The job market is cooling from a rapid boil to a low simmer as the Federal Reserve takes steam away from the U.S. economy. Workers, however, are still holding on to their bargaining power — at least for now.

About two-thirds of employed Americans (64 percent) received a pay increase at some point in the 12 months since October 2022, including 38 percent who said they got a pay raise, 16 percent who indicated they found a better-paying job and 10 percent who noted they earned both, according to a new Bankrate survey. That’s up from 61 percent in the prior year’s poll, during an even stronger year for hiring. By this time last year, employers had already created almost twice as many jobs.

But the strides Americans have been taking in their careers are getting overshadowed. More workers than last year (60 percent in 2023 versus 55 percent in 2022) say their incomes haven’t kept pace with increases in their household expenses because of inflation. Even among the workers who did get a raise or better-paying job, more than half (53 percent) say their earnings lost ground to inflation, up from 50 percent in 2022.

While inflation has come down, broadly speaking, prices have not. There is a kind of continuing, virtual sticker shock that continues to weigh on the minds and pocketbooks of consumers that is meaningful. — Mark Hamrick | Bankrate senior economic analyst

Key takeaways

  • Many workers saw a pay increase this year. About two-thirds of workers (64 percent) received a pay increase, found a better-paying job or both at some point in the 12 months since October 2022.
  • Inflation is eroding workers' gains. Three in 5 workers (60 percent) say their incomes haven't kept pace with inflation over the past 12 months, up from 55 percent last year. For those who did receive a pay bump of some form, more than half (53 percent) said their incomes haven't kept pace with inflation, up slightly from 50 percent last year.
  • Workers are seeing modest raises. More than half of workers (52 percent) who received a raise or found a better-paying job in the past 12 months report that their pay increase was less than 5 percent, including 28 percent who said it was less than 3 percent. Roughly 2 in 5 workers (38 percent) of those workers whose saw an increase earned a raise worth 5 percent or more.
  • Despite inflation, companies are giving out performance-based raises more than cost-of-living adjustments. Performance-based compensation adjustments remain the most common reason that workers received a raise (at 35 percent), similar to last year's poll. Cost-of-living adjustments (31 percent) were the second most common, followed by raises aligned with promotions or new job responsibilities (17 percent) and other reasons (12 percent). Another 5 percent didn't know.

A large majority of workers saw their pay increase this year

The workforce is just like any other market. Workers are selling their time, and companies are buying their labor. Someone typically always has an edge over the other.

Most of the time, it comes down to who’s more in demand. Since the U.S. economy emerged from the coronavirus pandemic-induced recession, workers have been in the driver’s seat. At the job market’s tightest, companies had almost 12 million open positions, outnumbering the unemployed by more than 2-to-1, Labor Department data shows. Businesses lifted wages by the fastest pace in records dating back more than two decades to lure talent. Workers seized the opportunity to hunt for greener pastures, creating an era of musical chairs for the labor market that’s today dubbed as the “Great Resignation” or “Great Reshuffle.”

The balance of power looks like it’s in the early stages of a shift. The share of workers in the labor force who are quitting — long seen as a sign of economic confidence — has returned to pre-pandemic lows. Employers created just 150,000 jobs in October, the slowest pace in five months. Wage gains are slowing, and unemployment has risen half a percentage point from its post-pandemic low.

Economists expect that the slowdown could get even sharper. They see joblessness rising to 4.5 percent by September 2024, as employers massively scale back on hiring, according to Bankrate’s latest quarterly survey of economists.

But the fact that a more material slowdown hasn’t happened already is what’s made the economy seem so remarkable. Back in the third quarter of 2022, economists projected that unemployment would hit 4.4 percent by September 2023. Instead, it edged up to only 3.8 percent.

The labor market’s slowdown hasn’t come to a head just yet. A slightly smaller percentage of workers than last year (36 percent in 2023 versus 39 percent in 2022) reported receiving neither a raise nor finding a better-paying job. Meanwhile, more Americans than last year (26 percent in 2023 versus 21 percent in 2022) said they found a better-paying job.

White workers were most likely to receive a raise, at:

  • 50 percent; versus
  • 45 percent for Black workers; and
  • 44 percent for Hispanic workers.

