There’s no such thing as short-term pain when it comes to job losses or inflation.

A study by the Federal Reserve Bank of Boston shows that those impacted by even short-term job loss experience lower overall earnings for up to 20 years after returning to work.

No one needs to point out the pandemic caused job losses. Today, manufacturers relying on foreign parts and materials are certain to look to reduced staffing, at least in the short-term, to help counter the pinch of higher costs from tariffs.

The brunt of the effects of economic downturns, the study shows, impact blue collar, low- to middle-income workers. According to the Pew Research Center, those groups account for about 77% of employed U.S. workers in 2023.

Any resulting loss in lifelong earnings will impact everything from what type of housing they are able to secure to the opportunities they can provide for their children for decades.

Meanwhile, families are struggling to balance a pandemic-driven spike in inflation that didn’t return to previous levels until last fall, against wages that, while higher than before COVID-19, simply didn’t keep up with prices.

According to the Bureau of Labor Statistics, following a 0.1% low in the rate of inflation in May 2020, at the height of the pandemic; a two-year spike followed, hitting a high of 9.1% in June 2022. Following that, the rate of inflation experienced a steep two-year drop to 3% in June 2023 and then followed a slow downward track to 2.4%, about the pre-pandemic rate, in September 2024.

In the same period, wages followed a similar trajectory, but did not keep up with inflation. The rate of average wage increase peaked at just 5.7% in 2022 and have since been on a downward track since, hitting 3.7% in December last year.

Another study, also available through the Federal Reserve Bank of Boston, shows the effects of tariffs on inflation. The conclusions are clear, tariffs impact prices. Even causing price increases on items made in the U.S.A. due to increases on the cost of the parts and materials used in making those products.

In the long-term, the study indicates tariffs can be a net positive, encouraging manufacturers to buy parts made in the U.S.

However, it will take years to build, equip and staff the necessary factories to produce them. We simply don’t have the infrastructure. One could argue this is the result of years of shortsighted policies encouraging offshoring, but regardless of how we got here, this is the reality now.

Unfortunately, there is no such thing as “a little” or “short-term” economic pain at the individual level for the average American and their family.

— JP