You have taken a pay cut only if you haven’t figured out a way of saving part of your income and putting that into assets that beat inflation. If you spend the

You have taken a pay cut only if you haven’t figured out a way of saving part of your income and putting that into assets that beat inflation. If you spend the entire income and don’t save (and not even paying a mortgage to acquire an asset), then yes, you have taken a pay cut. That may be poor decision making (depending on the situation), especially if you’re earning $100,000 (which puts you in a tiny percentage at the top of the world in terms of income). Inflation directly affects what you spend money on. You can choose to spend on other things that don’t suffer as much from inflation, but that may not be easy. On the other hand, how much you save from your income and where you put that is a lot more (relatively speaking) in your control. Employers will match salaries based on supply, demand and other factors affecting the business. Inflation could affect the supply and demand equation, but is not a direct factor for them to consider. Companies exist to maximize profits. That also means paying the minimum possible to a person and extracting the maximum value from that person. Changes will happen when this equation is under threat.