Paychecks were on track to catch up to prices. Now they might not.

For years, many Americans have wondered why their paychecks aren’t keeping up with the spiraling cost of things they need to buy.

Even as many economists acknowledged an "affordability crisis" and a "K-shaped economy" that benefitted the super-wealthy, analysts fixated on a more traditional measure of success: across the entire economy, aggregate wages were not too far behind aggregate inflation.

As recently as last summer, a report from Bankrate predicted that the gap between wages and inflation – which stood as wide as 4.8 percentage points in 2022, would finally close in 2026.

A hiring slowdown and, more recently, the Iran war, have shut down that speculation.

"We're not going to see a huge acceleration in wage growth," Bankrate Senior Economic Analyst Mark Hamrick told USA TODAY. "But we are going to see an acceleration of inflation."

Have wage gains kept up with inflation over the last year?

In aggregate, yes.

U.S. consumer prices rose 2.4% over the year in February, the Bureau of Labor Statistics estimated. The agency estimated average hourly earnings increased by 3.8% over the same period.

The bureau's March jobs report showed average hourly earnings have increased by 3.5% over the last year, marking a slowdown from the month prior. Economists expect U.S. consumer prices to have surged significantly higher in March than they did in February, largely due to skyrocketing oil and gas prices. The BLS’ consumer price index report due out April 10 will reveal whether those predictions are correct.

State Street PriceStats, which uses web-scraping technology to monitor the price of consumer products sold online, found annual inflation rose to 4% in March, a level last seen in January 2023.

"The more prices are set online, the faster retailers adjust prices... and what that means is that when you get shocks like this, inflation is more likely to pass through faster than it did before," said Michael Metcalfe, head of macro strategy at State Street Markets. "Whereas wages ‒ they might reset once a year, if you’re lucky."

Boston College economics professor Brian Bethune will watch the BLS' consumer price index reports for March, and for April ‒ when he expects to see high oil and gas prices starting to affect prices in other sectors.

"There was some optimism early this year that the math would turn positive in terms of the rate of inflation relative to the rate of growth of wages," Bethune said. "There's no question that's off the table now."

Have wage gains kept up with inflation since 2021?

The Bankrate report last August found U.S. consumer prices had risen 22.7% while wages had grown 21.5% since the start of 2021, representing a -1.2% gap.

But some workers’ paychecks had kept pace with inflation. 

The report found wages outpaced total pandemic-era inflation in four sectors, including retail trade, where the gap stood at 0.5%, health care and social assistance (1.7%), leisure and hospitality (4.1%), and food services and accommodation (4.8%).

Bethune said there’s a simple answer to why workers in those industries saw higher paychecks: those jobs were riskier to hold during the pandemic. 

"To get people to stay in those occupations, they had to be paid higher compensation," Bethune said. "Yeah, they got higher wages that you’re able to close the gap, but only because they were willing to take the risk of doing their jobs."

Sectors where wages had lagged behind inflation most included manufacturing (-2.5%), professional and business services (-2.8%), financial activities (-3.4%), construction (-3.6%), and education (-4.8%).

Are the rich getting richer?

The K-shaped economy may be showing up in wage gains, too.

Wages for middle- and high-income workers have grown faster than for lower-paid workers over the last year, according to data compiled by the Federal Reserve Bank of Atlanta.

As of February 2026, the 25% of workers earning the lowest wages saw their wages rise 3.5% year-over-year, while workers in the second quartile saw wage increases of 4.2%. Workers in the third quartile experienced the highest annual wage increases at 4.5%, while wages for workers in the top quartile rose 3.9% over the same period.

"There is a premium now being paid to people who have fairly sophisticated technical skills, in particular the ability to implement AI," Bethune said. "All of a sudden, we’re going back to this technology curve which tends to reward certain select individuals that have the right education, skills, background." 

Of course, Hamrick said, whether an individual receives a raise also depends on several other factors.

"Perhaps a more senior leader is going to be paid just on the basis of performance, and a younger member of an organization may be paid a little bit more simply because they are starting out at the lower rung of the income ladder," he said. 

Reach Rachel Barber at [email protected] and follow her on X @rachelbarber_