update it. A new 1099-G form will then be mailed to the address.
Folks can also view and print the 1099-G by logging into their MyUI+ account and then select “View Correspondences.” NOTE: If your tax form wasn’t mailed yet, it won’t be visible online. The labor department said it has no date on when all mailings will be completed.
→ CDLE’s 1099-G tax form page >> VIEW
→ MORE HELP — The generous-with-their-time volunteers behind the Colorado pandemic unemployment group on Facebook are still responding to questions even if they have nothing to do with the pandemic. If you’ve got one, drop it their way. >> CO Unemployment/PUEC/PUA Q&A group
This column is better when readers share what’s really going on out there. Don’t be shy! Share your thoughts on what you think is a livable wage in Colorado, why workers are quitting jobs or how inflation has affected your household budget. Stay warm! ~tamara