Inflation Has Officially Wiped Out Pandemic Pay Raises

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

NOTD - $0

That’s how much hourly pay has changed during the pandemic—in other words, not at all—if you consider how much inflation has eroded wage increases.

Here’s the math. The average hourly pay has risen to $31.73 in March from $28.56 in February 2020, just before COVID-19 wreaked havoc on the economy, according to data from the Bureau of Labor Statistics. But look at the numbers again, this time adjusted for inflation. As the chart below shows, over the same two-year period, the average wage winds up being exactly the same—$11.03, a bureau report showed Tuesday. (Keep in mind the figure seems so low because the inflation adjustment uses 1982-1984 dollars.)

The numbers show consumer prices (especially for gas and groceries) are currently winning in their tug-of-war with wages. Despite a hot job market where pay increases are common, inflation has eroded consumer purchasing power. The inflation rate rose to 8.5% in the 12 months through March, the most since 1981.

It’s worth noting that the sharp spike in inflation-adjusted wages early in the pandemic was the result of jobs lost, not pay raises. Most of the early layoffs occurred in the hospitality industry, especially restaurants, hotels, and the like, where wages tend to be low. But as the economy reopened and jobs returned, businesses found themselves short of people to fill them, and pay scales went up, enticing workers to come back.

Have a question, comment, or story to share? You can reach Diccon at

Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!

Article Sources