News Number of the Day Inflation Erodes Workers’ Pay Increases Number of the Day: The most relevant or interesting figure in personal finance By Diccon Hyatt Published on August 11, 2021 Fact checked by Glenn Hunter Photo: The Balance That's how many months inflation-adjusted hourly earnings have decreased, showing that rising prices are steadily eroding workers' buying power despite wage increases, according to new data from the government. Inflation-adjusted average hourly wages fell 0.1% in July compared to June, the Bureau of Labor Statistics reported Wednesday. While average wages rose 0.4% before accounting for inflation, the pay hikes didn’t keep up with prices, which, as measured by the Consumer Price Index, rose 0.5% in July. In fact, inflation has outpaced hourly earnings growth for all of 2021 so far. “Ultimately workers care about the difference between wages and prices,” Jason Furman, a Harvard economics professor and former top advisor to President Barack Obama, posted on Twitter. “And right now prices are going up faster than wages.” Employers have been boosting pay to attract talent as the economy recovers from the pandemic. However, the pandemic’s disruption of supply chains has led to shortages of everything from houses to computer chips, resulting in rising prices across a broad swath of things people buy. Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources 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. U.S. Bureau of Labor Statistics. “Real Earnings Summary.”