Inflation Cuts into Wage Gains

February 21, 2022

Driven by labor shortages, median hourly wages increased at an annual rate of 5.2% in December 2021, the highest level since June 2001. However, inflation cuts into buying power, and real wages — adjusted for inflation — actually dropped as inflation spiked in 2021. By contrast, negative inflation (deflation) during the Great Recession sent real wages skyrocketing temporarily even as non-adjusted wage growth declined.

mediam-hourly-wage-chart

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Prepared by Broadridge Advisor Solutions Copyright 2020.

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