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Have wages kept up with inflation since COVID? Ask most folks and you'll get a shrug. Ask the government's own data and you'll get two different answers ... from two different surveys, both legitimate, both seasonally adjusted, both measuring the same six years. The discrepancy is worth understanding.
The obvious approach: take Average Weekly Earnings (CES0500000011) — the headline number in every jobs report — and divide by CPI. Do that from January 2020 through June 2026, and the answer looks good. CPI is up 28.3%. Nominal weekly earnings are up 32.4%. Real earnings: +3.2%. Workers ahead. Case closed.
Except it isn't. I posted a few weeks back about workers falling behind. After it was up, I was troubled by some of the older data and poked around a bit. Looking at the month-to-month numbers, one fluctuation jumps off the page. Average Weekly Earnings normally move 0.1% to 0.4% in a given month. But from March to April 2020 — the single worst month for employment since the Depression — it went UP 4.87%. All that drama in one month, while 20 million jobs were being destroyed.
That's not a raise. That's what they used to call on Wall Street a “Dead Cat Bounce.” What happened was this: Employees in the leisure and hospitality industry — one of the lowest-paid sectors in the economy —got laid off in droves in April 2020. The whole sector was gutted. Millions of workers were no longer working, and not only did their wages go to zero but they dropped off the survey entirely! Meanwhile, higher-paid professionals in many other industries switched to remote work.
The rest is simple arithmetic. The average wage of everyone still working went up because all those low-wage employees were no longer in the survey.
That happened mechanically, without a single person getting a dollar more. Run the counterfactual and keep the laid-off workers in the survey but count the laid-off as earning zero instead of dropping out of the sample entirely, and April 2020 shows an 11% decline, not a 5% jump. The Atlanta Fed, the CEA, and the Center for American Progress have all documented this same finding independently. It's not a fringe theory. It's the mainstream explanation, and it's never fully unwound from the Average Weekly Earnings series ... every year-over-year comparison since then carries a piece of those phantom earnings.
So, I went looking for a series immune to the problem: the Employment Cost Index, wages component (ECIWAG). The Employment Cost Index (EIC) holds industry and occupation mix fixed. It can't be moved by who got laid off, only by what employers are actually paying for a constant basket of jobs. Run the same math, Q1 2020 to Q1 2026 (the latest available), and the picture changes:
CPI up 26.0%. ECI wages up 26.5%. Real wages: +0.4%. Essentially flat.
The path matters more than the endpoint. Real ECI wages didn't drift sideways for six years — they fell as much as 2.4% below their January 2020 level by mid ... 2022. They stayed underwater for roughly three years and only crossed back to positive territory around mid-2025. That's the "workers got crushed by inflation" story most people remember living through. It's real. It just doesn't show up in the composition-distorted average that makes the news.
Two numbers, two honest measurements, two very different stories ... and the gap between them isn't a rounding error. It's 2.8 percentage points of cumulative "wage growth" that never actually happened. It's funny money. No one ever got paid. Workers are back to roughly where they started before COVID, after a real and substantial multi-year stretch of falling behind ... not comfortably ahead, whatever the headline series implies.
Worse, is that the most recent quarter — though data is not yet available in the ECI — will likely show that workers fell further behind. For two of the past three months in a row (April and May 2026), year-over-year inflation has outpaced growth in average weekly earnings. Prices were going up faster than paychecks. In June, workers did better, but I estimate that the Q2 ECI v CPI will be negative again. Workers are back underwater. And it couldn’t happen at a worse time.
Don't take my word for it. CPIAUCSL, CES0500000011, and ECIWAG are all free on the St. Louis Fed’s user-friendly data warehouse - FRED. Pull them yourself.
Discussion (25)
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Well, that's discouraging. And if that continues, were not going to be in good shape by fall. Thanks for your hard work on these facts, Ekosj.
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Ekosj - I really appreciate your posts. Most of us can't weed through the financial lingo, but we can see and feel it all in real life. I am very bothered by this and I am not a cynical person by nature. However, I've seen "conspiracy theories" turn into the truth too much, especially since Covid. I feel like this whole engineered virus (after Gates and Co. did their simulation run in Oct. 2019) was pre-planned.
"The Johns Hopkins Center for Health Security in partnership with the World Economic Forum and the Bill and Melinda Gates Foundation hosted Event 201, a high-level pandemic exercise on October 18, 2019, in New York, NY. The exercise illustrated areas where public/private partnerships will be necessary during the response to a severe pandemic in order to diminish large-scale economic and societal consequences." https://centerforhealthsecurity.org/our-work/tabletop-exercises/event-201-pandemic-tabletop-exercise
I'm not saying they expected the China flu to emerge that soon - maybe it just happened that way. They war-gamed it all, but the world has not recovered from it. Jobs did not recover and now thanks to AI - will continue to disappear, goods and services are now very expensive, housing and rent very expensive, so many people have yet to recover.
But this may be part of what the Agenda 2030 and the WEF wanted. Reduce the population, (called useless eaters), introduce multi-gender and trans as normal, stop marrying and having kids, stay in your 15 min smart city, you will own nothing and be happy....... I have seen a lot of headlines recently (The Atlantic, Wired Mag, NY Times) about GenZ and how they are choosing to be alone, stay home, no friends, skip marriage and kids. How sad!! But that's what conditioning does.
Back to your financial data, if people of all ages are finding themselves in the hole each month, and job prospects dwindling, what to do?? Parents and children living together longer. I thought we would have bounced back by now, but the world totally changed in every way.
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I assume ECI includes compensation that is invisible to workers like cost of health insurance. Since health insurance only goes up, it is likely that take-home pay is going down. Yikes!
I bought gas today. it was $3.39 for 87 octane and $4.89 for 93 octane. That is a big spread. Something has gone wrong with our refining capacity in America.
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None of this is natural. All of this has been done to us.
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