⛄While low-income workers notched substantial wage🔯 gains during and after the pandemic, there are signs that their prosperity may be dwindling. 

Abigail Wozniak, a vice president at the Federal Reserve Bank of Minneapolis said while low-income earners were, in part, financially able to catch u🔥p with higher-income earners in the past few years, that’s no longer true.

“The Fed targets one inflation measure, but the pandemic has generated a lot of research interest in the question of whether that's true, whether everyone experiences inflation the same way," Wozniak said. "The early evidence is that they don't, and there's some more inflation for lower earners.”

For Low-Income Workers, ♏Pandemic-Era Wage Growth Is Abating

During the pandemic, workers in sectors such as leisure and hospitality had to return to in-person work—unlike those in other sectors. As a result, business♛es like restaurants had to boost wages considerably to attract workers, Wozniak said in an interview. 

However, that is beginning to change. In 2024, real wage growth for the bottom quartile of earners was nearly one percentage point less than it was in 2019, according to a study from the Minneapolis Federal Reserve.

While wages for low-income workers still outpace inflation, there are indicators that some workers may be struggling financially as households have spent down their pandemic savings and face higher expenses.

Inflati🌄on 𝓀Takes a Greater Toll On Low-Income Earners

Research from the New York Fed found that before the pandemic, low-income households experienced above-average inflation and spent a greater percentage of their income on food and housing.

“I think inflation has been a significant driver in some of the financial pressures that people have felt over the past year,” says Bruce McClary, a Senior Vice President at the National Foundation for Credit Counseling. “Unfortunately, many people still are not at a point where they're able to find breathing room in their budget.”

Low-Income Earners' Spending Reflects Strain

Executives from major banks and 澳洲幸运5官方开奖结果体彩网:consumer food companies have also indicated that low-income consumers face more financial headwinds in recent earnings calls. 🌞

Jeremy Barnum, the chief financial officer of JPMorgan Chase, suggested lower-income workers may be shifting more of their spending to essentials from discretionary expenses like eating out or concerts, in the company’s Q2 earnings call.

Higher prices aren't the only trouble households face. The Fed's campaign of rate hikes to fight inflation has made borrowing—from mortgages to credit cards—expensive. That's making it hard for more people to pay their bills on time.

In May, the New York Fed found credit card delinquencies were up in the first quarter from the on prior, especially among those with higher credit utilization ratios—or those who are close to maxing out their credit cards. According to the study, younger people and those living in low-income neighborhoods were more likel🔥y to have maxed-out credit cards.