- Inflation might be starting to cool off, but it's still outpacing nearly all Americans' wage gains.
- Only leisure and hospitality workers have seen inflation-adjusted wages climb since January 2021.
- Other workers are stuck with weakened buying power as prices soar faster than their salaries.
The US might be past peak inflation, but Americans are still feeling beat down by soaring prices.
The latest report on US inflation showed prices climbing 8.3% in the year through April, slowing slightly from the pace seen in March and hinting that price growth is finally starting to slow. The month-over-month gain of just 0.3% reflected an even faster and more encouraging cooldown when compared to the 1.2% increase posted in March. After a year of elevated inflation, the price surge seems to be easing up.
The vast majority of Americans, however, aren't going to notice much of a difference. While workers have enjoyed the strongest wage growth in decades, inflation has still overpowered pay gains. Americans are earning more on paper, but their dollars just aren't going as far, whether it's at the grocery store, gas pump, or shopping online. And some workers are feeling the heat much more than others.
The following chart shows how inflation-adjusted average hourly earnings for different industries have changed since January 2021:
Workers in the information sector have shouldered the biggest burden, with their inflation-adjusted wages down 7% since January 2021, Insider calculated with data from the Bureau of Labor Statistics. Financial services employees had a 4.7% decline in their earnings, while miners and loggers posted a 4.5% drop in buying power.
Leisure and hospitality workers, meanwhile, were the only ones to see wage growth surpass the impact of inflation. The cohort's real wages are up 4.3% from levels seen in January 2021, according to government data.
The gain underscores just how much the sector has seen wages boom throughout the pandemic. Hotels, restaurants, and bars shed millions of payrolls early in the health crisis as lockdowns quickly sapped business. Yet the economic reopening of early 2021 saw the sector rush to rehire as Americans' spending boomed. Leisure and hospitality businesses have since counted for the bulk of job gains over the past year and have seen wages surge higher as workers flex their newfound bargaining power.
The latest inflation data, however, shows few other groups even coming close to enjoying real wage growth since early 2021. Transportation and warehousing employees fared the second-best after leisure and hospitality workers, but even they faced a 1.2% drop in inflation-adjusted wages.
There's still some hope for Americans who've seen their buying power evaporate throughout the recovery. Job openings and quits both hit record highs in March, signaling the labor shortage only grew more intense through the end of the first quarter. The April jobs report showed average hourly earnings climbing another 0.3% in April. And while it may take several months for inflation to return to healthier levels, the Wednesday report suggests March might have been the peak for the US's price-growth problem.
The labor shortage will have to dramatically outlast the inflation surge if workers are to see their real wages swing higher. Early signs hint such a rebound is possible, but for now, most Americans will have to make do with scaled-back buying power.