Feeling the pinch? Blame the pay rise you didn’t get

September 16, 2026 — 5:00am

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I have one thing to say to our politicians, economists and readers of this august organ: no, it’s not the economy, stupid … it’s wages.

At present, the economy is not in a healthy state. It’s going nowhere fast. Although its growth of 2 per cent over the year to June sounds reasonable, the great majority of that growth is attributable to our growing population. Little of the remaining growth represents the rest of us becoming a bit better off.

The economy is close to stalling speed, and if we’re not careful, it will start contracting – getting smaller rather than bigger – otherwise known as being in recession. After reaching a low of 3.5 per cent in late 2022, the rate of unemployment has crept up slowly but inexorably to 4.5 per cent.

And, unless something major is done, it’s likely to keep edging up until, with more and more people unable to find work, it’s high enough to stop people banging on incessantly about the cost of living.

As I may have mentioned before, the cost of living is not really the problem. It’s just the bit you see when you go to the supermarket or fill up your car.

We’d all like to live in a world where our wages went up every year while prices didn’t change. Unfortunately, it’s the other way round: rising prices are the main reason we get a pay rise each year. If we didn’t, the real value of our wage would keep declining, making it harder to........

© The Age