Wages and Inflation
Are wages keeping up with inflation?
– USAFacts
AB: According to USAFacts Wage have been keeping up with inflation currently. Some simple graphs and words. Relatively easy read for everyone with the necessary graphs as support to the words. It did not seem like it was occurring.
Yes. From February 2024 to February 2025, wages grew 0.6 percentage points faster than inflation. Nominal wages — the literal dollars earned regardless of cost of living — increased by 3.4% while inflation stood at 2.8%. When wage growth outpaces inflation, it indicates workers are experiencing an increase in purchasing power from the previous year.
Data updated March 12, 2025
The Bureau of Labor Statistics has published average weekly wage data for more than 19 years, since March 2006. Looking back, average wages outpaced inflation 71.3% of the time. Most recently, wage growth was faster than inflation in every month since February 2024.
Between Feb 2024 to Feb 2025, average weekly wages grew faster than inflation.
A number of factors influence the nominal wage growth and inflation rates, including labor costs and the labor market itself. In May 2020, wages increased 7.6% over the previous year while inflation was at 0.2%, a record-high gap of 7.4 percentage points. This spike was attributed to pandemic labor market disruptions that disproportionately affected lower-wage jobs.
The biggest negative gap (-4.3 percentage points) was in June 2022, when nominal wages grew by 4.8% year over year while inflation hit 9.1%.
In February 2025, average weekly wages grew 3.4% compared with an inflation rate of 2.8%
We can measure the effect of inflation on wage growth by comparing the nominal average weekly wage to its inflation-adjusted (or “real” wage) equivalent. Since March 2006, the nominal average wage rose from $686 to $1,225, a 78.7% increase. Once adjusted to February 2025 dollars, it went from $1,095 to $1,225, a 11.9% increase. The nominal wage growth was $540, but the real wage growth was $130.
Between February 2024 and February 2025, the nominal average wage grew from $1,185 to $1,225 — $40 more a week, a growth rate of 3.4%. Accounting for inflation, the real wage growth was 0.58% or an additional $7 a week.
Between February 2024 and January 2025, the nominal average wage grew from $1,138 to $1,181 — $43 more a week, a growth rate of 3.6%. Accounting for inflation, the real wage growth was 0.9% or an additional $9 a week.
This hex map shows real wage growth in the United States during the period from February 2024 to January 2025. The color scale is sequential, ranging from -2.8% to 8.0%, with darker shades indicating higher positive growth and lighter shades indicating lower or negative growth. Idaho has the highest real wage growth at 6.53%, while Tennessee has the lowest at -2.68%. Other states with higher growth include Colorado (3.52%) and Mississippi (3.24%). States with lower growth include Illinois (-2.44%) and Delaware (-0.86%).