This was written back in 2006. Back then I was flying high getting paid, getting bonuses and about to get laid off. Pay erosion wasn’t that big as compared to today, but still a big thing.
Thanks to Inflation, pay erosion is back to hound consumers. If you don’t get a pay raise, you lose to inflation (that is pretty much a given). You can see what has become more expensive, so this is not something theoretical. You know you are paying (or going to pay) more for heating your house, driving your car, insuring your home and eating the same food you ate last year. Slice one was taken out of the pie.
The next slice of the pay erosion pie is even more worrisome. The cost of your “benefits” package at work. My Employer (Nortel at the time), brought in about ten years ago something called FLEX benefits. This allowed young single employees to effectively OPT out of the benefits program. It allowed older fogies like me to get more insurance if they wished.
Previously this was all covered by the company, now I had to start paying out of my own pocket for this. Initially, I paid somewhere around $20 a pay for this, not bad, since I did get a fair amount of stuff. Thanks to my increasing age, my benefits now cost 400% more after ten years (mostly due to Life Insurance and Disability Insurance premiums). I cringe to think how much more I will pay each year as I zone in on the magic “50” age. Previously I paid $500 I now pay over $2000.
On the positive side, my CPP payments stayed the same and my EI premium actually dropped. I got a small break from the Government.
The interest rate on my floating Mortgage went up, so I am paying more for my house, and on my debt payments. This is why getting out of debt is a GOAL!
This is a depressing, but worthwhile exercise for everyone to do at the start of the year. Compare how much you are taking home this January compared to last. How much different is it? If it is less, adjust your spending to live within your means. If it is more, maybe this is an opportunity to speed up your debt payoff, or even better your savings goals!
The start of the year is always a good time to analyze your financial world
Yes, it’s depressing and even more so when you stop to consider that you are nothing more than a number to your company.