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Real Wage Growth at the Micro Level

Author

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  • Victoria Gregory
  • Elisabeth Harding

Abstract

This paper investigates patterns in real wage growth in 2022 to determine whether wages have kept up with rising price levels, and how this differs among labor market participants. Using the CPS for wages and imputing expenditure data from the CEX, we measure separately nominal wage growth and inflation rates at the micro level. We find that there is more heterogeneity in the former, meaning that when we combine them, an individual’s real wage growth is primarily driven by their nominal wage growth. In 2022, 57% of individuals experienced negative real wage growth, with older and less educated workers, as well as job-stayers, being hit the hardest. Conversely, younger and highly educated workers, as well as job-switchers, had higher real wage growth.

Suggested Citation

  • Victoria Gregory & Elisabeth Harding, 2023. "Real Wage Growth at the Micro Level," Working Papers 2023-024, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:96831
    DOI: 10.20955/wp.2023.024
    Note: Publisher DOI: 10.20955/r.106.87-105
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    References listed on IDEAS

    as
    1. Cravino, Javier & Lan, Ting & Levchenko, Andrei A., 2020. "Price stickiness along the income distribution and the effects of monetary policy," Journal of Monetary Economics, Elsevier, vol. 110(C), pages 19-32.
    2. Pretnar, Nick, 2022. "Measuring Inequality with Consumption Time," MPRA Paper 118168, University Library of Munich, Germany.
    3. David Argente & Munseob Lee, 2021. "Cost of Living Inequality During the Great Recession," Journal of the European Economic Association, European Economic Association, vol. 19(2), pages 913-952.
    4. Richard Blundell & Luigi Pistaferri & Ian Preston, 2008. "Consumption Inequality and Partial Insurance," American Economic Review, American Economic Association, vol. 98(5), pages 1887-1921, December.
    5. Kaplan, Greg & Schulhofer-Wohl, Sam, 2017. "Inflation at the household level," Journal of Monetary Economics, Elsevier, vol. 91(C), pages 19-38.
    6. Javier Cravino & Andrei Levchenko, 2018. "Price stickiness along the income distribution," 2018 Meeting Papers 344, Society for Economic Dynamics.
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    More about this item

    Keywords

    inflation; real wage growth; nominal wage growth; macroeconomics; labor; consumption;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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