Wages are not keeping up with inflation.
 

Please consider the BLS Real Earnings report for December 2025.

All Employees

Real average hourly earnings for all employees were unchanged from November to December, seasonally adjusted. This result stems from an increase of 0.3 percent in average hourly earnings combined with an increase of 0.3 percent in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings decreased 0.3 percent over the month due to no change in real average hourly earnings combined with a decrease of 0.3 percent in the average workweek.

Production and Nonsupervisory Employees

Real average hourly earnings for production and nonsupervisory employees decreased 0.2 percent from November to December, seasonally adjusted. This result stems from a 0.1-percent increase in average hourly earnings combined with an increase of 0.2 percent in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Real average weekly earnings decreased 0.1 percent over the month due to the change in real average hourly earnings combined with no change in the average workweek.

For the past five months, workers have lost ground. It’s even worse if you factor in reduced hours.

Average Real Weekly Earnings
 

Over the past five months real weekly earnings are down 0.7 percent for all private workers. Earnings are down 0.3 percent for production and nonsupervisory workers.

My numbers may be slightly different (+- 0.1) than BLS reports due to rounding methodology.

Real Average Hourly Earnings Detail
 

Since February 2020 (pre-Covid) real wages for all private workers is up just 34 cents from $11.01 per hour to $11.35 per hour.

Since February 2020 (pre-Covid) real wages production and nonsupervisory workers is up just 44 cents from $9.51 per hour to $9.95 per hour.

These numbers are my calculations as well, but they exactly match the BLS report.

Nominal and Real Average Hourly Earnings
 

The above chart really puts things into proper perspective.

Data for production and nonsupervisory workers dates to January 1964. Data for total private only dates to March of 2006.

Key Points for Production and Nonsupervisory Since 1964

• Nominal wages rose from $2.50 per hour to $31.76 per hour.
• Real wages rose from $8.03 per hour to $9,95 per hour.

Real wages are up a total of 23.9 percent in 61 years. Nominal wages are up 1,170 percent in the same period.

On an annualized basis, real wages are up 0.35 percent per year. Nominal wages are up 4.26 percent per year.

These real numbers assume you believe the CPI is an accurate measure of inflation. Do you?

The Fed says there is a benefit to inflation. Yeah right, the benefit is for banks, the government, and those with first access to money.

The Bright Side

But hey, look at the bright side. Trump says there is virtually no inflation. Meanwhile, for those in the real world, real earnings are negative for 5 months.

Is it any wonder people are upset?

Looking Ahead

I expect big jumps in medical care services.

There are 24 million people on ACA, and a majority of them are in Republican states.

For Obamacare discussion, please see my December 7, 2025 post How Much Will 4.5 Million Florida Residents Pay for Obamacare in 2026?

Here’s some interesting health care math on Obamacare in Florida.

What About Overall Health Care Costs?

Good question. I addressed that issue on December 8, 2025 in Health Care Inflation Bomb Makes the Fed’s 2 Percent Target Almost Impossible

Let’s discuss 2026 health care premiums and what they mean to the Fed’s preferred measure of inflation.

I project increases in health care will add 1.4 to 1.6 percentage points to headline PCE inflation before food, energy, shelter, or tariffs move prices at all.

And it’s the PCE, not the CPI that will have the Fed’s attention.

Related Posts

January 13, 2026: CPI Up 0.3 Percent in December, Price of Food Jumps, Gasoline Lower

Except for declines in gasoline and used cars, this was not a good report.

January 13, 2026: The Fed Has Missed Its Inflation Target on Ten Different Measures

The Atlanta Fed tracks various inflation targets. Let’s have a look.

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