Two of the most closely watched pay measures released this month appear to disagree. The Federal Reserve Bank of Atlanta’s Wage Growth Tracker put median annual wage growth at 4.1% in August 2026, up from 3.8% in July. The Bureau of Labor Statistics reported that real average hourly earnings fell 0.1% from July to August and were 0.3% lower than a year earlier.
Read quickly, one says pay is accelerating and the other says workers are falling behind. Both are accurate. They measure different things, and the gap between them is more informative than either headline on its own.
That is also why this piece does not carry its original working title, which said real pay was improving. The latest published data do not support that claim for hourly pay.
Two measures, two questions
The BLS real earnings series starts with average hourly earnings from the monthly payroll survey. For all private employees, average hourly earnings rose 10 cents, or 0.3%, in August to $37.75, and were up 3.1% over 12 months, according to the August employment report. BLS then adjusts that average for consumer prices. The Consumer Price Index for All Urban Consumers rose 0.4% in August, slightly faster than the 0.3% gain in nominal pay, which is why real hourly earnings slipped 0.1% for the month. Over the year, the 0.3% decline in real hourly earnings means prices rose faster than average hourly pay.
The Atlanta Fed tracker asks a different question. It follows individual workers in the Current Population Survey who are observed 12 months apart, computes each person’s change in hourly wage, and reports the median of those changes as a three-month moving average. According to the series description on FRED, it is not seasonally adjusted and it is not adjusted for inflation. Despite the Atlanta name, it is a national measure, not a reading on Atlanta pay.
The design differences matter in at least three ways:
- Nominal versus real. The 4.1% tracker figure has not been reduced for price increases. The BLS real series has.
- Median versus mean. The tracker reports the typical individual’s change. Average hourly earnings is a mean across payroll jobs, so it can be pulled up or down by pay at the top or bottom.
- Same people versus same economy. Because the tracker follows the same workers for a year, it picks up raises, promotions and job changes those individuals received. The payroll average compares all jobs this month with all jobs a year ago, so a shift in the mix of jobs can move it even if no one’s pay changes.
So a matched worker can see a nominal raise above 4% while the economy-wide average hourly wage, after inflation, is flat to slightly down. Neither measure is the “true” wage. Each answers its own question.
What the numbers show, and what they do not
The tracker has moved up over the summer. Its three-month average was 3.6% in April, 3.5% in May, 3.6% in June, 3.8% in July and 4.1% in August, according to FRED. That is an acceleration in nominal pay growth for continuously observed workers. It is not evidence that purchasing power is rising, because the tracker does not account for prices.
The real earnings report also contains a detail that complicates a simple “workers are losing” reading. Real average weekly earnings for all employees rose 0.2% in August and 0.3% over the year. BLS attributes the annual gain to a 0.6% increase in the average workweek. In other words, over the year, a typical paycheck bought slightly more only because people worked somewhat longer hours; each hour of work bought slightly less.
For production and nonsupervisory employees, BLS deflates by a different index, the CPI for Urban Wage Earners and Clerical Workers, which rose 0.5% in August. Their real average hourly earnings fell 0.1% over the month and 0.1% over the year, while their real weekly earnings rose 0.1% over the year.
What the data do not show is how any individual household is faring. Neither series measures take-home pay after taxes, benefits costs borne by workers, or local living costs. Both are national. And one month of real-earnings data is noisy; a single CPI reading can flip the sign of the monthly change.
What this means for employers and workers
For employers, the practical risk is using the wrong number for the wrong decision. A 4.1% median wage-growth figure describes what happened to the typical continuously observed worker’s nominal wage. It is not a market benchmark for a specific role, and it is not evidence that a given salary has kept pace with prices. Compensation planning that cites the tracker should say that it is nominal, national and median-based; planning that cites average hourly earnings should note composition effects.
There is also a retention angle. If workers’ nominal raises are near 4% but hourly purchasing power is flat, pay increases that look generous on paper may not feel that way to the people receiving them. Employers that communicate raises only as percentages may find that message lands differently than intended.
For workers, the useful comparison is personal: an offer or raise set against the prices actually faced, the hours actually worked, and benefits that are part of the package. A national percentage, real or nominal, cannot answer whether a particular job pays enough in a particular place.
What to watch next
- September CPI and real earnings. Whether August’s 0.4% price increase was a one-month jump or a trend will decide the direction of real hourly pay.
- The tracker’s next reading. A second month above 4% would confirm the nominal acceleration; a pullback would suggest August was noise in a three-month average.
- Hours. If the workweek stops lengthening, real weekly earnings lose the support that kept them positive over the past year.
- Revisions. Average hourly earnings are revised with the payroll data, and both measures should be read over several months rather than one.
The short version: nominal wage growth for the typical worker picked up this summer, but average hourly pay did not keep up with prices over the past year. Both statements are supported by the data. The claim that real pay is improving is not, at least not yet.
Sources
- Federal Reserve Bank of Atlanta, “Wage Growth Tracker,” data through August 2026. https://www.atlantafed.org/research-and-data/data/wage-growth-tracker
- Federal Reserve Bank of St. Louis (FRED), from Federal Reserve Bank of Atlanta, “3-Month Moving Average of Unweighted Median Hourly Wage Growth: Overall (FRBATLWGT3MMAUMHWGO),” updated September 11, 2026. https://fred.stlouisfed.org/series/FRBATLWGT3MMAUMHWGO
- U.S. Bureau of Labor Statistics, “Real Earnings — August 2026,” September 11, 2026. https://www.bls.gov/news.release/realer.nr0.htm
- U.S. Bureau of Labor Statistics, “The Employment Situation — August 2026,” September 4, 2026. https://www.bls.gov/news.release/empsit.nr0.htm
Featured photo: A grocery aisle at Langenstein's in Uptown New Orleans. Prices rose 0.4% in August, faster than average hourly pay. Photo: Infrogmation of New Orleans, via Wikimedia Commons (CC BY-SA 4.0). Resized from the original.
