Older Workers’ Wages Are Growing—But Not Fast Enough

With inflation now a top concern among the U.S. public, workers face a race between wage gains and price increases. Older workers, despite receiving better raises than they have in many years, are losing that race. Like the rest of the labor force, older workers have benefited from significant increases in their hourly pay: in the past six months, median year-over-year wage growth averaged 3.9 percent for workers 55 and older — up from wage growth of 2.4 percent before the pandemic (Figure 1). Nevertheless, while pay is growing relatively quickly for older workers, their wage growth still lags behind that of mid-career workers (ages 35 to 54). And nominal wage growth — which is unadjusted for inflation — has been surpassed by a steep rise in prices over the past year, causing a decline in older workers’ standard of living. Despite these setbacks, inequality is decreasing somewhat for older workers, as those who occupy the lowest-wage jobs are experiencing the highest wage growth. Meanwhile, retirees have begun to return to the labor force, though it remains too early to tell whether they will do so in numbers that will reverse the rise in retirements during the Covid pandemic.