Wage Growth to Celebrate

There are a number of polls and reports indicating that the average American worker thinks that the U.S. economy is in a slump, and that they’re less well-off than they were before the pandemic tore through our society.  But the statistics indicate that this isn’t really true.

A recent report by the U.S. Department of the Treasury has found that from 2019 to 2023, real weekly earnings—meaning earnings above the inflation rate—rose 1.7% for the median American worker.  In other words, one week of pay for the median worker now buys more than a week of pay did in 2019, despite higher prices due to inflation.  The study also found that the growth of real wages was faster over the past 12 months than it had been during the pre-pandemic expansion.  

There are a variety of charts in the report.  One of them shows the very uneven impact of inflation in different types of goods and services.  Televisions now cost almost 30% less than they did before the pandemic, and health insurance, personal computers, airline fares and toys all showed fairly significant price declines.  Prescription drugs, internet services and most living expenses went up over that period, but none of them as fast as earnings.

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Of course, the earnings growth is only relevant for people who actually have a job.  The good news is that unemployment is still down around record lows.  And anything who thinks that wage growth in America lags behind the rest of the world should look at the last chart in the report, which shows that the U.S. experience is well ahead of other developed nations—most of whose workers experienced declines in real (above-inflation) wages over the same 2019-2023 time period.  Instead of feeling gloomy, American workers should be celebrating gains that others can only envy.

Source:

https://home.treasury.gov/news/featured-stories/the-purchasing-power-of-american-households