Source: ITR Economics – March 27, 2025
Despite slowing wage growth, the labor market remains tight, and gross earnings are still rising. Find out what these wage trends mean for your business!
It can be a challenge to weed through media reports on wages. There are several different sources and ways to look at income-related data. For example, here are some options that news articles may cite:
- Wage Growth
- Gross Earnings
- Inflation-adjusted Earnings
- Real Personal Income
Let’s look at each of them to get the full picture.
Wage Growth vs. Inflation-Adjusted Earnings
Currently, the pace of wage growth is coming down from a 2022 peak. The current slowing growth trend in wages is sometimes presented negatively in the news, and it does reflect a slight softness in the labor market following COVID-induced tightening. However, neither wages nor the labor market is crashing – in fact, the labor market remains relatively tight, and gross earnings themselves are still rising, just at a slower pace.
In the 12 months through February 2025, US Weekly Earnings of Private Sector Workers averaged $1,210 in nominal terms, according to data from the Bureau of Labor Statistics (BLS). This BLS Earnings data is an estimate of wages earned, inclusive of premium pay for overtime, late-shift work, and pay tied to output on an incentive plan. After adjusting for inflation, Earnings in February were 10% higher than average earnings in 2007.[1] In other words, Average Earnings have risen by an amount equivalent to 10% more purchasing power compared to 2007.
To be clear, there have been some periods of time between 2007 and 2024 where Earnings did not keep up with inflation. Most notably, in 2022, Earnings shrank by as much as 2.9% year-over-year on an inflation-adjusted basis – but previous and subsequent rise in Earnings add up to an increase above inflation.