TLDR
- High-income after-tax wages rose 5.6% in March on a three-month average basis.
- Lower-income wage growth slowed to 1.0%, near the weakest level in three years.
- Middle-income wage growth was 2.0%, close to the lowest level since mid-2024.
- US CPI rose 3.3% in March, outpacing wage growth for lower and middle earners.
- The gap between top and bottom earners was the widest since the data began in 2015.
US wage growth split sharply in March, and inflation left many households with weaker buying power. After-tax wages rose 5.6% for higher-income households on a three-month average. Middle-income wages increased 2.0%, while lower-income wages rose 1.0%. Consumer prices climbed 3.3% from a year earlier. The gap between the highest and lowest earners reached the widest level since 2015 on record.
Wage Growth Gap Reaches Widest Level Since 2015
March data showed a clear divide across income groups in the United States. Higher-income households recorded after-tax wage growth of 5.6%. That was the strongest pace in at least three years. Middle-income households saw wages rise 2.0% from a year earlier.
Lower-income households posted 1.0% growth. That was near the weakest reading in at least three years. The spread between higher-income and lower-income wage growth widened to 4.6 percentage points. That was the largest gap since the series began in 2015.
The pattern pointed to a much faster income gain at the top. The data also showed that wage growth weakened for the bottom two income groups. Middle-income wage growth was near the lowest level since mid-2024. Lower-income wage growth remained close to a three-year low.
Inflation Leaves Lower and Middle Earners with Weaker Real Pay
Consumer prices rose 3.3% in March from a year earlier. That rate was above wage growth for lower-income households. It was also above wage growth for middle-income households. This meant real wages fell for those two groups.
Their paychecks may have been larger in dollar terms. But their buying power moved lower after inflation. Higher-income households were in a different position. Their 5.6% wage growth was above the 3.3% inflation rate.
That left them with positive real wage growth in March. The numbers showed a two-speed income pattern. One group gained ground after prices were counted. Two other groups lost ground because prices rose faster than wages.
Uneven Income Gains May Shape Spending Patterns
The wage split may affect household spending in different ways. Higher-income households had more room to keep spending. Lower-income and middle-income households faced tighter budgets. When real wages fall, households often adjust where they spend. They may cut discretionary purchases and focus on rent, food, fuel, and utilities. That can put pressure on broad consumer demand.
The data also supported the view that inflation does not affect all households equally. Wage growth alone did not show the full picture. Real purchasing power mattered more for daily living costs. Asset owners may still have more protection when wages lag prices. Rising asset values can support income and wealth at the top.
Households without those buffers have fewer ways to offset higher prices. March figures therefore showed more than a wage increase story. They showed that gains were uneven, and inflation eroded much of the progress for lower earners badly. As a result, the US wage gap hit a record while price growth reduced relief for much of the workforce.
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