Consumer Inflation Sentiment Report

45% of Millennials Say Wages Don’t Meet Inflation

August 2023

PYMNTS surveyed 2,282 U.S. consumers between July 7 and July 14 to understand their perceptions regarding wages and jobs on the heels of nearly two years of high inflation rates and worries of a recession. PYMNTS has conducted a monthly longitudinal survey since July 2022 to track evolving consumer sentiments on inflation.

While worries about a recession are cooling, consumers remain cautious since their purchasing power is 11% lower than two years ago.
In response to their eroding purchasing power, consumers are finding more work: 41% of employed consumers have picked up extra work.
Sixty-two percent of employed consumers cite inadequate pay and benefits and the lack of opportunities as reasons to consider leaving their current role.


Register for Unlimited Access
Fill in the form below for free unlimited access to all our Trackers and Studies.

Thank you for registering. Please confirm your email to view all our Trackers.

    yesSubscribe to our daily newsletter, PYMNTS Today
    By completing this form, I have read and acknowledged the terms and conditions.


    Many employed consumers do not see their wages keeping up with inflation and are picking up extra work or considering job hopping. These sentiments are a new manifestation of the Great Resignation in an inflationary environment. Considering the low unemployment rate, this trend can cause a significant disruption of the labor market to the detriment of employers if left unheeded.

    The 13th installment in the “Consumer Inflation Sentiment Report” series explores consumers’ outlook on the American economy. For “The Great Resignation is Not Over” edition, PYMNTS surveyed 2,282 United States consumers between July 7 and July 14 to better understand consumers’ evolving perceptions of wages and jobs on the heels of nearly two years of high inflation rates and worries about a recession.

    This is what we learned.

    Consumers see high inflation fading on the horizon, but most are still cutting back.

    Inflation fell to a 3% annual rate in June, which signals that the end of high inflation may be in sight. Consumers still expect inflation to drop back to pre-2021 levels in January 2025 after months of consumer pushing the expected date further into the future. Grocery and retail shoppers are 15% less likely to expect price increases than one year ago.

    This expectation indicates that consumer sentiment is improving because inflation does not have as strong a hold on them as it did in past months. While worries about a recession are cooling, consumers are still cautious since their purchasing power is 11% lower than two years ago.

    Consumers may react slowly to decreased inflation due to longer-term perceptions that their wages have not kept up.

    Seventy-two percent of employed consumers said their income has not kept up with inflation or has barely kept up with it. This sentiment is not merely a sense of never feeling like one has enough: Nominal income levels have not been keeping up with inflation for decades.

    This theme reverberated across PYMNTS’ latest study. We found that 4 in 10 employed consumers say their current salary does not meet their expectations. Nearly half of those annually earning less than $50,000 felt this way. Even if they received a raise in the last 12 months, the amount of the raise my not have offset inflation.

    Consumers are concerned enough about inflation that they are finding additional work to compensate for higher prices.

    In response to their eroding purchasing power, consumers are finding more work: 41% of employed consumers have picked up extra work. Fifty percent of consumers in Generation Z and 51% of millennials seek additional employment, leading other age groups. While those making the least are the most likely to say their salary does not meet their expectations, remarkably similar shares of each income group — including those earning more than $100,000 per year — have picked up extra work due to concerns about inflation and rising prices. Not many consumers seem to be immune.

    The Great Resignation is not over: Employees are still planning to switch jobs.

    PYMNTS found that 16% of employed consumers whose current job does not meet their salary expectations do not see themselves still with their current employer in six months. Those most likely to switch employers are consumers annually earning between $50,000 and $100,000, bridge millennials and millennials — a large contingent by any measure. This factor should already give pause to employers by itself. When coupled with the current unemployment rate at a low of 3.6%, employers cannot count on easily finding new talent any longer, at least not quickly.

    Switching jobs may not be as easy for all income groups and professions, however. When companies have cut back in recent years, they have tended to eliminate higher-income and white-collar roles. Comparable alternatives to these positions may not be available as other organizations in the same industry may have also cut these roles or have removed the need for skilled labor with artificial intelligence. Even when there are corporate roles open, those jobs are taking longer to fill.

    However, our data reveals that 37% believe they can find a position in the next three months that would fit their qualifications and salary expectations. Those who currently earn more than $100,000 and whose salary does not meet their expectations are even more likely to echo this sentiment — 45% state that they can find an alternative job in three months. Hourly workers, however, may be able to seek and find alternative employment for more pay for the same position, given the labor shortage and low unemployment rates.

    Bolstered by rising prices, concerns about pay rank among the top factors leading employees to consider quitting their current jobs.

    Sixty-two percent of employed consumers cite the lack of adequate pay and benefits and the lack of opportunities to learn and grow as reasons they would consider leaving their current role. Wages that lag inflation and lackluster benefits are not enough to make employees stay. The takeaway for employers is that despite their efforts to enhance employee engagement and offer attractive benefits, roles with purpose or other intangibles, employed consumers want to secure a proper paycheck and growth opportunity first.

    The other side of the coin with employee turnover is how employers revisit and manage their human resources needs. Some employers may already have a set of employees or prospective candidates in reserve to bring into the workplace, or they may want to add newer capabilities and skills that the departing employees may not have had. In either case, they may have to make attractive offers to those employees to lure, retain and keep them, and they will need to manage the employee turnover rate to preserve morale.