Black workers (35 percent) and Hispanic workers (32 percent) were most likely to report that they found better-paying jobs, up from 29 percent and 24 percent in 2022, respectively. Slightly more than 1 in 4 (22 percent) of White workers said they found a higher-paying job.

Generation Zers (at 47 percent for those between the ages of 18 and 26) were almost three times more likely than Gen Xers (at 18 percent for those ages 43-58) and roughly seven times more likely than baby boomers (at 7 percent for those ages 59-77) to say they found a better-paying job. Millennials (at 31 percent for those ages 27-42) were also more likely to indicate they found a better-paying job than their counterparts.

Older generations, however, were slightly more likely to say they earned a pay raise in the past year, at:

  • 48 percent of baby boomers;
  • 51 percent of Gen X;
  • 46 percent for millennials; and
  • 46 percent for Gen Z.

Higher-income workers were the ones most likely to report a raise in the past year, at:

  • 57 percent for those earning $100,000 or more a year;
  • 50 percent of those making between $80,000 and $99,999;
  • 51 percent for those making between $50,000 and $79,999; versus
  • 41 percent for those making less than $50,000.

On the flip side, the lowest earners were most likely to report receiving neither a raise, nor a higher-paying job, at:

  • 42 percent for those making less than $50,000;
  • 33 percent for those making between $50,000 and $79,999;
  • 33 percent of those making between $80,000 and $99,999; and
  • 27 percent for those earning $100,000 or more a year.

Many workers say their pay isn’t keeping pace with inflation

But the strong job market can be two-faced, especially if it contributes to inflation. Bankrate’s poll found that workers are still feeling the pinch of expensive prices — and some indicate they’re even worse off than they were in 2022.

For all employed Americans, less than one third (29 percent) say their pay has matched or exceeded inflation this year, down from 33 percent in 2022. Even the workers who received a pay increase of some kind were less likely than they were last year to say that their income had kept pace or beat inflation, at 36 percent in Bankrate’s 2023 poll versus 39 percent in 2022.

A smaller share (11 percent) of all employed Americans said they don’t know whether their pay matched or exceeded inflation.

For the workers who didn’t see a pay increase, the economic backdrop appears to be harming their finances even more. Almost 3 in 4 workers (72 percent) say their incomes haven’t at least kept pace with their rising cost of living, versus just 15 percent who say it has and 13 percent who don’t know.

That’s happening at a time when the inflationary picture looks like it’s improved — at least on paper. Inflation hit a 3.2 percent annual rate in October, nearly three times slower than the staggering 9.1 percent peak from June 2022.

“To the degree possible, workers would like to try to get the upper hand, or at least break even in the relationship of wages and consumer prices, including by making up for lost ground,” Hamrick says.

The workers most likely to find a higher-paying job or earn a pay raise in the past year were also the ones indicating they’ve taken the biggest hit from inflation. Older generations whose pay increased this year were most likely to say their incomes haven’t kept pace with inflation, at 69 percent of baby boomer workers and 65 percent of Gen X workers, versus 45 percent of millennials and 40 percent of Gen Zers.

Workers in the Midwest were the most likely to both earn a raise — and also say that their incomes haven’t kept pace with inflation, even when they did see higher pay.

Region Employed workers who received a raise or found a higher-paying job in the past year Percentage of those workers who say their incomes haven’t matched or exceeded inflation
Source: Bankrate survey Oct. 26-30, 2023
Northeast 62% 49%
Midwest 69% 60%
South 64% 55%
West 61% 47%

Workers across income spectrums are feeling the pinch of higher inflation, but the highest earners are indicating they’re the least scathed, at:

  • 64 percent of workers making under $50,000 a year saying their incomes haven’t matched or exceeded inflation; versus
  • 66 percent for those earning between $50,000 and $79,999;
  • 56 percent for those earning between $80,000 and $99,999; and
  • 55 percent of those making $100,000 or more.

Meanwhile, hourly workers are also indicating they’ve lost more purchasing power. About 2 in 3 (66 percent) of them say their incomes lost ground to increases in their household expenses, versus 54 percent of salaried workers. That stayed true, even when they reported a pay increase of some kind. More than 3 in 5 (61 percent) of them said their incomes trailed inflation, versus 47 percent of salaried workers.

