Only the Lowest-Paid Group Beat Inflation, the Middle and the Top Did Not

Only the Lowest-Paid Group Beat Inflation, the Middle and the Top Did Not

Indexed to 100 in 2019, after-tax wages for America's lowest-income group now sit at 137, against consumer prices at 133. The middle group is at 129 and higher earners at just 124.5.

Most people look at this chart and notice that the bottom is winning. The rarer finding is the other two lines: middle and higher earners have both spent seven years below the inflation line.

■ Read the words "after tax" carefully

This chart shows money arriving in the account once tax has been taken out. Withholding rates were adjusted in the US this year, so part of the apparent raise is the government deducting less rather than employers paying more. The bank that produced the data says that effect probably lasts about a year.

The line therefore contains two different things: genuine wage gains, and a temporary tax change. What remains once the withholding effect drops out next year is the more honest answer.

One more limitation. The figures come from one bank's own customer deposit records rather than a national survey, which skews towards people who have their pay deposited there.

Source: Research arm of a large US bank and the Bureau of Labor Statistics (Image: @MikeZaccardi)