Real wages have fallen 1.6 percent over the last year
Real wages may have increased slightly in March, but purchasing power remains more than one percent lower than this time last year.
The Bureau of Labor Statistics reported that real wages rose for the first time this year in March, climbing up 0.2 percent. In January and February, wages lost around 0.4 percent of their purchasing power, meaning that the figures from March offset half of what has been lost so far in 2023.
The number of hours worked per week continues to fall
From March 2022 to March 2023, the number of hours worked each week fell from 34.1 to 39.9. Compared to this time last year, weekly earnings have fallen 0.7 percent, and as noted by the BLS, “combined with a decrease of 0.9 percent in the average workweek,” since March 2022, real wages have actually fallen by around 1.6 percent. Not only are workers making less, but they are working less, a double whammy for the purchasing power of the average household in the United States.
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The amount of overtime worked by those employed in the private sector has also fallen over the last year. This decrease has likely occurred as more workers are integrated into the workforce, thus lightening the load for those who had remained employed.
Which workers have seen the greatest decreases in purchasing power?
Some workers have seen real wages fall much more rapidly than others.
One group of these workers is those in the information industry, which the BLS takes to include workers who
- produce and distribute “information and cultural products [i.e., movies, radio, TV]”;
- provide “the means to transmit or distribute these products”; and
- process data.
Information workers have seen their real wages fall, on average, by 1.1 percent over the last year. Since the pandemic began, around five percent of their purchasing power has been erased. However, this was not always the case. In 2020 as firms tried to attract workers back into the labor force, real wages peaked at 636.76 in January 2021, but since then, nearly a tenth of the value of their wages has been lost.
Since March 2022, workers in the manufacturing industry have seen the value of their wages, in terms of purchasing power, fall by 2.2 percent. Compared to March 2020, real wages for these workers have fallen by 4.2 percent. In 2019, the manufacturing industry recorded around $351 billion, and by 2022, the sector had raked in more than $616 billion —an increase of around seventy-five percent.
The last group who saw a significant decrease in the value of their wages over the last year are those in leisure and hospitality, who have seen around 1.3 percent of their purchasing power erased. Like those in the information industry, workers in this sector saw wages rise through 2021 as businesses tried to attract and retain talent. However, unlike the information industry, not all of these gains have been erased, with real wages still twelve percent higher than they were in March 2020. The fact that some of the wage increases have held their purchasing power means that firms still have to offer higher salaries to maintain adequate staffing levels.