1. This means that some of the fastest low real wage growth we have seen in decades is over (for now). And this low wage growth outpaced inflation of other income groups.
2. The good news about the graph is that real wages continued to rise, until recently. This further disputes some of the narratives recently about purchasing power, which has increased for most (can’t say all yet) income groups continuously since 2023 (also overall since 2019).
3. The good news is that nominal wage growth will heat up, and we are likely to see a post-2022 situation again, after this shock resolves.
4. One of my forecasts finds that, if you are a median worker, your real wages will be lower in 2026 than 2025, but higher than 2025 in 2027. For the 25th percentile, you’re looking at 2026 and 2027 being lower than 2025. The longer this goes on, the closer we get to 2030 for being where real wage growth finally increases again, with some intervals being until 2032.
OMNeigh on
For some people, I guess? But not across the board.
Someone making $200k per year getting a 2% annual raise is not spending an additional $4000/yr on gas.
2 Comments
[Gift link for the free riders.](https://www.wsj.com/economy/jobs/prices-at-the-pump-are-wiping-out-wage-gains-d16d78c0?st=kKfx7K&reflink=desktopwebshare_permalink)
1. This means that some of the fastest low real wage growth we have seen in decades is over (for now). And this low wage growth outpaced inflation of other income groups.
https://www.epi.org/publication/strong-wage-growth-for-low-wage-workers-bucks-the-historic-trend/
https://www.clevelandfed.org/publications/economic-commentary/2025/ec-202511-did-inflation-affect-households-differently
2. The good news about the graph is that real wages continued to rise, until recently. This further disputes some of the narratives recently about purchasing power, which has increased for most (can’t say all yet) income groups continuously since 2023 (also overall since 2019).
3. The good news is that nominal wage growth will heat up, and we are likely to see a post-2022 situation again, after this shock resolves.
4. One of my forecasts finds that, if you are a median worker, your real wages will be lower in 2026 than 2025, but higher than 2025 in 2027. For the 25th percentile, you’re looking at 2026 and 2027 being lower than 2025. The longer this goes on, the closer we get to 2030 for being where real wage growth finally increases again, with some intervals being until 2032.
For some people, I guess? But not across the board.
Someone making $200k per year getting a 2% annual raise is not spending an additional $4000/yr on gas.