After-tax wage growth is accelerating faster among higher-income households as lower- and middle-income households trail behind, a new Bank of America Institute report shows.<\/p>\n
Pay for higher-income households in March grew by 5.6% from a year ago, while lower- and middle-income households saw after-tax wage growth of 1% and 2%, respectively, according to David Tinsley, a senior economist at the Bank of America Institute. That\u2019s the biggest gap recorded since the bank began tracking the data in 2015.<\/p>\n
In a mostly stuck labor market with little payroll growth<\/a>, employers generally have the upper hand. Average hourly earnings by one measure rose by just 3.4% on an annual basis in March, government data shows<\/a>, the slowest wage growth since 2021. And as prices rise \u2014\u00a0particularly at the gas pump<\/a> \u2014 workers might feel more squeezed than usual.<\/p>\n But Tinsley\u2019s analysis shows that pinch isn\u2019t felt equally. Though the pay disparity could be amplified by bonuses hitting bank accounts recently, \u201ceven if this effect fades over this year, underlying wage dynamics continue to favor the top end,\u201d Tinsley wrote. The good news: Payroll growth appears to be recovering to levels comparable to those seen in early 2025, according to Bank of America deposit data, while growth in unemployment payments has slowed.<\/p>\n Emma Ockerman<\/a>\u00a0is a reporter covering the economy and labor for Yahoo Finance. You can reach her at\u00a0emma.ockerman@yahooinc.com<\/a>.<\/p>\n Sign up for the Mind Your Money newsletter<\/a><\/p>\n