After rapid recovery from the Kovid -19 epidemic, the increase of wages for all workers is slowing down, but it is falling at the fastest speed for workers at the bottom of the income spectrum.
This is a sharp opposite from the postpartum recovery era, when the lowest paid workers were seeing the fastest wage growth, some economists called “wages compression”.
It also comes because these workers can face more pressure than tariffs, which are expected to increase the cost on many items.
The trend of wage compression is almost completely reversed. The poorest workers are now looking at the slowest level of wage growth, while the highest -grossing fastest.
According to recent data from the Atlanta Federal Reserve, an average annual wage increased at an annual rate of 3.7 percent in July at an annual rate of 3.7 percent. This is much less than the last half of 2022, when the lowest -grossing 7.5 percent growth was seen.
Wages for people more than $ 1,887 a week rapidly raised a full percentage points in July, which increased by 4.7 percent. It is a tick below the last half of 2022, when they were seeing an increase of 4.8 percent.
While various income categories in Atlanta fed the data on the trend line slowly through each other through 2023 and 2024, wage growth for the lowest -grossers actually fell from a rock in February. The lowest -grosser saw a decline of 0.3 percent in March and a decline of 0.2 percent in April.
They are all nominal numbers that do not take into account inflation. Inflation kills the worst families because they spend a large percentage of their income every month, usually on essential commodities such as rent and grocery items.
, [Atlanta] Wage Growth Tracker is corresponding to what we have found so far this year – wages on tenth percent are increasing much more gradually compared to the middle. [and] High veg workers, and, this is a clear reversal of the pattern in the postpandemic labor market, “Josh Bivence, the chief economist of the Left-Surrender Economic Policy Institute, told Hill.
Republicans are nervous about the reversal of this trend, especially since inflation has recently begun to move back – due to the part of President Trump’s tariff regime.
Inflation played a big role in the economic discomfort of voters supporting Republican in last year’s elections. The worry is that if voters are still feeling pain in the mid -term of next year, then they can reverse the tide.
The Consumer Price Index increased by 2.7 percent annually in July after falling to 2.3 percent in April. The personal consumption expenditure price index reached 2.6 percent in July after falling up to 2.2 percent in April.
Showing sensitivity to low -income wage hike trends, the White House released an analysis last week called a 1.4 percent “Real Blue Caller Wage Boom”.
Number mentions an increase in earnings and recent historical categories for production and recent historical categories for fruitless workers.
An official of the Treasury Department told The Hill on Friday that the fall in inflation in the first half of this year was a driver of this upper.
But economists look more pessimistic about recent trends.
“As soft labor markets are damaging their wage growth, rapid price inflation [driven in part by tariffs] Bivence has pinned the hills on the cost side.
The Treasury Department official said that the actual profit tax deduction for blue-collar workers is going to come out in a big way and Trump signed the law earlier this summer.
The official cited bonus depreciation – a professional tax deduction that allows for immediate expenditure of capital investment – as an important inspiration for future wages.
Inflation, as measured in the Consumer Price Index, is 25.3 percent above the end of the epidemic recession in June 2020, while the wage is 24 percent, which means that Tech-Hom pay has not caught prices over that five years period.
Sarah Foster, an economic analyst of a financial media company Banquart, wrote in Monday’s remarks, “Not all workers do not feel equally inflation.” “Education, construction, financial activities, professional and wage growth in business services and manufacturing are at the forefront.”
Over the long term, wages are very highly inflation because labor costs are in the expansion of production costs and market prices. The purchasing power of wages has increased a few dollars only since 1964, Pue research found In 2018.
However, at a short time, wage movements relative to prices can lead to a major difference for homes and can lead to political consequences.
Inflation and economy were ranked as the top digit in the 2024 election and helped Trump to pursue, which was seen by voters as strong on the economy, back to the White House for a second term.
There is also a possibility of increase in wages for low -income workers Played an important role In the mid -term elections of 2022, who saw that Democrats caught the expected red wave of Republican victory in the swing states.
Economists described increased wages for poor workers as “deep changes in the conditions of the US labor market”.
Economist Erin Dubey, an economist of Massachusetts, wrote in 2024, “The unexpected compression was around a third of the 1940s as a great compression of the 1940s.”
He and his colleagues mentioned that it was “focused at the bottom half of wage distribution and was inspired by a particularly rapid wage increase among workers under 40 and without college degrees.”
Some economists are also arguing that Trump’s tariffs can work hard for low -pay workers.
Economists for the Institute on Taxation and Economic Policy found that tariffs for the poorest fifth of Americans would increase one tax equal to 6.2 percent of their income that year.
