Low-wage workers saw their real (inflation-adjusted) wages decline in 2025, a sharp reversal from the historically fast real wage growth they had experienced over the previous five years. Middle- and high-wage workers continued to experience modest gains in 2025, according to our new analysis (see Figure A).

We examine wage growth across deciles, using the Current Population Survey (CPS) Outgoing Rotation Group microdata. Note: Due to the federal government shutdown and a lack of funding at the Bureau of Labor Statistics (BLS), there are no CPS wage data for October 2025. That means that 2025 wages are calculated based on reported wages from the other 11 months of the year.

A weakening labor market halted low-end wage growth in 2025

In 2025, the 10th-percentile wage—the hourly wage at which 10% of workers are paid less and 90% of workers are paid more—fell 0.3% to $14.56. The median wage—the wage at the middle of the wage distribution—grew 0.8% to $25.67 in 2025 while the 90th-percentile wage increased 0.4% to $64.52 (see Figure B).

These outcomes are a stark departure from the post-2019 pattern in which low-wage workers consistently experienced faster real wage growth than those in the middle and upper parts of the wage distribution. During that period, policymakers engineered a fast and full recovery from the pandemic recession, which provided unusual leverage to low-wage workers as employers scrambled to hire or rehire the workers they lost in the pandemic. Low-wage workers were able to secure historically fast real wage growth, despite the pandemic- and war-driven inflationary spike in 2021–2022.

But in 2025, a softening labor market halted low-wage workers’ progress. The Trump administration chaotically imposed historically high tariffs, conducted cruel mass deportations, and implemented massive layoffs among federal agencies that provide key inputs to private-sector economic growth and security. All of this led to increased economic uncertainty, and promised growth failed to materialize—particularly in areas such as manufacturing employment.

Payroll employment growth slowed notably as average monthly job gains fell from 168,000 in 2024 to only 49,000 in 2025. The average unemployment rate ticked up from 4.0% to 4.3%. By December 2025, the unemployment rate stood at 4.4%, fully a percentage point higher than the 3.4% low point reached in April 2023. Groups that are often affected first by an economic downturn—such as young workers and Black workers—experienced a much faster uptick in unemployment. Most concerning is the depressed hires rate, which is currently at levels similar to 2013 when the economy was still recovering from the Great Recession. Should layoffs pick up even a bit, this low hires rate would see the unemployment rate rise quickly.

The 2026 outlook for wages remains uncertain. While higher unemployment and depressed hires point to a cooling labor market, it is unclear that conditions will continue to deteriorate: Unemployment insurance claims remain stable and consumer spending has held up. At the same time, economic risks loom large, including geopolitical instability, Trump’s immigration policy and cuts to social programs, and the possibility of a stock market and investment collapse if the AI-driven stock market bubble deflates rapidly.

Wage inequality has declined since 2019, but low-end wage levels are still insufficient to make ends meet

Even with last year’s decline, the 10th-percentile wage of $14.56 represents a significant improvement from 2019 in inflation-adjusted terms. And there was still substantial wage compression between 2019 and 2025, as wages at the 10th percentile grew twice as fast (15.0%) as wages at the 90th percentile (7.4%). These findings are consistent with economist Arindrajit Dube’s recent Substack article, which documents strong wage compression over this period. Importantly, Dube shows that these patterns persist even after controlling for compositional changes in the population, meaning that faster wage growth at the bottom is not explained by shifts in worker demographics such as age, education, or gender.

But this low wage is still far from sufficient to make ends meet. Even if that 10th-percentile worker worked full time throughout the year, their annual pay would only be $30,279—which is not enough to attain a modest yet adequate standard of living in any U.S. county or metro area, according to EPI’s Family Budget Calculator.

Low-wage workers have seen little wage growth for much of the last 50 years

While the gains over recent years are welcome, longer-term trends show lower-wage workers losing ground. Figure C shows wage growth at the 10th, 50th, and 90th percentiles from 1979 to 2025. Over this period, 90th-percentile wages grew by an average of 1.1% per year, compared with just 0.5% at the 10th percentile. In fact, it wasn’t until 2015 that lower-wage workers finally reliably surpassed their 1979 real wage. If wages at the 10th and 50th percentiles had grown at the same rate as the 90th percentile since 1979, they would have been $18.58 and $32.40, respectively, or about 27% higher. For all wage deciles over time, including data by demographic characteristics, visit the EPI data library.

While workers at the 90th percentile have benefited more than lower-wage workers, their gains pale in comparison to those at the very top of the distribution. The gulf between the lowest- and highest-wage workers cannot be fully captured in the CPS data because it isn’t possible to accurately measure what’s happening with very high-end wages. Using Social Security Administration (SSA) data, we previously found that wages for the top 1% skyrocketed 182% from 1979 to 2023, roughly triple the growth rate of the 90th percentile and about seven times the growth of the 10th percentile.1 As a result, inequality between the top 1% and the rest of workers substantially worsened over this period.

It is also true that productivity growth—the change in the amount of goods produced or services provided in an hour of work—has outpaced the wages of the vast majority of workers since 1979.2 While higher earners have fared better, every worker should benefit when the economy expands and productivity increases. Had low-end wages grown in line with productivity since 1979 (as they almost surely did in previous decades), the 10th-percentile hourly wage would be $21.04—or 45% higher than it is now. Similarly, the median wage would be 43% higher—or $36.69. Our forthcoming wage calculator will allow users to input any wage level and find how much higher their wages would be if they had in fact grown as fast as productivity.

Policymakers can and must raise wages to address affordability concerns

Making life more affordable for working families is not just about slowing the rate of increase of prices, it’s about ensuring continued wage gains at the bottom and middle of the wage distribution after decades of slow and suppressed wage growth before the COVID pandemic. In 2025, wages for the lowest-wage workers lost the race against prices, making it more difficult for them to afford necessary goods and services.

Policymakers must identify raising wages as the key lever to making life more affordable for working families, and they can do that by raising the minimum wage, reforming labor law to ensure workers can freely exercise their right to unionize, and maintaining full employment. Ignoring these policy levers to raise wages makes the affordability proposition even more difficult to attain.

---

1. To be clear, this isn’t an apples-to-apples comparison because we are comparing two different data sets and one uses annual earnings (SSA) and the other uses hourly wages (CPS).

2. Productivity growth is the percent change between 1979 and the most recent four quarters. At the time of writing, 2025 Q4 was not available.