Wage Growth
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The percentage change in average wages over a period, measured either in nominal terms (current dollars) or real terms (adjusted for inflation).
## Wage Growth
Wage growth tracks how much average pay increases over time. It is a key indicator of worker prosperity and inflationary pressure.
### Nominal vs. Real Wage Growth
```
Real Wage Growth = Nominal Wage Growth − Inflation Rate
```
If wages rise 5% but inflation is 4%, real wage growth is only 1%.
### Recent Trends (US)
| Year | Nominal Growth | CPI Inflation | Real Growth |
|------|---------------|---------------|-------------|
| 2022 | 5.1% | 6.5% | −1.4% |
| 2023 | 4.3% | 3.4% | +0.9% |
| 2024 | 3.8% | 2.9% | +0.9% |
### Determinants
Wage growth is driven by: labor supply/demand, productivity gains, inflation, minimum wage increases, unionization, and skills shortages. Sectors experiencing rapid growth (AI, cybersecurity) see significantly above-average wage growth.
### Impact on Salary Negotiation
Understanding wage growth trends provides leverage in salary negotiations. If your field is growing at 6% annually and you haven't had a raise in two years, you may be 12% below market.