According to World at Work’s Salary Budget Survey, American employers expected salary increases of 3.7% for 2025, slightly below the 3.8% average increase in 2024. According to the U.S. Bureau of Labor Statistics, inflation was 2.3% for the 12-month period ending April 2025.
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When you compare the two numbers, salaries appear to be outpacing inflation by a modest amount in 2025. However, there’s more to the story than just the current numbers and we reached out to the experts to gather additional insights on how salaries are holding up with the higher costs.
Are salaries keeping up with inflation? Here’s what the experts had to say.
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The Numbers Depend on Your Timeline
Melanie Musson, finance expert with InsuranceProviders.com, said the answer to this question depends on your timeline and how you want to compare the two figures. “If you want to say that wages have kept pace with inflation, you’ll use data from the past two years. If you want to come to the conclusion that inflation has outpaced wages, you’ll use data from the past five to seven years,” she said.
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Over the last year or so, inflation has cooled, but many people have fallen behind in wage growth over the last five years. These same people could have also fallen behind on their savings and financial goals as inflation started to run rampant in 2022. To obtain an accurate assessment of inflation and wage growth, you’ll want to determine the timeline you wish to use for comparison with your financial situation.
Progress of Wage Growth Has Been Uneven
“The truth is that salaries have indeed been increasing with inflation,” said Aaron Razon, personal finance expert at Couponsnake. “However, the progress is uneven, hence why many Americans have been having a hard time keeping up with the rising costs, especially while they still make building a stable financial future their priority.”
Razon stressed that salary growth hasn’t kept pace with inflation over the last five years or so. It’s also critical to note that wage growth has been modest compared to the rampant inflation figures the economy experienced in 2022. This means that while your current wage growth could be higher than inflation, the progress hasn’t always been equal, which has been challenging for American families. This leads us to the next point.
The Impact of Inflation Is Still Being Felt
“Inflation surged significantly just a few years ago, particularly peaking in mid-2022 due to the global pandemic,” said Christine Lam, certified financial planner (CFP) and investment advisor representative at Financial Investment Team. “During this period, many households relied on credit to cover expenses, increasing credit card debt and potentially drawing from investments to meet their financial needs.”
The end result is that, even though wage growth figures indicate progress in the right direction, the impact of soaring inflation from the highs of 2022 is still being felt, as many are financially strained. Many consumers may not have noticed the salary increase because they’re still trying to catch up with bills that have accumulated.
Every Industry Is Different
Lam explained that certain industries are keeping up better with inflation than others. “For example, those who are in the trades or construction fields show strong wage growth,” she said, “whereas the education and healthcare sectors are lagging.” If a household has two individuals working in an industry that hasn’t seen substantial wage growth, then this could worsen the financial strain of the rising cost of living.
When comparing cost-of-living increases to salary growth, you can’t ignore that it depends on the person’s line of work. If your industry has seen tremendous wage growth, you won’t be as impacted by inflation as someone who hasn’t noticed a difference in their paychecks.
You May Not Notice the Higher Wage Growth
Chris Motola, financial analyst with NationalBusinessCapital.com, said inflation has been lower than wage growth for the past year, but admitted that many households may not notice this. He pointed out that household debt is up and that hiring has been slow for the past year or more. “With substantial downward revisions in job growth from the BLS, workers may feel like they don’t have much job mobility,” he added.
If you’re unable to find a new job or if your housing costs have increased significantly, you won’t notice the wage growth since you could still be personally struggling to get by.
How To Manage If Your Wage Hasn’t Kept Up
Lam pointed out that while wage growth is outpacing inflation, the rate of increase remains modest. If it feels like your salary hasn’t been keeping up, then it’s essential that you take the time to make some changes.
These are the best steps to take if your wage hasn’t kept up with inflation:
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Negotiate a higher wage. The first step is to negotiate a raise with your employer by presenting a case that demonstrates your value to the company.
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Start freelancing. If you can’t land a raise through your employer at this time, you could look into freelance work on a platform like freelancer.com or by offering your services on social media.
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Look into acquiring new skills. If you’re not able to increase your salary or get into freelancing, you’ll want to think about switching careers or finding new skills you can pick up to help boost your income. Your options can range from upgrading your education to learning graphic design.
“Another thing people whose salaries haven’t kept pace with inflation can do is explore high-yield savings options,” Razon added. With daily expenses costing more, you want to ensure that you’re growing your savings by earning more interest on your funds. You want to do your best to improve your salary and savings to keep up with soaring inflation that has been impacting consumers.
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This article originally appeared on GOBankingRates.com: Are Salaries Keeping Up With Inflation? Experts Weigh In
