Texas cities were more likely to see less wage growth.

LLC Editors • September 23, 2022 • Advertising Disclosure

Editor's Note: This story originally appeared on LLC.

The U.S. economy is now a full year into a historic run of inflation. Year-over-year price increases in the Consumer Price Index (CPI) have topped 5% every month since May 2021, peaking at 8.5% in March.

While the Federal Reserve has begun to raise interest rates to cool the economy, supply chain challenges and strong consumer demand throughout the pandemic have sent inflation to its highest levels in four decades.

Countless headlines over the last year have invoked widespread concerns about inflation, but not every household experiences rising prices in the same way. For example, homeowners who bought before the pandemic have been spared from spiking prices for housing costs, while remote workers have been less susceptible to rising costs for vehicles and gasoline.

Amid a tight labor market and the Great Resignation, many workers have seen their wage gains outpace the rate of inflation — but for those who haven’t, rising prices have effectively given them a pay cut.

Even before the current run of inflation, many workers were already in a challenging position due to relatively slow wage growth relative to prices over the last decade. Average hourly earnings showed year-over-year growth of between 2% and 3% for most of the decade before the pandemic, falling behind the rate of growth in the CPI at several points.

Over this period, higher earners — who may already be better equipped to withstand rising prices — saw their wages grow significantly faster than lower earners.

With prices rising rapidly, data from March 2022 year-over-year changes in the CPI are outpacing year-over-year changes in hourly earnings by 3 percentage points.

Using data from the U.S. Bureau of Economic Analysis’ Real Personal Income tables, researchers at LLC.org determined the locations where incomes have struggled to keep pace with inflation. Here are the U.S. metropolitan areas where incomes have struggled the most.

The data used in this analysis is from the U.S. Bureau of Economic Analysis’ Real Personal Income tables. To determine the locations where incomes have struggled to keep pace with inflation, researchers calculated the percentage change in per capita income between 2010 and 2020, with lower values being ranked higher. In the event of a tie, the location with the smaller total change in per capita income over the same time period was ranked higher. Note all values shown are inflation-adjusted to 2020 dollars. To improve relevance, only metropolitan areas with at least 100,000 residents were included. Additionally, metros were grouped into cohorts based on population size: small (100,000–349,999), midsize (350,000–999,999), and large (1,000,000 or more).

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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