American wages have outpaced inflation since the pandemic

On Jul 16, 2024

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Former President Donald J. Trump wants to “make America wealthy once again.” That was the theme for day of one The Republican National Convention. Economic policies, inflation, regulation and trade deals, were the focus of Monday’s speeches, according to the GOP.

Is pay keeping up with inflation? Are Americans on a path to become wealthier? Here’s what we found:

The average hourly wages of employees rose in June compared to a year ago. The Bureau of Labor Statistics found that wages grew 3.9% between June 2023 and June 2024, quicker than the rate of inflation. Although the news is beneficial to employees, many Americans still feel the burden of rising costs of living.

Wages outpace inflation

The Consumer Price Index, a measurement of the change in price of goods and services, has increased 20.8% since the beginning of the pandemic, according to Bureau of Labor Statistics. During that same period of time, average hourly earnings increased 22.3%.

“We had this period where inflation rose faster than wages, and what we’ve how had in the last year or so is we’ve seen wages growing faster than inflation,” said Gerald Cohen, a professor and chief economist at the Frank H. Kenan Institute of Private Enterprise at the University of North Carolina.

It’s normal for prices to rise throughout the U.S. economy each year: A small amount of inflation is a sign of a healthy economy, Bankrate reported. Small amounts of inflation can help businesses grow through hiring and increases to consumer wages.

The fed currently targets a 2% annual inflation rate.

CPI report: Inflation slowed more than expected in June as gas prices fell, rent rose

Does wage growth cover rising costs of living?

A survey from Bankrate found that between October 2022 and the end of October 2023:

Nearly 66% of Americans experienced increased wages at some point
About 38% said they got a pay raise
16% got a better-paying job

“Different people have had different experiences,” Cohen said. Households in the lowest 20% income bracket spend more on housing and groceries and may have had wages increase, he said, but “they felt higher inflation more because their spending basket is weighted toward things that have gone up more in price.”

See where yours ranks: The 5 states with the highest inflation and the 5 with the lowest.

Only a third of workers from the survey who had a pay increase reported that their income kept up with, or exceeded, increases in their household expenses due to inflation.

People working in retail and the food service industry are especially vulnerable to feeling the effects of inflation, experts say.

Trump’s popularity and economic plan’s ‘potential impact’

Despite recent gains, the real income of the bottom 90% of Americans – those making less than $216,056 a year in 2023 – has “largely stagnated since the early 1970s,” Jesús Fernández-Villaverde, professor of economics and director of the Penn Initiative for the Study of the Markets at the University of Pennsylvania, told…