More than half of workers who saw a pay increase say their raise was less than 5 percent

Illustrating why workers feel like they’re falling behind, more than half (52 percent) of the workers who are making higher pay said the pay bump they earned was less than 5 percent, with the largest share (28 percent) saying they saw a less than 3 percent raise.

On the other hand, about 2 in 5 workers who earned higher pay this year (38 percent) say their pay increase was 5 percent or more. That includes:

  • 17 percent who received between a 5 percent to less than 7 percent raise;
  • 10 percent who received a raise between 7 percent to just under 10 percent; and
  • 12 percent who received a raise of 10 percent or more.

A smaller share (10 percent) of workers said they don’t know or can’t remember how much their wage increase was.

On paper, Americans have to see a 3.2 percent raise or more to beat inflation, according to the latest figures from the consumer price index (CPI). A substantial share likely have crossed that threshold: More than 3 in 5 workers who got a raise (63 percent) said their pay bump was 3 percent or more, Bankrate’s poll shows.

But every household has their own personal inflation rate. Some Americans may have higher costs of living, depending on what they buy. One example: Americans who’ve recently bought a car may be experiencing even greater inflation rates. Motor vehicle insurance is up about 19 percent from a year ago, while repairs costs are up almost 10 percent over the same period, Bureau of Labor Statistics data shows. An even worse picture, used vehicle prices have climbed 35 percent since before the pandemic began in February 2020 — though they’re off about 13 percent from their peak.

The median salary in the U.S. is roughly $40,260, according to data from the U.S. Census Bureau. A 5 percent raise would be worth a modest $2,013 extra a year.

Meanwhile, a 5 percent raise might not help Americans fully catch up to the total ground that they lost. Prices have risen almost 17 percent since February 2021, when inflation first began to take off, a Bankrate calculation of inflation data shows. Americans could feel the difference if inflation slows long enough for their pay to catch up — but that could take some time. A separate Bankrate analysis from September found that workers won’t fully catch up to their total loss of purchasing power from inflation until the fourth quarter of 2024.

“It seems highly unlikely that prices generally will retreat to pre-pandemic levels,” Hamrick says. “To the extent that inflation expectations are elevated on the part of consumers, that is probably a reasonable mindset, even while peak inflation appears to be behind us.”

Among employed Americans who earned a pay increase, those more likely to say their pay bump was an increase of 5 percent or more include men, millennials, higher earners, salaried workers and workers who found a higher-paying job, at:

  • 42 percent for men versus 34 percent for women;
  • 47 percent for millennials versus 37 percent of Gen Xers, 36 percent of Gen Zers and 25 percent of baby boomers;
  • 48 percent of workers making more than $100,000 or more a year versus 33 percent of those making under $50,000;
  • 45 percent of salaried workers versus 32 percent of hourly workers; and
  • 44 percent of those who only found a higher-paying job versus 34 percent of those who only got a raise and stayed at their current role.

Performance-based raises remain more common than cost-of-living adjustments

Even despite workers worrying about inflation, those who received a raise are most likely to earn one for their job performance, with:

  • 35 percent receiving a performance-based adjustment;
  • 31 percent receiving a cost-of-living bump;
  • 17 percent earning a raise because of a promotion or taking on new job responsibilities;
  • 12 percent citing another reason; and
  • 5 percent saying they don’t know.

Baby boomers and workers making under $50,000 a year were the only groups more likely to get a cost-of-living adjustment (at 37 percent and 32 percent, respectively) than a performance-based raise (at a respective 34 percent and 29 percent). Gen Xers, meanwhile, reported the same prevalence of performance-based raises and cost-of-living adjustments (at 36 percent each).

Even so, performance-based raises were the most lucrative, with 42 percent of workers who received a raise for that reason earning a pay bump worth 5 percent or more versus 26 percent of those who earned a cost-of-living adjustment.

“Inflation makes a big impression both on consumer sentiment as well as on individual and household finances,” Hamrick says. “When we’re talking about the most significant inflation in nearly half a century, that’s even more meaningful.”

  • Bankrate commissioned YouGov Plc to conduct the survey. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,404 U.S. adults, including 1,293 who are currently employed. Fieldwork was undertaken between Oct. 26-30, 2023. The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.