More than four years after the pandemic sent prices soaring, wages in the U.S. have yet to fully catch up with inflation, according to a new report.
On average, Americans’ pay has grown 1.2 percentage points less than the cost of living since 2021, Bankrate’s 2025 Wage to Inflation Index shows. That means many households have seen their purchasing power eroded even as paychecks have risen.
The gap helps explain why Americans remain uneasy about the economy. A CBS News poll in July found that 55% view the economy as “very” or “fairly” bad. Three in four said their income hasn’t kept pace with inflation, and most reported that prices continue to climb — with many expecting that trend to persist.
Teachers hit hardest
Some professions are falling further behind than others. Educators, in particular, have seen the largest shortfall between wage growth and inflation over the past four years. Teachers have long faced a “wage penalty” compared with other college-educated workers, partly due to limits on school funding, according to the Economic Policy Institute.
“Wage growth is often a reflection of who holds power in the labor market,” said Bankrate analyst Sarah Foster. “When job openings outnumber available workers, businesses boost pay to compete for talent. But when openings are scarce, employers don’t feel the same pressure to raise wages.”
The 1.2 percentage point shortfall signals ongoing financial stress for many families, Foster added. Even before the pandemic, millions struggled to save for emergencies. “When wages don’t keep up with inflation, households lose purchasing power,” she said. “That’s money they could have used to save for retirement, buy a home, or build an emergency cushion.”
Some sectors outpace inflation
Not all industries are lagging. Jobs in leisure and hospitality have managed to outpace inflation, boosted by strong post-pandemic demand. Health care has also been a major driver of job creation, accounting for nearly nine in 10 new private-sector jobs last month, Foster noted.
Widespread wage dissatisfaction
Only 54% of Americans say they’re satisfied with their current pay, according to the Federal Reserve Bank of New York — the lowest level since the survey began in 2014.
Even higher-income households, which make up roughly half of all consumer spending, are feeling the squeeze. Rising delinquencies on credit cards and auto loans suggest that financial strain is spreading beyond lower-income families.
Meanwhile, the quality of new jobs appears to be declining. Just 7% of positions created this year pay above-average wages, compared with 38% before 2020, according to data from credit-score provider VantageScore.
That shift is especially challenging for white-collar workers in fields like finance and professional services, where the job market has slowed considerably. “Many workers in these sectors describe it as frozen,” Foster said. “Those who are employed see few opportunities to move, while those unemployed struggle to find openings.”