Many pundits are confused as to why, in an economy where all the aggregates are pointing in the right direction, Americans are so sour about it. Here’s my hunch: Because of inflation, many people have seen virtually zero real wage growth for a long time.
We can calculate cumulative real wage growth by comparing average nominal wages (which includes salaried employees) to inflation, as measured by the Consumer Price Index. Since the start of Donald Trump’s second term (from January 2025 to September 2026, the month of the most recent data), hourly earnings have risen by 5.94 percent while average prices have risen by 5.89 percent. That translates into real wage growth of just 0.05 percent in just under two years — keeping your head above water by the tiniest of margins. And remember, half of all jobs have seen their wages rise by less than average, running below inflation.
Extend the data backward, and you see the source of real fury. Since the beginning of 2021, when the inflationary surge commenced, nominal wages have risen by 26.3 percent as prices have gone up by 28 percent. That means earnings have declined in real terms by 1.3 percent over nearly six years. Workers, on average, have less purchasing power today than they did in 2020.
Before the pandemic, Americans were used to experiencing real wage gains almost every year. If voters feel like they’ve been falling behind for a while, it’s probably because many of them have been.