AVERAGE WORKER WORSE OFF IN REAL TERMS

After adjusting average worker earnings in the past 12 months for inflation, which is a term called "real earnings", workers actually lost 1.2% compared to the previous year. How is this possible? According to the Bureau of Labor Statistics (BLS), earnings increased 3.2% from February 1, 2007 through the end of January of 2008, while inflation increased at a rate of 4.3%, leaving workers with less buying power even though they earned more money.

From USA Today:

Inflation-adjusted earnings for average workers have fallen 1.2% over the last year, the Bureau of Labor Statistics said Wednesday, as higher food and fuel costs have eroded purchasing power.

Earnings adjusted for inflation — also known as real earnings — have fallen for eight of the last 13 months and were down 0.5% in January compared with December, according to the labor statistics agency.

Average weekly earnings were $592.74 in January, or roughly $30,800 a year. While that's about $1,000 a year more than workers averaged in January 2007, inflation has increased at a rate of 4.3% for the same period, outpacing the 3.2% earnings gain.