High inflation overshadowed a big increase in wages over the past year, amounting to a nearly 2% smaller paycheck for the average worker, according to federal data published Thursday.
Employers have raised wages at about the fastest rate in 15 years, as they compete for talent amid record job openings and quit levels. But consumer prices for goods and services are rising at their fastest annual pace in four decades, eroding those gains for many Americans.
As a result, "real" hourly wages (earnings minus inflation) fell by 1.7%, to $11.22 from $11.41, in the 12 months through January 2022, the U.S. Department of Labor said Thursday.
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Net weekly earnings fell more over the same period — by 3.1%, to $387.06 from $399.52 — after accounting for a shorter workweek, likely due to pandemic-related impacts on worker schedules.
"The price pressures on households just don't end," according to Greg McBride, the chief financial analyst at Bankrate.
However, substantial pay boosts in some industries, like leisure and hospitality, means some workers still came out ahead.
And data suggests the trend may be reversing — the average worker saw their pay outpace inflation by 0.1% from December to January. It was the second consecutive monthly improvement in "real" earnings.
"You're seeing it beat inflation, just barely," said Elise Gould, a senior economist at the Economic Policy Institute, a left-leaning think tank.