Over the past few years, rising inflation has put increasing financial pressure on American households, particularly those in the middle class. While wages have grown in nominal terms, many workers feel they are falling behind as the cost of essentials — housing, groceries, and everyday expenses — continues to climb. Public frustration over inflation remains high, with surveys consistently showing that Americans view the rising cost of living as one of the most pressing economic concerns.
This analysis from Upgraded Points, a company that provides advice on credit card rewards programs and other financial products, examines how inflation-adjusted wages have changed across U.S. metropolitan areas between December 2020 and December 2024, using the most recent data available. December 2020 was chosen as the starting point because it marks the period just before inflation began rising rapidly in 2021. By comparing wage growth to the increasing costs of goods and services, the findings reveal where worker pay has failed to keep pace, highlighting the cities where residents have lost the most purchasing power.
Here are some of the key takeaways from the analysis:
- National Purchasing Power Decline: Real wages declined 3.2% between December 2020 and December 2024 as prices (+21.2%) outpaced nominal wages (+17.3%).
- Regional Differences: Baltimore (-14.0%), Dallas (-12.1%), and Boston (-11.2%) experienced the steepest declines in real wages.
- Positive Outliers: Tampa, Florida (+3.5%) and Houston (+6.3%) were the only major metros where wage growth outpaced inflation.
- Public Sentiment: 71% of Americans say it is harder to get by now than a decade ago, citing rising housing and grocery costs.
Trends in Real Wage Growth and Cost of Living
At the onset of the COVID-19 pandemic, real wages surged, driven in part by historic pay gains among low-wage workers as widespread labor shortages gave employees greater bargaining power. Industries such as hospitality, retail, and logistics saw particularly strong wage growth as employers scrambled to fill positions. However, as the economy rebounded and inflation accelerated sharply in early 2021, real earnings began a downward trajectory, with wages failing to keep pace with rising costs.
Between December 2020 and December 2024, nominal wages increased by 17.3% nationwide, but prices rose by a cumulative 21.2%, leading to a 3.2% decline in real earnings over that period. While inflation-adjusted wages remain slightly higher than they were at the start of the pandemic, the rapid erosion of purchasing power — particularly for essentials — has made this regression especially difficult for Americans to absorb. The experience of falling behind after a period of strong gains has fueled frustration, keeping inflation top of mind for workers and their families.
Cumulative Inflation by Metro From Q4 2020 to Q4 2024
While inflation surged nationwide, some of the sharpest cost increases have hit America’s fastest-growing metros.
Housing costs soared in Miami (+39.5%) and Tampa, Florida (+39.3%), nearly doubling the national rate. Phoenix (+37.0%) and Atlanta (+33.9%) also recorded major increases in rent and home prices. Grocery prices rose fastest in Houston (+27.8%), Detroit (+26.2%), and Dallas (+25.9%), putting further strain on household budgets for everyday items.
In total, Miami (+27.9%), Tampa (+26.4%), and Atlanta (+26.1%) saw the greatest overall cumulative inflation. Meanwhile, some historically expensive cities — such as San Francisco (+14.9%) and Washington, D.C. (+17.9%) — recorded relatively more moderate price growth. Notably, the hardest-hit metros were those that have attracted waves of new residents in recent years due to their traditionally lower costs of living. As demand surged, so did prices, erasing much of their historical affordability advantage.
Wage Growth vs. Price Growth in America’s Largest Cities
The result is that over the past 4 years — between December 2020 and December 2024 — inflation has outpaced wage growth in nearly every major metro in the U.S., eroding prior financial gains for millions of workers. Only 2 of the country’s largest metro areas — Tampa (+3.5%) and Houston (+6.3%) — saw real wage gains after adjusting for inflation. In every other major city, wage growth failed to keep up with the rising cost of living.
The gap between price growth and wage growth has been staggering in some metros. Baltimore (-14.0%), Dallas (-12.1%), and Boston (-11.2%) saw the steepest declines in real earnings. Even in fast-growing cities like Phoenix, where wage growth was among the highest in the country, inflation still eroded those gains, resulting in a 3.0% drop in cost-of-living-adjusted pay.
While some metros have seen strong wage increases, few workers have truly gained ground after accounting for the relentless rise in costs.
How Do Americans Feel About the Current Economic Conditions?
Given the staggering rise in costs that have outpaced wage growth in nearly all of America’s largest cities, it’s not surprising that many Americans feel worse off now than they were a decade ago. According to the Upgraded Points February 2025 Financial Pulse Survey, 71% of respondents said it is harder for the average family to get by now than 10 years ago, with 42.5% believing it is “much harder.” Only 8% felt that life has become easier.
When asked about the biggest financial challenge facing families today, 41.8% pointed to rising costs, making it the dominant concern. Another 27.3% cited insufficient wages, highlighting the gap between paychecks and inflation. Unnecessary spending (16.7%) and job instability (14.0%) were seen as lesser but still notable struggles.
Which Expense Places the Greatest Financial Strain on Middle-Class Households?
When asked which financial burden weighs heaviest, Americans overwhelmingly pointed to housing (25.6%), reflecting skyrocketing rents and home prices, especially in historically cheaper but fast-growing metros like Miami, Tampa, Phoenix, and Atlanta. The cost of groceries (15.6%) was the next biggest concern, underscoring how rising food prices — up 27.8% in cities like Houston — are squeezing household budgets.
Healthcare and taxes were also cited as major stressors for 13.2% and 10.2% of respondents, respectively. Meanwhile, expenses like debt payments, childcare, and education weigh heavily on some families but don’t affect all households in the same way as housing and food.
For a detailed breakdown of wage growth and price increases in 21 major U.S. metropolitan areas, see the original report: Inflation vs. Wages: Where Salaries Haven’t Kept Pace With Rising Costs.
Methodology
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This analysis examines the gap between wage growth and rising costs by comparing inflation-adjusted earnings across U.S. metropolitan areas. Data sources include the U.S. Bureau of Labor Statistics (BLS), specifically the Consumer Price Index (CPI) and Current Employment Statistics (CES) programs, as well as the Upgraded Points February 2025 Financial Pulse Survey, a proprietary survey of U.S. adults.
To assess where wages have failed to keep pace with inflation, researchers calculated the percentage change in real (inflation-adjusted) earnings from December 2020 to December 2024. December 2020 was chosen as the starting point because it marks the period just before inflation began accelerating rapidly in 2021. However, because BLS only reports inflation data on odd months for certain metros, November 2020 and November 2024 figures were used for those locations instead.
The study utilized the following CPI measures:
- Overall price growth is based on the “All Items” CPI
- Housing price growth is based on the “Shelter” CPI
- Grocery price growth is based on the “Food at Home” CPI
Only metropolitan statistical areas (MSAs) with complete and consistent data across both BLS surveys were included in the analysis.
For complete results, see Inflation vs. Wages: Where Salaries Haven’t Kept Pace With Rising Costs on Upgraded Points.
