Hourly Earnings Growth
Year-over-year growth rate of real average hourly earnings among those working, based on 2023 US dollars, private sector only.
Why did we include this measure?
Inflation-adjusted wages capture the ability of Americans to provide for their own needs and are a measure of work productivity. This is the largest single source of income overall and, for working age adults, usually the sole source of income.
How does the US rank globally?
- Specific Measure: Year-over-year growth rate of real average hourly earnings, based on 2021 international dollars (PPP).
(Source: Authors’ analysis of International Labor Organization data).
- Percentage of countries the US outperforms: 70% (out of 20 countries)
- International Rank Trend: Improving
National Trend Mixed
What do the data show?
Real wage growth has been positive in all but six of the prior 16 years. That means workers are becoming better off economically. We are also doing well compared with other countries, and we have been moving up the international ranks. The countries just above us in the international comparison are Chile, Costa Rica, and South Korea. Like the other work and labor forces measures, real wage growth is also sensitive to economic conditions. Higher unemployment changes the number of jobs in different wage categories, which is a key factor affecting real wage growth. (Workers who keep their jobs in recessions usually do not see declines in wages.)
What might explain these patterns?
Real wage growth is related to productivity growth. When productivity rises, employers can pay workers more. However, they do not move completely in tandem. Productivity has been increasing somewhat faster than real wages (See the Economy section). This reflects the rapid growth of executive pay, which falls outside the wage definition, relative to the wages of the average worker.
We also note that the US international rankings on both average wage growth and productivity are higher than our education metric rankings (see the Education section). This may be explained by our relatively freer markets and investment in physical capital that work in tandem with worker skill.
For more information about data sources and treatments, download the Data Notes.