SAN FRANCISCO – (INT) - California has seen significant improvement in employment and wages in the past year. But, there is a fly in the ointment.

Employment has recovered to pre-pandemic levels in most sectors, and wages have risen steadily since the beginning of 2020 amid a historically tight labor market. And yet more Californians report feeling worse off financially (39%) than better off (17%) compared to a year ago, according to a California ‘think tank’.

In October survey by the Public Policy Institute (PPIC), the shared feeling of worse off is higher than at any point since 2009. Despite robust employment, income, and wage growth, there’s an obvious culprit harming financial well-being: inflation.

Wages are up across all sectors since January 2020. As of September, wages have increased 14% on average, with gains stronger in leisure and hospitality (24%); trade, transportation, and utilities (16%); and education and health services (13%; not shown in chart).

However, higher earnings don’t go as far in a world of rising prices. After adjusting for inflation, average wages are down 1.3% compared to January 2020. Only two of the largest sectors have shown growth in inflation-adjusted wages: leisure and hospitality (up 7%), and trade, transportation, and utilities (up 1%). Put another way, the average worker is earning $4.50 more per hour today, but with inflation it feels like a $0.50 loss compared to January 2020.

Story Date: November 21, 2022