A decade ago, low-income workers saw wages grow at the highest rate of any Americans. Now, the opposite is true, and the gap is widening between how quickly wages increase for wealthy and poorer U.S. households.
“Before and during the pandemic, lower-income households experienced higher wage growth than other income groups,” he said. “But that has changed over the past year. Today, wage growth for low-income workers is significantly lower than wage growth for middle- and high-income workers.”
While wage growth for all income groups has declined in the last few years, growth for the highest-income quartile has held up better, dipping from a peak of about 5.5% in 2023 to more than 4.5% now, still one percent higher than the lowest-income group.
While the U.S. economy has resembled a “K” for decades, the gap between wealthy and poor has gained more attention as the middle class and those making $100,000 yearly are bunched in with the lower half of the K. For example, wage growth for the middle two quartiles also slowed sharply and is below that of the wealthiest U.S. consumers, according to the Atlanta Fed data.
“The key point there is that there’s been a slowdown in labor market dynamism, the gross hiring rate, the quits rate fall into relatively low levels, and that particularly impacts young people who rely more on job switching to advance in their careers,” Eckert told Fortune.
“Data show wage growth has slowed more in the trade and transportation sector, and to a lower level, than any other major sector since the end of last year,” the analysts wrote in a note in September. “Fears workers would be able to secure larger wage increases in response to the tariffs look highly unlikely to be realized.”
