Rising Wages Aren't Keeping Pace With Inflation

Real average weekly earnings were down 1.4% year over year in October
grocery receipt
Photograph: Shutterstock

Average hourly earnings for U.S. workers are going up, to be sure: In the past 12 months, earnings for private-sector nonfarm employees are up 4.9% to $30.96 an hour, the Bureau of Labor Statistics noted Friday in its monthly jobs report. 

Private-sector workers saw their hourly earnings rise 11 cents on average in October; for production and nonsupervisory employees, hourly earnings climbed an average of 10 cents (to $26.26) in the month after rising 14 cents in September.

But when escalating inflation and a slight reduction in workweek hours are factored in, the BLS reported Wednesday, workers' real average hourly and weekly earnings (PDF) actually declined year over year in October. Real average hourly earnings, as calculated by the bureau, dipped 1.1% for the 12-month period; real average weekly earnings fell 1.4%.

Higher prices for goods and services put the biggest dent in consumers' buying power. Consumer prices were up 6.2% year over year in October, a 3o-year high, with gas prices up almost 50% compared with October 2020, used-car prices up more than 26% and prices of several grocery go-tos (e.g., steak, up 20%; eggs, up 11.6%; and baby food, up 7.9%) surging as well. The length of the average workweek also dipped 0.3% from October 2020 to October 2021, according to the BLS. Taken together, they more than offset the bigger paychecks that workers are bringing home. 

Month to month, real average hourly earnings were down 0.5% in October after edging up 0.1% in August and 0.2% in September. In the past year, four of 12 months saw month-to-month gains in real average hourly earnings; eight months saw declines.

Earlier this week, KK Davey of market-research firm IRI said his company expects consumers to become much more price-sensitive in 2022 as they feel the effects of wages struggling to keep pace with inflation. In addition, without the boost of pandemic assistance programs and as they return to spending more on healthcare, education and transportation, "People are going to begin to trade down [at the grocery store] as prices increase," Davey said.


Get today’s need-to-know grocery industry intelligence. Sign up to receive texts from Winsight Grocery Business.


More from our partners