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Hourly Pay Is Slipping Below Inflation Again, and Friday's Jobs Report Tests the Wage Line

Published October 1, 20266 min read

Worn work gloves and a plain envelope sit beside a small selection of groceries on a checkout counter. — A worker’s pay is buying less as inflation outpaces hourly wage growth. Illustration: MarketIntelLabs

The average hourly wage of the American production worker buys less than it did a year ago. Nominal average hourly earnings rose 3.1 percent year over year in August, according to BLS data, while the CPI rose 3.4 percent, according to BLS data published via FRED, which puts the real year-over-year change in pay at roughly minus 0.3 percent. Real wages were shrinking in five of the six months from March through August 2026. The only exception was March, and it barely cleared zero.

Key Takeaways Nominal hourly earnings rose 3.1 percent year over year in August 2026 while CPI inflation ran 3.4 percent, leaving real pay about 0.3 percent lower than a year earlier. Real wage growth was negative in…

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