Have people’s earnings kept up with inflation since the pandemic recession?
In nominal dollar terms, median weekly earnings for full-time workers have grown since January 2021. But adjusting for consumer price index (CPI) inflation shows that real earnings have been falling.
Watch our latest video tutorial to learn more about how to compare nominal and inflation-adjusted earnings (real earnings) using the SF Fed Data Explorer. To explore on your own, paste the code 31p09720991g097231000000000000 into the Chart Code box.
In nominal dollar terms, median weekly earnings have grown since January 2021. But how have our real earnings, adjusted for CPI inflation, been keeping up? (video, 1:59)
Transcript
Hi everyone. Welcome to the Data Explorer video series. These videos are designed to help you get the most out of our Data Explorer website.
Inflation has been in the news a lot lately. So, how is inflation affecting our paychecks? We can use the Data Explorer to find out.
This chart shows the median usual weekly earnings in the U.S. from January 2021 to July 2022. The data tell a pretty clear story: in the last year and a half, American workers have seen steady growth in their weekly earnings.
But just how much have earnings increased? One way to understand the magnitude of this change is by scaling the data to a specific date for comparison—say January 2021—to see how the numbers change relative to that point.
This new chart shows that median weekly earnings are up significantly since last January.
While higher earnings sound like a great thing, that’s not the full story. Over the past few months, elevated levels of inflation are making it cost more when you go to the grocery store or to the gas station. This impacts how far the money in your wallet will go.
So how can we measure the effect of higher prices on increased earnings? One way is to divide the face value of earnings, known as the nominal value, by an index, like the consumer price index that shows how prices have changed relative to a certain date. This accounts for the changing value of the dollar due to inflation. The result after this adjustment is known as real earnings.
This chart shows real median usual weekly earnings. The line tells us that Americans have seen a substantial decline in their real earnings. To compare both nominal and real wages in one chart, under select view mode, check the button for inflation-adjusted data. The comparison shows that earnings for the typical worker have not kept up with increases in inflation.
You can use the earnings tab of the Data Explorer to investigate whether these trends in real and nominal earnings hold across different groups, such as gender, education, and occupation.
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The views expressed here do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System.