Over the past year, U.S. wages rose 3.0 percent. Prices rose 3.7 percent. Take one from the other and a typical worker’s real pay is about 0.7 points behind, according to a Koryo Macro analysis of September 2026 data from the Federal Reserve’s FRED database.
That is the difference between nominal and real wages. The nominal wage is the dollar figure on the paycheck. The real wage is what that money buys once inflation is stripped out, which is why a raise can still leave a household feeling squeezed. The shorthand is wage growth minus inflation. A 5 percent raise in a year when prices also rise 5 percent leaves real pay flat. If prices rise more, real pay goes negative.
Behind again
The analysis uses average hourly earnings for the wage side and the consumer price index for prices. By that measure, wages are running below prices, and the shortfall has grown from a month earlier.
It has been a long swing. The gap blew out during the 2022 inflation spike. In 2023 and 2024, wage growth pulled ahead of prices and real wages turned positive. More recently inflation has picked up again and pushed them back below zero.
Why analysts watch it
Look only at nominal pay and the story is “I got a raise.” Look at real pay and you may be able to buy less than before. For that reason, analysts reading consumer spending, domestic demand and sentiment watch the direction of real wages more closely than the headline figure.
The author cautions against reading a negative number as alarming by itself. Real wages recover when inflation cools or pay climbs faster, and what matters is whether wages are catching up to prices over time.
