Low-income Americans 'turn on survival mode' because of inflation

 Low-income Americans 'turn on survival mode' because of inflation

Jacqueline Rodriguez no longer buys fresh fruit at the supermarket, and Jorge Nuñez sells his car to walk to work, and eats more vegetables instead of meat.

After 15 years, Jacqueline Rodriguez has almost saved up enough money to buy a house upfront. Then the pandemic hit. She was fired, and had to use her savings to pay for everything that was becoming increasingly expensive, including the textbooks for her 18-year-old son.

If Rodriguez could buy a house and only pay monthly installments, she would avoid the highest inflation of her life. But now, the landlord has raised her monthly rent from $1,200 to $1,500. After draining all her savings, Rodriguez even had to collect $50 to fuel her car and drive to Miami International Airport, where she was paid $13.8 an hour as a cashier at Wendy's.

Jacqueline Rodriguez outside her rented Miami home. Photo: Washington Post

Jacqueline Rodriguez outside her rented Miami home. Photo: Washington Post

Low-wage workers like Rodriguez are experiencing their fastest pay rise since the beginning of the pandemic. However, they are nothing compared to the inflation that is also the highest in 40 years. Her salary can't buy much. With three children, Rodriguez spends $200 a week on childcare and $200 a month on water. Even wipes have increased in price from $14 to $18.

"Things go up in price horribly," she said. "I go to the supermarket to buy chicken, then have to decide what to make based on the price. I won't buy anything expensive anymore. Everything now They're all too expensive," she said.

Inflation is squeezing low-income families already on tight budgets. Nearly all of their expenses go to necessities – food, energy, housing.

Rodriguez said she considers every penny spent. Now she doesn't buy toys for her children anymore. The same goes for fresh fruit in the supermarket. But Rodriguez is lucky to still have food assistance from the union.

"For low-income people, small changes in disposable income also make it difficult for them," said Xavier Jaravel, professor at the London School of Economics. "Inflation reduces purchasing power. If you have a high income, , that also means you save a lot, so a little decrease in purchasing power is not a big deal."

Rapidly rising inflation is the latest example of how a pandemic recession is increasing global inequality. During the crisis, the economic consequences weigh most heavily on low-income workers and in the service sector. For now, inflation widens the boundaries, despite strong economic growth and an impressive job market recovery.

In 2020, when the economy slowed down due to lockdown orders during the pandemic and 20 million people were laid off in just a few weeks, the US Federal Reserve (Fed) immediately acted by lowering interest rates and pump trillions of dollars into the financial system.

However, these moves also cause side effects. By the end of 2021, inflation will accelerate. Rising asset prices make America's rich even richer during the pandemic.

Asked at a press conference last month if the Fed sees inflation affecting vulnerable people, Fed Chairman Jerome Powell acknowledged "inflation is forcing this group of people to make decisions." It's very difficult. For people with high incomes, inflation is also not a good thing. But they can still eat, drive, and have a house."

In a recent study, economists concluded that by the second half of 2021, households earning less than $30,000 a year tend to face higher inflation than those earning $100,000 a year. . A team of researchers from the University of Chicago's Booth School of Business, the University of California at Berkeley and the University of Texas analyzed the prices 43,000 households pay for food, drinks and other household items, based on according to data from Nielsen Homescan.

In Los Angeles, Jorge Nuñez noticed a stark difference in spending while working at Chateau Marmont, where room rates run into the hundreds of dollars per night. Nuñez had to send money back to his family in Honduras and elsewhere in the United States. Therefore, he always works at the same time as a warehouse worker or setting the table to make ends meet.