Wage growth is slowing down for all workers following the booming recovery from the COVID-19 pandemic, but it’s dropping at the fastest pace for workers at the bottom end of the income spectrum.

That’s a sharp reversal from the postpandemic recovery era, when the lowest paid workers were seeing the fastest wage growth, something economists termed “wage compression.”

It also comes as these workers could face more pressure from tariffs, which are expected to raise costs on a number of goods.

The trend of wage compression has inverted almost entirely. The poorest workers are now seeing the slowest levels of wage growth while the highest earners are seeing the fastest.

Median annual wages for people making $806 a week or less increased at an annual rate of 3.7 percent in July, the same rate as in June, according to recent data from the Atlanta Federal Reserve. That’s much lower than the last half of 2022, when the lowest earners were seeing 7.5 percent growth.

Wages for people making more than $1,887 a week increased a full percentage point faster in July, at 4.7 percent growth. That’s just down a tick from the last half of 2022, when they were seeing 4.8 percent growth.

While the various income categories in the Atlanta Fed data crisscrossed one another through 2023 and 2024 on a slow downward trend line, wage growth for the lowest earners really fell off a cliff in February. The lowest earners saw a 0.3 percent drop in March and another 0.2 percent drop in April.

Those are all nominal numbers, which don’t take inflation into account. Inflation tends to hit the poorest........

© The Hill