The tightest labor market in decades is fueling rapid wage growth for millions of Americans, but sky-high inflation is quickly eroding those gains.
The Labor Department reported on Wednesday that average hourly earnings for all employees actually declined 2.6% in April from the same month a year ago when factoring in the impact of rising consumer prices. On a monthly basis, average hourly earnings dropped 0.1% in March, when accounting for the inflation spike.
By that measure, the typical U.S. worker is actually worse off today than they were a year ago, even though nominal wages are rising at the fastest pace in years. That's because consumers are confronting the highest inflation in a generation, which has quickly diminished their purchasing power.
"Rising wages are pushing overall inflation higher – and yet workers are still losing ground," said Rucha Vankudre, senior economist at Emsi Burning Glass. "Wages are increasing but not in real earnings for people."