U.S. workers are earning more than they did a few years ago, but many still feel like everyday life is getting harder to afford.
A new analysis from MyPerfectResume suggests that while paychecks have risen, higher prices have offset most of those gains, leaving many Americans with less real spending power than before the pandemic.
From 2020 to 2024, the average annual wage increased from about $64,000 to $75,600—an 18% jump—according to the Bureau of Labor Statistics. Over the same period, consumer prices rose roughly 21%. In effect, a dollar in 2024 bought what about 82 cents did in 2020, the study found.
After adjusting for inflation and cost of living, the analysis estimates the typical worker is earning about 2.6% 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,” said Jasmine Escalera, a career expert at MyPerfectResume. “Inflation and rising living costs erased those gains.”
More Pay That Feels Like Less
For many households, larger paychecks are being absorbed by higher costs for essentials such as housing, groceries, energy, insurance, and other routine expenses.
Data from the Bureau of Labor Statistics shows that many of the biggest budget categories are still rising. Between December 2024 and December 2025, food prices rose about 3.1%, with grocery costs up 2.4% and restaurant meals increasing 4.1%. Housing costs climbed 3.2%, while energy prices—including electricity and natural gas—rose about 2.3%.
Although every state saw wage increases in raw dollars, most workers still experienced a decline in purchasing power once costs were factored in.
Escalera said the pressure 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 You Live Matters More Than Ever
The analysis found that location plays a major role in whether wage gains actually translate into a better standard of living. Only nine states saw real increases in buying power after inflation and cost-of-living adjustments.
Idaho ranked highest, with workers gaining about 3.1% in real purchasing power. Florida followed at 2.6%, while Washington and Montana each saw increases of roughly 2.3%. Wyoming also posted a gain of about 1.8%, suggesting wage growth in those states managed to outpace rising costs.
By contrast, several higher-cost states saw the steepest declines. New Jersey recorded the largest drop, with real purchasing power falling about 7%. Rhode Island was close behind at nearly 6.9%, while Maryland, New York, and Massachusetts all saw losses greater than 5%.
Even in traditionally high-paying states, higher salaries didn’t necessarily lead to better living standards as rising costs eroded much of the benefit, Escalera said.
Career Choices Are Shifting
Escalera noted that when budgets tighten and savings shrink, workers often become more cautious about making career moves.
“When your budget is tighter and savings are thinner, switching jobs becomes riskier,” she said. “Instead of chasing higher pay or growth, many are prioritizing security.”
Some workers are also taking on additional jobs to cover expenses. A MyPerfectResume report found that 72% of workers rely on side jobs to make ends meet, Escalera said. While the extra income can help in the short term, it may also increase burnout and stress, potentially affecting performance and limiting long-term career growth.
She added that return-to-office policies may add another layer of strain by reducing flexibility—especially for workers who previously considered relocating to more affordable areas when remote work expanded during and after the pandemic.
“When you combine shrinking purchasing power with reduced flexibility, you get a more cautious, less mobile workforce,” Escalera 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.”
