Private sector workers in the United States received higher paychecks over the past year, but their real purchasing power has decreased.
According to the Employment Cost Index released this Friday by the Bureau of Labor Statistics (BLS), private sector wages and salaries increased by 3.1% in nominal terms in the twelve months up to September 2026, but fell by 0.6% once adjusted for inflation.
The data reflects a widening gap: prices have risen faster than wages, eroding the purchasing power of millions of households.
Total compensation in the private sector—which includes salaries, health insurance, retirement, and other benefits—rose nominally by 3.4% during the same period, but this was insufficient to offset the increase in the cost of living.
In the July-September 2026 quarter, private sector wages rose by 0.8% seasonally adjusted compared to the previous quarter, the same as total compensation. These are quarterly figures that should not be confused with annual data: they measure the growth rate over three months, not twelve.
Within the private sector, the gap between unionized and non-unionized workers is significant. The former secured a year-on-year salary increase of 4.3%, while the latter barely reached 3.0%. In terms of total compensation, unionized workers achieved 4.3% compared to 3.3% for those not belonging to a union.
One of the components that most pressured labor costs was health insurance: health benefits in the private sector increased by 6.4% year-on-year, making it the fastest-growing component within the benefits package.
For state and local government workers, the situation was similar: their salaries increased by 3.2% year-on-year in nominal terms, but they lost 0.5% in real terms.
In the Southern region of the census—which includes Florida—private sector wages increased by 3.5% year-over-year and 1.0% in the quarter, slightly above the national average, although the BLS does not publish specific data by state.
The inflationary context explains the paradox. The consumer price index for Septemberreached 3.7% year-on-year, largely driven by gasoline.
One day prior to the release of the ECI, the Bureau of Economic Analysis (BEA) reported that the PCE index —the measure of inflation used by the Federal Reserve—reached 3.6% year-over-year in September, with a monthly increase of 0.5%, the largest in six months.
In that same month, real personal income decreased by 0.3%: nominal income only grew by 0.2%, but prices rose by 0.5%.
These two statistics—the ECI from the BLS and the PCE from the BEA—measure different phenomena using different methodologies and are not directly comparable, although both indicate the same trend: household income is not keeping pace with prices.
The long-term trend exacerbates the diagnosis. Private salaries grew by 4.1% year-on-year in March 2024; by September 2026, that rate had decreased to 3.1%, while inflation remained high, indicating a cumulative erosion of purchasing power over more than two years.
The next publication of the Employment Cost Index, corresponding to the fourth quarter of 2026, is scheduled for January 29, 2027, when it will be revealed whether the trend of real wage loss is reversed or deepened.
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