Real Wage Growth at the Micro Level

Gregory, Victoria; Harding, Elisabeth

doi:10.20955/wp.2023.024

Working Paper

Real Wage Growth at the Micro Level

Abstract: This paper investigates patterns in real wage growth in 2022 to determine whether wages have kept up with rising price levels, and how this differs among labor market participants. Using the CPS for wages and imputing expenditure data from the CEX, we measure separately nominal wage growth and inflation rates at the micro level. We find that there is more heterogeneity in the former, meaning that when we combine them, an individual’s real wage growth is primarily driven by their nominal wage growth. In 2022, 57% of individuals experienced negative real wage growth, with older and less educated workers, as well as job-stayers, being hit the hardest. Conversely, younger and highly educated workers, as well as job-switchers, had higher real wage growth.

Keywords: inflation; real wage growth; nominal wage growth; macroeconomics; labor; consumption;

JEL Classification: E24; E31; J31;

https://doi.org/10.20955/wp.2023.024

Status: Published in Federal Reserve Bank of St. Louis Review