Median Earnings Up 9% Since 2019, Narrowly Outpacing Inflation Over Same Period

The COVID-19 pandemic has wreaked plenty of financial havoc, but there’s a bit of light, too: Median wages for full-time, year-round workers in 2021 were 8.8%, or $4,186, higher than they were in 2019.

By race and gender, Hispanic and Latino women saw the biggest wage growth by percentage, while Black and African American men got the smallest boost — though still an improvement.

However, that news dims a bit when you factor in rising inflation, which has bogged down purchasing power (i.e., people are getting fewer goods and services for the same amount of money).

Here, MagnifyMoney examines wage growth during this unique two-year period for various population segments and explores the impact of those changes on purchasing power. Even with the slight growth in wages, Black and African American men lost buying power in the period examined, which can be damaging — especially for lower income earners.

Key findings

• Median wages for full-time workers grew 8.8% from 2019 to 2021. Median annual earnings jumped from $47,684 in 2019 to $51,870 in 2021 — a rise of $4,186. The majority of the gain (7.3%) came between 2019 and 2020. For context, the average year-over-year increase in median wages in the 10 years prior was 2.2%.
• These gains outpaced inflation, but just slightly. If a worker bought the same goods and services — such as groceries, gas and medical care — in December 2021 that they did in December 2019, they’d have just an extra $11 that month to put into savings despite the wage gains.
• Despite Hispanic and Latino women having the lowest median earnings in 2021, the demographic saw the biggest increase in purchasing power compared to two years earlier. Hispanic and Latino women had median wages of $37,258 in 2021, but that’s an 11.6% jump from $33,371 in 2019. That means they’d have an extra $88 in December 2021 compared to December 2019 (if they bought the same goods and services).
• In stark contrast, Black and African American men saw a decrease in purchasing power over this period. Black and African American men saw an 8.2% jump in their median wages between 2019 and 2021 — the smallest of any demographic. Based on their median earnings in both years and the rising inflation, they’d have $10 less in December 2021 compared to December 2019.

Median wages for full-time workers up 8.8%

First, the good news. Between 2019 and 2021, median wages for full-time, year-round workers grew 8.8%. Overall, they rose $4,186, jumping from $47,684 in 2019 to $51,870 in 2021.

How significant is that? Pretty significant when you consider the average year-over-year increase in median wages in the 10 years before 2019 was just 2.2%.

Much of the growth between 2019 and 2021 was during the pandemic (7.3% between 2019 and 2020), with COVID-19 — which first emerged in China in December 2019 — reshaping the job market and fueling wage increases.

Many employees found that their bargaining power increased during the pandemic. Because of government stimulus and enhanced unemployment benefits, some were able to hold out for a higher wage before they agreed to work for an employer. As a result, many employers had to offer higher wages to attract and keep their workers.

While the MagnifyMoney study focuses on changes in wages between 2019 and 2021, here’s a look back to 2001 to provide deeper context.

Wages narrowly outpace inflation over same period

Given higher earnings, it should follow that workers can save more after paying for living expenses, right? If only it weren’t for inflation — that notorious downer that keeps rising — that might be the case. When we look at workers’ purchasing power during the same time frame examined on wages, those bigger paychecks move the needle just slightly.

How slightly? Well, if a worker bought the same goods and services — food, gas and medical care, among others — in December 2021 as they did in December 2019, they’d only save an extra $11 that month. (Gee, thanks inflation.)

Source: MagnifyMoney analysis of U.S. Bureau of Labor Statistics (BLS) data. This compares the purchasing power of full-time workers’ 2019 median earnings to 2021 median earnings, using December 2019 and December 2021 as the purchasing power period examined.

As for the future, while the latest inflation figures showed the largest year-over-year increase in 40 years, the government is beginning to take steps to quell it. But how soon consumers will see a difference, that remains to be seen.

“With the Federal Reserve finally beginning to increase interest rates, there is a chance that inflation will begin to calm as the year progresses,” says Jacob Channel, LendingTree senior economic analyst. “However, with the Russian invasion of Ukraine further damaging global supply chains, as well as resulting in higher prices for things like fuel, inflation appears poised to remain high for a while longer.”

As for wage growth, there are signs of a slowdown as the economy continues to recover from the pandemic.

Median wages by demographics — and how buying power has changed

Of course, wage and buying power increases aren’t the same across the board, and significant differences are seen between various races and genders.

