U.S. Inflation-Adjusted Hourly Earnings Fall 0.5% in September

U.S. inflation-adjusted average hourly earnings fell 0.5% in September as consumer prices rose faster than workers’ pay, according to data released Wednesday by the Bureau of Labor Statistics. Average hourly wages increased 0.1% before adjusting for inflation, but the Consumer Price Index for All Urban Consumers climbed 0.6%, leaving employees with less purchasing power per hour worked.

The decline was accompanied by a 0.5% drop in real average weekly earnings. Private-sector employees worked the same average number of hours as in August, so a longer workweek did not offset the loss in hourly purchasing power. The September result followed a smaller 0.1% monthly decline in real hourly earnings in August, extending a period in which wage increases have struggled to keep pace with prices.

Gasoline drives a faster monthly rise in prices

The inflation-adjusted wage figure in the BLS real earnings report compares average pay on private nonfarm payrolls with a broad measure of consumer prices. In September, the gap was unusually clear: pay rose by one-tenth of a percent in nominal terms, but the overall cost-of-living index increased by six-tenths of a percent. Both monthly figures are seasonally adjusted.

Gasoline was the largest immediate source of the price pressure. The separate September consumer-price report showed a 9.1% jump in the gasoline index, which accounted for more than half the monthly increase in the all-items CPI. The broader energy index rose 5.2%. Those increases help explain why the purchasing-power measure fell even though employers paid a little more per hour in dollars.

Price pressures were not equally strong across household expenses. Food prices overall were unchanged from August, including a 0.1% decline in food purchased for home consumption and a 0.2% rise in food away from home. Shelter costs increased 0.4%, however, and prices excluding food and energy rose 0.3%. September’s headline CPI gain was also larger than August’s 0.4% rise.

Over the past 12 months, consumer prices increased 3.7%, up from an annual rate of 3.4% in August. Gasoline was 34.2% more expensive than a year earlier according to the index, while energy prices overall were up 20.4%. The CPI excluding food and energy rose 2.6% over the year. The monthly surge in fuel costs therefore sat within a broader period of higher prices, even though individual categories moved at different speeds.

The inflation-adjusted earnings calculation does not mean employees received pay cuts of 0.5%. It measures how far the purchasing power of average hourly pay moved after accounting for price changes. September’s nominal wage increase was positive, but it was too small to preserve the amount of goods and services that an hour of work could buy on the broad CPI measure.

Weekly earnings and nonsupervisory pay also weaken

The distinction between nominal and real pay appears in the BLS dollar figures. Average hourly earnings for all employees on private nonfarm payrolls rose from $37.76 in August to $37.81 in September. Average weekly earnings increased from $1,298.94 to $1,300.66. Those changes show that pay in current dollars edged higher, rather than falling outright.

Adjusted for consumer prices, the direction reversed. Real average hourly earnings fell from $11.30 to $11.24 when expressed in the BLS series’ constant 1982–84 dollars. Real average weekly earnings declined from $388.75 to $386.76 on the same basis. These inflation-adjusted dollar values are index-based comparisons, not estimates of what an employee actually took home in September.

The average workweek remained at 34.4 hours. As a result, the 0.5% monthly fall in real hourly earnings translated into a matching decline in real weekly earnings. Over the 12 months through September, real hourly pay was down 0.7%, although real weekly earnings fell a smaller 0.1% because average hours worked were 0.6% higher than a year earlier.

Workers in production and nonsupervisory positions experienced a slightly larger monthly decline. Their real average hourly earnings fell 0.6%, based on a 0.2% rise in nominal hourly pay and a 0.7% increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, the price measure used for this group. Their average workweek remained at 33.8 hours, and real weekly earnings declined 0.5%.

The production and nonsupervisory series covers a substantial share of private employment, including production workers in goods-producing industries and nonsupervisory employees in services. Nominal hourly earnings in this group rose from $32.53 to $32.60, but that increase did not match the rise in its inflation measure. Compared with September 2025, the group’s real hourly earnings were down 0.6% and real weekly earnings were down 0.3%.

What the wage figures can and cannot show

The report is a measure of average earnings per job, not a direct survey of each household’s financial position. The BLS derives the earnings figures from its establishment survey by comparing payroll amounts with paid hours, then adjusts the result for consumer-price changes. The averages include both full-time and part-time private-sector jobs, and changes in the mix of employment across higher- and lower-paid industries can affect the reported result.

That distinction matters when interpreting a month as volatile as September. A worker who received a raise larger than the change in prices could have gained purchasing power, even as the national average fell. Someone who drove frequently or faced a large personal fuel bill might have experienced a different price increase from a household with little gasoline spending. The CPI tracks an overall basket of expenses rather than the precise purchases of every worker.

The numbers also do not capture the full picture of household income. They describe pay earned per hour and per week at private nonfarm jobs, not changes in taxes, government benefits, investment income or expenses specific to a family. Nor does the report identify which individual occupations or localities were most affected by September’s decline in real pay.

For the wider wage trend, the 12-month comparison shows a similar imbalance to the latest monthly figures. Average hourly earnings rose 3.0% in nominal terms over the year through September, while consumer prices increased 3.7%. On the BLS inflation-adjusted series, real average hourly earnings fell 0.7% over that period. The September pay and hours estimates are preliminary and remain subject to revision.

The next scheduled real earnings release, covering October, is due November 10, 2026. It will show whether pay growth begins to catch up with prices after September’s unusually strong increase in gasoline costs.