On the broad stage of the macroeconomy, economic growth is often seen as a symbol of a country's prosperity. However, a phenomenon that cannot be ignored is that even in the context of rising economic aggregates, the actual feeling of ordinary people may be that "there is less and less money in their pockets". Behind this seemingly contradictory phenomenon lies complex economic and social factors. This article will reveal the disconnect between economic growth and people's perception of income in five ways.
First, income growth lags behind GDP growth.
Although the growth of gross domestic product (GDP) reflects the overall expansion of the country's economy, this does not mean that the income of all residents grows in tandem with it. Wage growth can be influenced by a variety of factors, including corporate profitability, labor market supply and demand, and minimum wages. If wages grow at a slower rate than the cost of living, then even if the economy is growing, the real purchasing power of ordinary people will fall.
2. Unequal income distribution.
The fruits of economic growth are not evenly distributed. In many cases, inequality in income and wealth can lead to the gains of economic growth being taken up by those at the top of society. Low- and middle-income groups may find their income growth slow or even stagnant. This increase in inequality has led to a perception that economic prosperity has nothing to do with them.
Third, the rising cost of living.
As the economy develops, the price level tends to rise, especially in key areas such as real estate, education, healthcare, etc. If these basic costs of living grow faster than the average household income, then even if the economy as a whole grows, the real disposable income of ordinary people will decrease.
Fourth, changes in the employment structure.
Economic growth is often accompanied by the upgrading and change of industrial structure. This can lead to a decrease in some low-skilled jobs, while the demand for high-skilled jobs increases. For those who are unable to adapt to the requirements of the new industry, they may face unemployment or have to accept lower-paying jobs, which will also affect their income levels.
5. Fiscal Policy and Social Welfare.
* Fiscal policy and social welfare systems are essential to alleviate economic pressures on the population. If tax policies are not reasonable, or if the social security system is not perfect, then ordinary people may feel the increased economic pressure even as the economy grows. For example, high tax rates, heavy social insurance contributions, and inadequate public services can all affect people's real incomes.
Conclusion: The disconnect between economic growth and people's perception of income is a multi-dimensional problem, involving income growth, distribution inequality, cost of living, employment structure, and fiscal policy. To solve this problem, it is necessary to work together with enterprises and all sectors of society to ensure that the fruits of economic growth can benefit every member of society more fairly through reasonable economic policies and social security measures, so that the people's pockets can truly feel the warmth of the economy.