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

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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