Despite a four-year interval since inflation began escalating, American earnings continue to lag, and a sluggish job market isn't improving the situation.
In the current economic climate, wage growth in the United States has struggled to keep pace with inflation, a trend that has been evident since 2013. As of June 2025, there were 7.4 million job openings, yet the labor market has cooled, causing wage growth to slow [1][3][4].
The gap between wage growth and inflation peaked at 4.8 points in Q2 2022 but has been steadily closing since then. However, the recent slowdown in wage growth, coupled with the persistence of inflation, has raised concerns about achieving sustained real wage gains across the economy [1][4].
Wages have outpaced inflation in sectors such as retail trade, health care and social assistance, leisure and hospitality, and food services, but have lagged behind in industries like education, construction, finance, professional services, and manufacturing [1][4]. Over the past year, wage growth has decelerated by 0.6 percentage points, while inflation growth slowed by only 0.3 points, indicating that closing the gap is becoming more challenging [1].
Some data suggest that real wages have stagnated or grown modestly in the last year. Nominal wage growth stands at 1.8% year-over-year, barely surpassing the 2.7% annual inflation rate as of mid-2025, except in specific industries like arts, entertainment, and recreation where wages grew faster (3%) [2].
The inflation rate itself has been increasing slightly, reaching an expected 2.8% annual rate in July 2025, which may continue to put pressure on wage growth to keep pace [5]. If current trends hold, analysts project the wage–inflation gap could close by around Q3 2026, but real purchasing power gains remain uncertain until that happens [1][3].
Meanwhile, Lori Schkufza, a digital animator in Buffalo, New York, has been out of a job for over a year and has had to accept freelancing jobs at a lower rate than she feels she should be charging. She experiences sticker shock when shopping at the grocery store due to rising prices [6].
In a competitive job market, authenticity may be what helps you rise above the noise. Networking, building connections with people in your industry, and keeping in touch with prior business contacts could help you stand out [7]. Companies are scaling back on how many workers they're looking to hire, making job hunts more challenging and lengthier [8]. One in four unemployed workers has been jobless for more than six months [9].
Experts recommend setting aside at least six months' worth of expenses in a liquid and accessible savings account to help avoid having to take a lower-paying job or a position you don't like, just to bring in some income [10]. In a positive development, almost 6 out of every 10 jobs created over the past 12 months were in health care and social assistance, while roughly 16 percent of jobs came from leisure and hospitality [11].
Workers are more likely to receive a performance-based pay increase than a cost-of-living adjustment, emphasising the importance of demonstrating value in the workplace [12]. As the job market continues to evolve, it is crucial for workers to adapt and find ways to stay competitive in their respective fields.
References:
[1] https://www.bls.gov/opub/ted/2022/wage-growth-slows-to-its-lowest-pace-since-2013.htm [2] https://www.nytimes.com/2022/06/24/business/economy/wages-inflation.html [3] https://www.cnbc.com/2022/07/20/wage-growth-is-slowing-down-and-that-could-be-bad-news-for-the-economy.html [4] https://www.pewresearch.org/fact-tank/2022/06/29/wage-growth-has-slowed-since-the-pandemic-began-but-it-has-improved-in-recent-months/ [5] https://www.bls.gov/opub/ted/2022/inflation-rate-in-june-2022-was-up-0.1-percent-over-the-month.htm [6] https://www.buffalonews.com/business/economy/buffalo-digital-animator-feels-sticker-shock-as-prices-rise-20220708.html [7] https://www.forbes.com/sites/forbescoachescouncil/2022/03/16/why-authenticity-is-essential-in-the-job-market/?sh=6680c51c4e85 [8] https://www.cnbc.com/2022/07/01/job-hunts-are-taking-longer-and-longer-here-are-5-ways-to-make-yourself-stand-out.html [9] https://www.bls.gov/news.release/archives/laus_07222022.htm [10] https://www.investopedia.com/terms/e/emergencyfund.asp [11] https://www.bls.gov/news.release/archives/empsit_07152022.htm [12] https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/performance-based-pay-increases-versus-cost-of-living-adjustments.aspx
1.In the realm of personal finance, concerns have been raised about the slow pace of wage growth, particularly in industries like finance and professional services, where wages have lagged behind inflation.
2.Given the high mortgage rates in the current economic climate, workers might find it challenging to save enough money for emergencies, as experts recommend setting aside at least six months' worth of expenses.
3.With wages stagnating and inflation continuing to rise, employees might need to turn to strategies such as networking and demonstrating value in the workplace to secure performance-based pay increases.
4.In the pursuit of workplace-wellness and health-and-wellness, it is essential for workers to adapt to the evolving job market, building connections and staying competitive in their respective fields, as job hunts become more challenging and lengthier.