For example, while Hispanic and Latino women had the lowest median earnings in 2021, they had the biggest percentage increase over the previous two years, with median wages rising from $33,371 in 2019 to $37,258 in 2021 — an 11.6% jump. In comparison, Black and African American women’s median wages rose 9.9%, while Asian women’s rose 9.6%.

Source: MagnifyMoney analysis of U.S. Bureau of Labor Statistics (BLS) data.

Translating earnings changes between 2019 and 2021 into purchasing power — amid steadily increasing inflation — Hispanic and Latino women would only have an extra $88 in December 2021 compared to December 2019 if they paid for the same goods and services.

Believe it or not, that’s the highest among any demographics examined here: Black and African American women would have $42, while Asian women would have $50.

The hardest hit when looking at purchasing power is Black and African American men — the one demographic that would lose money in the period examined. In fact, Black and African American men would have $10 less in December 2021 than in December 2019 after buying the same goods and services. Hispanic and Latino men would have $41, and Asian men would have $18.

Black and African American men saw the smallest increase in median wages from 2019 to 2021 — 8.2%. That compares to an increase of 9.8% for Hispanic and Latino men and 8.8% for Asian men. Unfortunately, that’s not surprising: Over the previous 20 years, the median income for Black and African American male workers rose by just 55.7%, or $15,483, compared with 67.4%, or $20,891, for all full-time workers.

Source: MagnifyMoney analysis of U.S. Bureau of Labor Statistics (BLS) data. This compares the purchasing power of full-time workers’ 2019 median earnings to 2021 median earnings, using December 2019 and December 2021 as the purchasing power period examined.

How consumers can respond to inflation

Any way you slice it, dealing with inflation is tough for many people — especially lower income earners. As frustrating as it can be — especially when you’re trying to save money for the future — there are ways you can help keep your financial goals on track.

Buckle up your budget

One of the most important things Americans can do to respond to inflation is reevaluate their budget, according to Ismat Mangla, MagnifyMoney executive editor. Things cost more than last year, and people need to adjust their spending.

“You may need to decrease your discretionary spending so you can afford the necessities,” Mangla says. “Think of it as an opportunity to look at expenses that may be causing lifestyle creep that you can do without right now. Maybe you can get rid of unused subscriptions or pause on the gym membership you weren’t using anyway. I’d also recommend trying to negotiate lower rates on ongoing expenses, like cable and cellphone bills.”

She suggests postponing purchases of big-ticket items if you can. For example, while auto loan rates are pretty low right now, the cost of cars has skyrocketed. If you can keep driving what you already own, do that.

Mangla also encourages consumers to do their research.

“Not everything has gone up in price at the same rate,” she says. “When it comes to food, beef prices have increased more significantly than chicken. So understand what costs more now and think about shifting some of your spending.”

Invest

“You may be tempted to focus on your cash savings, but your money that’s sitting in the bank is losing value, especially in an inflationary environment,” Mangla says. “Prices are going up, but you’re not earning much interest. That’s why it’s really important to focus on your investments.”

She suggests developing a diversified investment portfolio, including investments that respond well to inflation, such as Treasury Inflation-Protected Securities (TIPS) or Series I savings bonds. You might also want to increase your exposure to equities in sectors that respond well to inflation.

If you’re unsure how to manipulate your portfolio, it’s worth meeting with a certified financial planner or financial advisor for solid advice.

Ask for a raise

Asking for a raise doesn’t always work, but that doesn’t mean that you shouldn’t try. If your employer doesn’t budge, don’t be afraid to look for something else. One of the best ways to boost your earnings is to move to another job. You can also increase your earning power by keeping your skills sharp or learning new ones.

Prepare for rising rates

With interest rates on the rise, Mangla advises people to refinance their home before rates go any higher and pay down high-interest debt, like credit card balances, as soon as possible.

Mangla also encourages people to invest in their health now, as health care costs are likely to continue rising.

Methodology

Using median weekly wage data from the U.S. Bureau of Labor Statistics (BLS), MagnifyMoney analysts calculated the changes in median annual earnings for select demographic breakdowns between 2001 and 2021, though we mainly focus on the period between 2019 and 2021.

The data was converted to annualized earnings by averaging the weekly wage data (presented quarterly) and multiplying those averages by 52. Analysts then performed additional calculations on those results, including annual changes.

Purchasing power figures were made by comparing 2019 and 2021 annualized wages in the BLS Consumer Price Index inflation calculator. Researchers used December 2019 and December 2021 to complete these calculations.