Average Hourly Earnings - Historical Chart
Average Hourly Earnings. Gray shaded areas indicate U.S. recessions.
Source: Federal Reserve Bank of St. Louis (FRED), Series CEU0500000003. Shaded areas = NBER recession dates. Updated 2026-03-09.
Nominal Wages Are a Mirage
At $37.59 per hour, the average non-supervisory worker in the private sector earns more than at any point in history. That is the nominal story. The real story -- after adjusting for the 20%+ cumulative price increase since 2020 -- is that purchasing power is roughly where it was in early 2020. Four years of wage growth, erased by inflation.
This matters for the economy in ways that standard analysis misses. Workers look at their paychecks and see bigger numbers. They look at their grocery bills and feel poorer. Both things are true simultaneously, and the psychological effect of the latter overwhelms the mathematical reality of the former. Consumer confidence surveys consistently show pessimism about personal finances even during periods of positive real wage growth, because the level of prices (not the rate of change) is what people experience.
The 10-year average is $30.65. The current reading is above that average by $6.94. But the 10-year average includes years of very low inflation, so the comparison is misleading. A better benchmark is real earnings indexed to 2019, and by that measure, workers have gained roughly $0.50-$1.00 in actual purchasing power over six years. That is stagnation by any honest accounting.
The Composition Effect
Average hourly earnings are also distorted by who is getting hired and who is getting laid off. When companies fire their highest-paid workers (as tech companies did throughout 2023-2024) and replace them with lower-paid new hires, the average drops -- even though no individual worker took a pay cut. Conversely, when low-wage workers leave the labor force, the average rises because the remaining pool skews higher-paid.
The BLS does not track the same workers over time in this series. It tracks the average across all workers in a given month. That means the number conflates actual wage growth with compositional shifts. The Employment Cost Index (ECI) does a better job of controlling for this, but it is quarterly and gets far less attention.
What Wage Growth Means for Business Costs
If you employ people, this number is your cost base. At $37.59/hour, a full-time employee costs roughly $78K in direct wages before benefits, payroll taxes, and overhead. Add 30% for benefits loading and your all-in cost per employee is roughly $102K.
Wage growth has been decelerating from the 5-6% peaks of 2022, settling into a 3.5-4% range. For most businesses, that is above the rate at which they can raise prices, which means margins are compressing. The squeeze is most acute in labor-intensive sectors: restaurants, healthcare, retail, and professional services.
The Wage-Price Spiral That Did Not Happen (Yet)
The Fed was terrified of a 1970s-style wage-price spiral, where higher wages drove higher prices which drove higher wage demands in an inflationary loop. That has not materialized -- partly because unions are weaker, partly because global supply chains constrain pricing power, and partly because the labor market is not as tight as the U-3 rate suggests.
But the risk has not vanished. It has shifted form. Instead of a broad-based spiral, we are seeing sector-specific wage inflation in areas with genuine scarcity: skilled trades, nursing, commercial driving, and specialized tech roles. Businesses in these sectors are paying 20-40% more than they were in 2019, and those costs are permanent.
Bottom Line for Business Owners
Wage growth is slowing but not reversing. Do not plan for wages to decline -- they never do in nominal terms outside of severe recessions. Your labor cost baseline has reset permanently higher. If your revenue has not kept pace with the 20%+ cumulative increase in wages since 2020, your margins are structurally thinner. That makes debt service harder and makes every dollar of business debt more dangerous.
Wage Growth vs. Inflation: The Real Earnings Gap
| Period | Nominal Wage Growth | CPI Inflation | Real Gain/Loss |
|---|---|---|---|
| 2020 | +7.9%* | +1.4% | +6.5% (distorted) |
| 2021 | +4.7% | +7.0% | -2.3% |
| 2022 | +5.1% | +6.5% | -1.4% |
| 2023 | +4.3% | +3.4% | +0.9% |
| 2024 | +3.8% | +2.9% | +0.9% |
*2020 compositional distortion: low-wage workers lost jobs, pulling average up
Average Hourly Earnings - Frequently Asked Questions
Average hourly earnings for all private-sector employees are ${value} as of {period}, per FRED series CEU0500000003. This is a nominal figure before taxes. Year-over-year growth has been running at 3-5% recently.
That depends on the period. In 2021-2022, inflation outpaced wage growth, meaning real wages fell. In 2023-2024, wage growth caught up as inflation declined. When real wages fall, consumers cut spending, which hurts business revenue even as labor costs rise.
Labor is the largest expense for most service businesses, typically 30-50% of revenue. A $1/hour increase across a 20-person staff adds roughly $40,000 per year in wage costs. Small businesses with thin margins feel this pressure acutely.
Wage growth is an inflation input. The Fed worries about a wage-price spiral where higher wages lead to higher prices, which lead to demands for higher wages. Strong wage data can push bond yields higher as markets price in tighter monetary policy.
Average hourly earnings are pulled upward by high earners, so the average overstates what a typical worker makes. BLS also publishes median weekly earnings (FRED: LEU0252881600A) from the CPS, which is a better measure of what the typical worker actually earns.
FRED series CEU0500000003 from the BLS Current Employment Statistics survey. Published monthly as part of the Employment Situation report. Covers all employees on private nonfarm payrolls.