According to the most recent BLS data, real average hourly earnings remined unchanged in December despite 0.3% nominal wage increases. Inflation consumed the entire gain. Average weekly hours fell 0.3%, meaning real weekly earnings dropped 0.3%.
What's happening:
- Inflation ate raises - Workers got bumps on paper. Purchasing power didn't budge.
- Hours contraction - Employers managing labor costs defensively. Cutting hours, not headcount yet.
- Production worker squeeze - Real hourly earnings actually declined 0.2% for production/nonsupervisory workers while all employees held flat. Uneven pressure across skill levels.
Source: BLS, "Real Earnings – December 2025" (Jan 13, 2026)
The Signal: When nominal raises disappear into inflation while hours contract, you're watching defensive workforce management in real-time. If you're planning 2026 comp assuming employees feel wealthier from 2025 raises, recalibrate. Real purchasing power stood still.