Jan 6, 2024 - Economy

Chart: Wage growth is beating inflation

Share of workers receiving raises above inflation
Data: Center for American Progress; Chart: Danielle Alberti/Axios Visuals

Inflation is hated mostly because it erodes the power of your paycheck. But the good news — and the reason why optimism might return to the U.S. in 2024, as I wrote this week — is that real pay hikes have now returned.

Why it matters: As Brendan Duke of the Center for American Progress writes, 57% of workers are making more money now — after adjusting for inflation — than they were a year ago. 41% of us have seen a real wage increase of more than 5%.

  • Be smart: Higher wages don't always psychologically offset higher prices. (A $20 cocktail is still expensive even after you've received a big raise.) That's why unhappiness with inflation can linger long after wages have risen to cover those expenses.

The bottom line: Once inflation falls, as it now has, the remaining discontent does tend to diminish as prices that used to cause shock and resentment become normalized. Meanwhile, higher real wages help everyone.

Go deeper