    Conclusion

    Consumers’ sentiments regarding inflation are improving slowly. However, inflation’s effects have left their marks on consumers’ spending habits and how they think about their incomes. Consumers have already been practicing cost-cutting measures at grocery and retail stores. Now they want to ensure they are getting their worth at work — a proper paycheck adjusted for inflation and opportunities for growth and advancement.

    For some employed consumers, a stressful or unpleasant job environment — not a paycheck alone — may decide whether to stay or switch jobs. Employers that can offer not just a sufficient paycheck but also growth and learning opportunities, a flexible work environment, meaningful work and work-life balance may be able to lure those employees to their businesses. Those that work with emerging technologies also have a unique opportunity to offer technology training to incoming workers who are up to updating their skills.

    Employers looking to attract and keep talented workers must consider employees’ priorities. They should not view adjusting wages to account for increases in the cost of living or inflation as growing costs but as a way to keep employees during low unemployment, reduce churn and preserve morale. After all, wages and salaries are the largest and visible part of an employee’s compensation package. Retaining employees and retraining them can also be an alternative way to sidestep the time and costs that seeking, interviewing and training a new candidate can take.

    Methodology

    “Consumer Inflation Sentiment Report: The Great Resignation is Not Over,” produced independently by PYMNTS, analyzes consumer sentiments on wages and job hunting against the high rate of inflation that has affected their spending behaviors over the past two years. We surveyed 2,282 U.S. consumers between July 7 and July 14 about their experiences and perceptions. The sample was balanced to match the U.S. adult population in a set of key demographic variables. Our respondents’ average age was 47.6 years old, 51% identified as female and 38% annually earned more than $100,000.


    Read the July “Consumer Inflation Sentiment: Back to School Means Back to Federal Loan Repayments” and other previous editions of the series for more..

    About

    Ingo

    PYMNTS is where the best minds and the best content meet on the web to learn about “What’s Next” in payments and commerce. Our interactive platform is reinventing the way in which companies in payments share relevant information about the initiatives that shape the future of this dynamic sector and make news. Our data and analytics team includes economists, data scientists and industry analysts who work with companies to measure and quantify the innovation that is at the cutting edge of this new world.


    We are interested in your feedback on this report. If you have questions or comments, or if you would like to subscribe to this report, please email us at feedback@pymnts.com.

    Disclaimer

    The Consumer Inflation Sentiment Report Series may be updated periodically. While reasonable efforts are made to keep the content accurate and up to date, PYMNTS MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, REGARDING THE CORRECTNESS, ACCURACY, COMPLETENESS, ADEQUACY, OR RELIABILITY OF OR THE USE OF OR RESULTS THAT MAY BE GENERATED FROM THE USE OF THE INFORMATION OR THAT THE CONTENT WILL SATISFY YOUR REQUIREMENTS OR EXPECTATIONS. THE CONTENT IS PROVIDED “AS IS” AND ON AN “AS AVAILABLE” BASIS. YOU EXPRESSLY AGREE THAT YOUR USE OF THE CONTENT IS AT YOUR SOLE RISK. PYMNTS SHALL HAVE NO LIABILITY FOR ANY INTERRUPTIONS IN THE CONTENT THAT IS PROVIDED AND DISCLAIMS ALL WARRANTIES WITH REGARD TO THE CONTENT, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT AND TITLE. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF CERTAIN WARRANTIES, AND, IN SUCH CASES, THE STATED EXCLUSIONS DO NOT APPLY. PYMNTS RESERVES THE RIGHT AND SHOULD NOT BE LIABLE SHOULD IT EXERCISE ITS RIGHT TO MODIFY, INTERRUPT, OR DISCONTINUE THE AVAILABILITY OF THE CONTENT OR ANY COMPONENT OF IT WITH OR WITHOUT NOTICE.
    PYMNTS SHALL NOT BE LIABLE FOR ANY DAMAGES WHATSOEVER, AND, IN PARTICULAR, SHALL NOT BE LIABLE FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, OR INCIDENTAL DAMAGES, OR DAMAGES FOR LOST PROFITS, LOSS OF REVENUE, OR LOSS OF USE, ARISING OUT OF OR RELATED TO THE CONTENT, WHETHER SUCH DAMAGES ARISE IN CONTRACT, NEGLIGENCE, TORT, UNDER STATUTE, IN EQUITY, AT LAW, OR OTHERWISE, EVEN IF PYMNTS HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
    SOME JURISDICTIONS DO NOT ALLOW FOR THE LIMITATION OR EXCLUSION OF LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES, AND IN SUCH CASES SOME OF THE ABOVE LIMITATIONS DO NOT APPLY. THE ABOVE DISCLAIMERS AND LIMITATIONS ARE PROVIDED BY PYMNTS AND ITS PARENTS, AFFILIATED AND RELATED COMPANIES, CONTRACTORS, AND SPONSORS, AND EACH OF ITS RESPECTIVE DIRECTORS, OFFICERS, MEMBERS, EMPLOYEES, AGENTS, CONTENT COMPONENT PROVIDERS, LICENSORS, AND ADVISERS.
    Components of the content original to and the compilation produced by PYMNTS is the property of PYMNTS and cannot be reproduced without its prior written permission.