Unveiling the Truth Behind Workers' Financial Progress in Today's Economy

Diccon Hyatt, a seasoned financial and economic journalist, has extensively covered the pandemic-era economy through hundreds of insightful articles over the past two years. Known for translating complex financial concepts into clear, relatable language, Hyatt focuses on how economic trends impact individual finances and the broader market. His experience includes roles at U.S. 1, Community News Service, and the Middletown Transcript.

Key Insights

• "Real earnings" is a vital economic measure that compares wages to inflation to evaluate workers’ true purchasing power.
  
• Depending on the calculation method, real earnings have shown slight increases or decreases in the early months of the Trump administration.
  
• This statistic serves as a meaningful barometer for assessing how workers are faring under current economic policies.
  

In the midst of fluctuating economic conditions, one statistic stands out as a clear indicator of workers’ financial health. Among the myriad government data points, "real earnings" stands out as a key gauge of how the cost of living affects American workers. By adjusting wages for inflation, this figure estimates how much value each hour of work holds in terms of purchasing power.

Recently, the White House spotlighted a rise in real earnings as evidence that the economy remains supportive of workers, despite concerns that tariffs might drive up prices on everyday goods.

In April, real average hourly earnings increased by 1.9% compared to the previous year, meaning workers' paychecks effectively stretched further after accounting for price changes and wage adjustments.

Inflation has remained relatively moderate while wages have grown steadily over the past year under both the Trump and Biden administrations.

As Trump's trade policies continue to take effect, monitoring real earnings will be essential to gauge economic progress. Economists warn that prolonged tariffs could push prices higher, potentially slowing economic growth and impacting employment opportunities.

However, when examining real median weekly earnings for full-time workers aged 16 and older, the data tells a slightly different story: purchasing power declined by approximately two dollars per week in the first quarter of 2025.

Real wages are expressed in constant 1982-1984 dollars, meaning a first-quarter median weekly wage of $1,194 equates to the buying power of $373 in the early 1980s. Median wages, rather than averages, offer a more accurate snapshot of the typical American worker’s purchasing power.

Real earnings have become an increasingly valuable tool for assessing economic progress, especially when compared to the pandemic period. During the pandemic, many lower-wage workers lost their jobs, artificially inflating average wage figures because higher-paid workers remained employed.

Over recent decades, real earnings have experienced fluctuations but generally trended upward, reflecting gains in productivity that enable workers to afford more with their income. Since the Bureau of Labor Statistics began tracking this data in 1979, real weekly earnings have increased by approximately 11%.

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