Heres why your paycheck is disappearing

Heres why your paycheck is disappearing It’s not a magic trick- your paycheck may seem like it’s vanishing faster than you can earn it, but there are reasons why this seems to happen. It’s a common phenomenon: payday comes around and you start thinking about all of the things you’d like to do with your money when it comes in, but then reality hits, and your grand plans for your paycheck seems to evaporate into thin air, along with your funds. If you’re often struck by this disappointing occurrence, take comfort in the fact that you’re not alone. The simple truth comes down to this: for many of us, the size of our paychecks haven’t kept pace with the rising costs of the things we purchase, and when this occurs it should be no surprise that the â€Å"vanishing paycheck† is such a common phenomenon.What you’re earningThe statistics on historical wage trends paint a daunting picture, and goes a long way to explain why our earnings don’t seem to go as far as we’d like them to. According to a recent report by The Brookings Institution, inflation-adjusted wages have only grown around 10 percent over the last 45 years, with real wage growth crawling forward at a paltry .2 percent annually. The Bureau of Labor Statistics (BLS) reports that when adjusted for inflation, real average hourly earnings have remained virtually unchanged for the American workforce over the last four decades.There are a number of factors that can be pointed to in an effort to explain this trend, from cheap labor overseas affecting supply and demand to globalized corporate competition and an economy weakened by the Great Recession and unexpectedly high inflation, but the bottom line is that this level of wage stagnation reflects a significant lack of opportunity for economic advancement for the average American worker.Furthermore, although companies have been earning massive profits in recent decades, largely due to rising costs of products and globalization o f markets and labor pools, this increased revenue simply has not made its way into the pockets of the employees who contribute to their success. The Economic Policy Institute reports that the average worker’s share of corporate-sector income in the form of wages and benefits has been on the decline since 1979.Wage inequality is another recent yet disturbing trend. According to recent BLS data, although there has been wage growth for those in the top earning percentile brackets, the opposite is true for workers in the bottom and lower-middle earning categories. This growing economic stratification creates a deep divide between the â€Å"haves† and â€Å"have nots,† leaving many workers with little hope that their financial situations will dramatically improve.What you’re spendingIf stagnant wages wasn’t challenging enough, consider the fact that the goods and services we purchase are taking bigger and bigger bites out of our paychecks than ever befo re. This includes everything from essentials like housing, food, and utilities to non-essential purchases like luxury items, vacations, and even expensive coffee (which has turned into a multi-billion-dollar-a-year industry), all of which gnaw away at our earnings faster than we thought possible.Current BLS data indicates that average prices for consumer goods are increasing at an average rate of around 2 percent a year; this may not seem significant, but when many workers don’t see steady wage increases each year, paying an extra 2% for everything they purchase can really add up. There’s also a wide array of expenses that today’s average worker shoulders that previous generations did not have to worry about- think student loans, smart phone bills, and numerous credit card payments to name just a few- all of which further stretches workers’ paychecks beyond capacity.The bottom lineWhat does this all mean? There’s a growing unbalance between what th e average American worker earns and what he or she spends, and it paints a bleak economic picture for many people. If you’re not a captain of industry or among the earning elite, chances are good that the money you’re earning just isn’t going as far as you’d like it to, due to a variety of disadvantageous economic forces and trends that are showing no sign of reversing anytime soon. With all of these factors at play, the magic trick known as the â€Å"vanishing paycheck† isn’t so mysterious or magical after all.