U.S. workers are making more money than they did just a few years ago, yet for many it is a familiar feeling that everyday life now seems harder to afford.
A new analysis by MyPerfectResume suggests that while paychecks have grown, rising prices have quietly erased most of those gains, leaving many Americans with less real spending power than before the pandemic.
Between 2020 and 2024, the average annual wage climbed from about $64,000 to $75,600, an 18 percent increase, according to the Bureau of Labor Statistics. But over the same period, consumer prices rose roughly 21 percent. That means a dollar in 2024 bought what just 82 cents did in 2020, according to the study.
After adjusting for inflation and cost of living, the study found that the typical worker is now earning about 2.6 percent less in real terms than four years ago.
“While wages have increased on paper over the past few years, most workers aren’t actually feeling better off,” Jasmine Escalera, a career expert at MyPerfectResume, told Newsweek. “Inflation and rising living costs erased those gains.”
More Pay Feels Like Less Money
For many Americans, larger paychecks have been swallowed by the trend of higher housing costs, grocery bills, energy prices, insurance, and other everyday expenses.
According to the Bureau of Labor Statistics, everyday costs, that make up the largest share of household budgets, are still rising. Between December 2024 and December 2025, food prices increased about 3.1 percent, with grocery costs up 2.4 percent and the prices of restaurant meals rising 4.1 percent. Housing costs climbed 3.2 percent, while energy prices, including electricity and natural gas, rose roughly 2.3 percent.
Even though every state posted wage increases in raw dollars, most workers still saw their purchasing power shrink.
Escalera said the squeeze is widespread.
“In 41 states, workers effectively took a pay cut once housing, groceries, and other essentials were factored in,” she said. “Even with higher paychecks, many households feel they’re falling behind.”
Where someone lives now plays a major role in how far their income goes, and a salary that stretches in one state may barely cover basic needs in another as purchasing power falls. Only nine states saw real gains in buying power after inflation and cost-of-living adjustments, according to the study.
Idaho led the country, where workers gained about 3.1 percent in real buying power. Florida followed closely at 2.6 percent, with Washington and Montana both seeing increases of roughly 2.3 percent. Wyoming also posted a gain—1.8 percent—suggesting that wage growth in those states managed to stay ahead of rising costs.
At the opposite end, several high-cost states experienced the steepest declines. New Jersey saw the largest drop, with real purchasing power falling about 7 percent. Rhode Island followed with a nearly 6.9 percent decline, while Maryland, New York, and Massachusetts all recorded losses of more than 5 percent.
Even in traditionally high-paying states like Massachusetts and New York, Escalera said higher wages did not translate into better living standards as rising costs erased much of the progress.
Career Impacts
Escalera explains that when budgets are stretched and savings shrink, workers become more cautious about switching up their careers.
“When your budget is tighter and savings are thinner, switching jobs becomes riskier. Instead of chasing higher pay or growth, many are prioritizing security,” she said.
Some are also turning to second jobs to fill the gap.
“According to a report by MyPerfectResume, 72 percent of workers now rely on side jobs to make ends meet,” Escalera said. “While this can help close short-term financial gaps, it often contributes to burnout and stress, which can affect performance in a worker’s primary role and further limit wage growth and career advancement.”
Return-to-office policies may make things even harder. Escalera said that fewer workers now feel able to push back or relocate to lower-cost areas—a trend that boomed during and after the coronavirus pandemic, when working remotely became the norm.
“When you combine shrinking purchasing power with reduced flexibility, you get a more cautious, less mobile workforce,” she said. “People aren’t moving for better opportunities as they did a few years ago. That’s contributing to slower job switching, fewer openings, and a more stagnant labor market overall.”
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