U.S. Inflation-Adjusted Wages Fall Through September

The United States Department of Labor reported that inflation-adjusted wages for American workers fell over the 12 months ending in September. Although total compensation for civilian workers rose 3.4%, with wages and salaries increasing by 3.1% and benefit costs by 3.9%, these gains were offset by price increases.

Real wages effectively shrank for both sectors, falling 0.6% for private-sector workers and 0.5% for state and local government workers. This decline in purchasing power complicates the Federal Reserve System's efforts to curb inflation without triggering a significant slowdown in hiring or wage growth.

In response to persistent inflation, the Federal Reserve System raised its benchmark interest rate six weeks ago for the first time since 2023. The central bank has indicated that another rate hike may occur later this year to further tame economic pressure.