Wages are not keeping up with inflation. The price of cars has grown significantly faster than earnings, a new analysis by the Anderson Economic Group found.
The price of new and used cars increased by 11.8% and 37.3% respectively in December 2021 from December 2020, while wages increased by 4.9% in that same period. Supply chain slowdowns, factory closings, and computer chip shortages coupled with demand sent car prices higher.
“Employees need to work three weeks more than they did in December 2020 to afford a typical new vehicle in December 2021,” said Dr. Christina Benton, director of market & industry analysis at Anderson Economic Group.
For used cars, the length of time was greater. The average price of a used car in November 2020 cost $21,708. In November 2021 it rose to $27,569 according to Cox Automotive. Average weekly earnings from that same period were $1,044.23 in 2020 and $1,077.09 in 2021 respectively, according to CPI. Anderson Economic group analysis reveals Americans needed 26 weeks of average weekly earnings in November to buy a used car today compared to 21 weeks of earnings a year ago.
“This is the first time in recent memory that “sticker shock” has been a clinical condition for auto shoppers,” said Patrick Anderson, Principal & CEO of Anderson Economic Group.
The group analyzed US Bureau of Labor Statistics data and the Consumer Price Index to compare the cost of new and used vehicles relative to average weekly earnings.