American workers have seen little improvement in their purchasing power since President Donald Trump returned to office, with pay increases largely offset by rising prices over the past 18 months.
Average hourly earnings rose 3.5% in June from a year earlier, matching the annual inflation rate of 3.5% over the same period. After adjusting for inflation, workers are earning about 27 cents more per hour than they were in January 2025, leaving many households with little sense that their financial situation has materially improved.
Real average hourly earnings increased 0.8% in June from the previous month, the largest monthly gain in more than a year after lower gasoline prices helped pull down overall inflation, according to Bureau of Labor Statistics data analyzed by The Washington Post.
The June improvement followed several months of weak or negative real wage growth. Inflation climbed as high as 4.2% in May before easing in June, while inflation-adjusted hourly earnings increased from approximately $37.37 at the start of Trump's current term to about $37.64 last month.
Economists say broad averages often fail to capture the experience of workers whose raises have not kept pace with higher prices.
"No matter what we see in the averages, there's going to be a lot of people whose wages are simply not keeping up with inflation," Betsey Stevenson, a former Labor Department chief economist and current University of Michigan professor told The Washington Post.
"So they just can't buy the same bundle of goods that they could have bought a year ago," Stevenson added.
Affordability remains a major concern for voters as the country heads toward the midterm elections. Michael Strain, director of economic policy studies at the American Enterprise Institute, said Americans frequently judge the economy through the lens of their own household finances.
"President Trump was elected because people were unhappy with the southern border being open and people were unhappy with the inflation that they had to deal with under President Biden," Strain said.
White House spokesman Kush Desai said the administration believes inflation tied to energy prices could ease if tensions in the Middle East subside.
"President Trump has always been clear about the fact that oil and gas prices — and thus overall inflation — will rapidly drop as soon as the Iran situation is resolved," Desai said in a statement carried by The Washington Post.
The renewed conflict involving the United States and Iran has remained an economic concern throughout 2026. Oil prices have repeatedly moved higher as hostilities intensified and investors monitored shipping through the Strait of Hormuz, according to Reuters.
Gasoline prices could again approach $4 per gallon if disruptions continue, Reuters reported in a separate analysis of U.S. fuel markets published this week.
The effects of inflation have varied significantly across the workforce. Employees who changed jobs or negotiated higher salaries have generally outperformed inflation, while workers who remained in the same positions have often fallen behind.
However, fewer Americans are switching employers. The share of workers voluntarily quitting their jobs recently fell to its lowest level since 2020, according to Labor Department data.
Inflation has moderated from the highs recorded earlier in the decade, but prices for many staples remain elevated. Beef and veal prices were up 12.9% year over year in May, while dairy prices also continued climbing, according to the latest USDA Food Price Outlook.
At the wholesale level, producer prices fell 0.3% in June as lower energy costs provided some relief, though underlying inflation pressures remain, according to The Associated Press.
Consumer sentiment has remained subdued despite signs of easing inflation, with affordability continuing to rank among Americans' top economic concerns.
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