CPI vs Average Hourly Earnings
Real wage growth — wage gains minus inflation — is what actually determines whether households are getting ahead. Compare nominal wage growth and CPI inflation directly.
- CPI
- Avg Hourly Earnings
Nominal wage growth measures how fast paychecks are rising. CPI measures how fast prices are rising. Subtract one from the other and you get real wage growth — the part of wage gains that's actually available to spend.
From 2021 through mid-2023, CPI inflation ran above nominal wage growth for the first sustained stretch in decades. Real wages were falling: workers got raises, but prices rose faster. From mid-2023 onward the relationship flipped as inflation cooled faster than wage growth — real wages have grown since, partially recovering the purchasing power lost in the prior two years.
The BLS publishes several wage measures. Average hourly earnings (from the establishment survey) is the most common monthly gauge; the Employment Cost Index and Atlanta Fed's Wage Growth Tracker offer complementary views that control for composition effects.
Frequently asked questions
What are real wages?
Real wage growth is nominal wage growth minus inflation — the part of a pay raise that's actually available to spend after prices rise. If wages rise 4% but CPI rises 3%, real wages grew about 1%. It's what determines whether households are getting ahead, not the headline raise figure.
When did inflation outpace wage growth recently?
From 2021 through mid-2023, CPI inflation ran above nominal wage growth for the first sustained stretch in decades, so real wages fell — workers got raises but prices rose faster. From mid-2023 onward inflation cooled faster than wage growth and real wages began recovering the purchasing power lost in the prior two years.
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