U.S. Real Hourly Wages Fall 0.7% Year Over Year Through September
Key Facts
Average real hourly earnings for all U.S. workers fell 0.5% from August to September 2026, the Bureau of Labor Statistics said, after nominal earnings rose 0.1% and the consumer price index increased 0.6% over the same period. Year over year, average real hourly earnings fell 0.7% in the 12 months ended in September, while real weekly earnings declined 0.1%. The figures come as accelerating prices put pressure on wage growth: the all-items consumer price index rose 3.7% in the year ended in September, compared with a 3.4% increase through August. These measures show wages declining after adjusting for price changes, rather than merely slower growth in nominal pay. Quarterly growth in compensation costs for civilian workers also slowed, a separate measure of labor costs, putting the trajectory of wages and inflation in focus for the U.S. economy.
The Bureau of Labor Statistics said compensation costs for civilian workers rose 0.8% in the three months ended in September, following a 0.9% increase in June. Wages and salaries rose 0.7% from June, while benefit costs increased 0.9%. The breakdown indicates that benefit growth outpaced wage and salary growth during the quarter, while overall compensation growth slowed from the previous quarter’s pace. The Employment Cost Index measures changes in labor costs while excluding the effect of workers moving between occupations and industries, according to the bureau’s definition. This methodology allows changes in compensation costs to be assessed separately from shifts in the distribution of employment across occupational and industrial sectors. In the 12 months ended in September, compensation for union workers in the private sector rose 4.3%, compared with 3.3% for nonunion workers.
In state and local governments, compensation costs rose 3.5% in the year ended in September, according to non-seasonally adjusted Bureau of Labor Statistics data. Wages and salaries in this group increased 3.2%, while benefit costs rose 3.8%. These figures provide an annual comparison for a specific government workforce, alongside private-sector data showing a difference between union and nonunion workers. The real wage measure covers average hourly earnings for all workers and recorded a 0.7% annual decline through September. In September alone, the gasoline index rose 9.1%, accounting for more than half of the monthly increase in the overall consumer price index. The energy index also rose 5.2% in September, after increasing 2.1% in August, and climbed 20.4% in the 12 months ended in September.
The Associated Press reported that household income after taxes and adjusted for inflation fell from August to September, as the U.S. economy grew at an annual rate of 3.4% in the third quarter, spanning July to September. The monthly decline in real wages forms part of a broader picture of households’ inflation-adjusted income, while the economy continued to post annualized quarterly growth at the rate cited by the news agency. In an earlier comparison in Bureau of Labor Statistics data, real hourly earnings were up 0.8% year over year in September 2025, then posted a 0.1% annual decline in August 2026 before the decrease widened to 0.7% in September. The sequence shows the measure moving from positive annual growth to a decline, which deepened in the latest reading. By contrast, monthly nominal wage growth was just 0.1% from August to September, while the consumer price index rose 0.6% during the month.
The Bureau of Labor Statistics is scheduled to release October consumer price index data on November 10, 2026, at 8:30 a.m. Eastern time. The next release of the Employment Cost Index, covering December 2026 data, is scheduled for January 29, 2027, at 8:30 a.m. Eastern time. The December Employment Cost Index release will update employment weights and remove workers’ compensation costs, according to the bureau. This methodological change begins with the publication of December data, placing the next release in the context of a shift to updated weights and the exclusion of that cost component. The upcoming price reading and the next labor-cost data are the bureau’s scheduled releases following the September figures.