When’s a Raise Not a Raise? When Inflation Erases It

Number of the Day: The most relevant or interesting figure in personal finance

11 Cents

That’s how little the average hourly worker has actually gained from their $2.52 pandemic-era raise, after accounting for soaring inflation.

Yes, wages have been rising as employers try to fill record numbers of open jobs, but price increases for all kinds of things—especially gas and groceries—have eroded consumers’ purchasing power, leaving the average worker barely better off than they were before the pandemic began. 

More specifically, while the average hourly wage reached $31.03 in November—up 8.8% from the $28.51 in February 2020—an estimate of what those wages would be in 1982 dollars shows it was $11.13 an hour in November, just 1% more than the $11.02 it was pre-pandemic, and down from as high as $11.74 early on in the crisis, the Bureau of Labor Statistics said Friday. Indeed, the rising cost of living was the second-most commonly identified threat after the pandemic, according to a new Allianz survey, and the share of people who view it as the single biggest threat to their retirement tripled to 25% in the latest survey from 8% in 2020.

The impact of inflation is particularly worrisome because so far the blow has been softened by the various forms of emergency relief and stimulus distributed during the pandemic, according to Jason Furman, a professor of economics at Harvard University and former top economic advisor to President Barack Obama.

“So far in 2021 government transfers, mostly the stimulus checks, have more than made up for the inflationary losses but there is a question as to what happens to people next year,” Furman wrote in an email.

Correction - Dec. 13, 2021. This article has been corrected after it misstated a figure. The average hourly wage has gone up $2.52 between February 2020 and November 2021.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Bureau of Labor Statistics. “Data Viewer.”

  2. Bureau of Labor Statistics. “Table A-1. Current and Real (Constant 1982–1984 Dollars) Earnings for All Employees on Private Nonfarm Payrolls, Seasonally Adjusted.”

  3. Federal Reserve Economic Data. “Average Hourly Earnings of All Employees, Total Private.”

  4. Allianz. “Rising Inflation Seen As Biggest Risk to Americans’ Retirement Plans in 2022.”

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