Did U.S. Wage Growth Beat Inflation? A Matched-Period Check
Compare average hourly earnings and seasonally adjusted CPI from August 2020 to August 2026, using the exact real-growth ratio rather than subtraction.
Editorial date: · Data reviewed September 30, 2026 · US Economic Data
Compare the same interval before comparing percentages
A wage growth headline and an inflation headline can refer to different months, populations or adjustment bases. This calculation uses August 2020 and August 2026 for both measures. Average hourly earnings concern all employees on private nonfarm payrolls, while the CPI-U is the urban-consumer price index. Both selected series are seasonally adjusted.
The first row is nominal earnings. The second row is the CPI change over exactly the same interval. The third divides the earnings ratio by the price ratio and indexes the result to 100 at the starting month. This is a website calculation from the acquired observations, not a separately published official real-earnings series.
Original data comparison
This article retains its original acquired data vintage. Current indicator and state pages use the reviewed update. Inspect revisions and corrections.
AHE and CPI-U SA, Aug 2020–Aug 2026. Real indexed earnings = 100 × (earnings_end / earnings_start) / (CPI_end / CPI_start). Rounded only for display.
| Measure | August 2020 | August 2026 | Change |
|---|---|---|---|
| Average hourly earnings | $29.49 | $37.75 | 28.01% |
| CPI-U, seasonally adjusted | 259.316 | 334.131 | 28.85% |
| Earnings deflated by this CPI | 100.00 | 99.35 | -0.65% |
The matched-period result
Nominal average hourly earnings increased 28.01%, while the selected adjusted CPI increased 28.85%. The exact ratio gives -0.65% purchasing-power change for this average earnings measure. Merely subtracting the two cumulative percentages gives -0.84 percentage points; that subtraction is not the same real-growth calculation.
This interval begins in August 2020, after the initial pandemic disruption, rather than at a pre-pandemic month. That choice belongs in the interpretation. It should not be described as the experience of a continuously employed worker or as a complete measure of labor compensation. A useful follow-up is to repeat the same calculation with another matched start month and retain both source definitions.
The exact ratio differs from subtraction
Real growth equals (1 + nominal growth) ÷ (1 + price growth) − 1, with the inputs expressed as decimals. If nominal pay rises 5% and prices rise 3%, the exact result is approximately 1.94%, rather than exactly 2%. The approximation becomes less reliable as either cumulative change gets larger.
The calculation describes the amount of the measured basket that the average hourly earnings figure represents. It does not identify taxes, benefits, hours worked or an individual’s take-home income. Weekly or annual earnings can move differently when work hours change.
Average wages can change when the mix of workers changes
An average can rise when employment shifts toward higher-paying jobs, even if particular workers receive no raise. It can fall when lower-paying jobs expand. The average-hourly-earnings series therefore should not be described as the raise received by the typical worker.
A compensation index that controls for occupational and industry composition answers a different question. The Employment Cost Index includes specified compensation components and has a quarterly frequency. It is a useful companion measure, but should not be forced onto the same monthly date or called another version of this average.
Choose a deflator for the research question
CPI-U is a defensible broad consumer-price benchmark for this illustration, but it does not match every household’s basket or every earnings population. A different deflator can produce a different real-growth result. The chosen price series belongs in the chart title, method and citation.
Use the real wage calculator for a clearly labeled input scenario, or download the earnings and CPI histories for another matching interval. The ratio is retrospective and does not predict future wage growth or inflation.
Sources and calculation method
AHE and CPI-U SA, Aug 2020–Aug 2026. Real indexed earnings = 100 × (earnings_end / earnings_start) / (CPI_end / CPI_start). Rounded only for display. These are observations in acquired September 30 snapshots. Source publication dates and reference periods differ; the article’s editorial date is separate from this final data-review date. The tables do not establish which revisions were known before acquisition.
Retain the table download and file checksum alongside the method when citing this comparison. For source or calculation questions, use the corrections contact.
