By Howard Schneider
WASHINGTON (Reuters) -Inflation-adjusted earnings stalled across age and income groups over the past year, while the sometimes rapid wage gains of the COVID-19 era have left workers as a whole little better off five years later, a JPMorganChase Institute study concluded.
The study, released on Thursday, said after-tax take-home pay, adjusted for inflation that soared above 9% in 2022, grew more slowly than the economy as a whole from 2019 through 2025, likely leaving workers with a smaller share of annual output.
While lower-paid workers have kept the relative wage gains made early in the pandemic, when their pay was rising faster than others, that progress has stalled recently, the study found, with earnings growing about the same across income categories.
“While the labor market has been strong, American workers may sense that it could have been even stronger,” as the economy continued to grow but wage gains were offset by inflation, the institute said in its study.
It used data from about 20 million checking accounts, including 7 million from the 2019-2025 period, to track take-home earnings of individuals by income level and age.
The findings are potentially relevant for Federal Reserve officials trying to gauge the resilience of consumer spending should inflation accelerate due to the Trump administration’s import tariffs.
Retail spending barely grew in April after a surge of buying in March that may have reflected efforts to make purchases before the tariffs on goods from China and other major trading partners took effect.
Whether spending rebounds or continues to slow from here will be important to U.S. central bankers trying to understand the impact of trade policy on the economy. Firms like Walmart have warned of future price increases, while Fed officials and economists say households are facing mounting financial challenges, including the restart of student loan repayments and the loss of financial buffers built up from government payments during the pandemic.
“Workers can see how their wages are moving, and they can read the paper and understand what is happening” on trade and other issues, Institute President Christopher Wheat said in an interview. “Eventually you’d think that is going to show up in spending, though we’ve not directly seen that yet.”
(Reporting by Howard Schneider; Editing by Paul Simao)
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