The Illusion of Wage Growth: Where Paychecks Stretch the Farthest

U.S. wages have climbed at one of the fastest rates in modern history. Between 2020 and 2024, the average American worker’s pay rose from about $64,000 to $75,600, an 18% nominal increase, according to the Bureau of Labor Statistics (BLS).

But as 2026 begins, that growth looks far less optimistic. After adjusting for inflation and cost of living, most Americans lost real spending power over that same period. 

A new analysis by MyPerfectResume finds that the typical U.S. worker is earning approximately 2.6% less in real terms than in 2020. In other words, the nation got a raise on paper, but a pay cut in reality.

And that decline occurred even though every state posted wage increases in raw dollars, underscoring how inflation erased most of the apparent progress.

Why “More Pay” Feels Like “Less Money”

From 2020 to 2024, consumer prices rose approximately 21% (CPI-U), meaning a dollar in 2024 bought what 82 cents did in 2020. Rising costs for the following quickly absorbed higher wages:

• Housing
• Groceries
• Energy
• Insurance
• Everyday essentials

For millions of workers, bigger paychecks didn’t lead to better living standards—just higher bills. And where you live matters as much as how much you earn.

How we measured real purchasing power by state

MyPerfectResume assessed all 50 states to find where paychecks gained or lost value from 2020 to 2024.

1. Wage data: We used average annual wages from the BLS Quarterly Census of Employment and Wages for 2020 and 2024.
2. Inflation adjustment: 2020 wages were converted to 2024 dollars using the Consumer Price Index (CPI-U), which rose approximately 21% over that period.
3. Cost-of-living adjustment: We applied the Bureau of Economic Analysis (BEA) Regional Price Parities (RPP) to show how far a dollar goes in each state. This reflects the real value of wages after accounting for the local cost of living.
4. Result: The final figures reveal the real change in purchasing power, showing where workers’ paychecks gained value and where rising costs erased most of the increase.

National Overview: The Hidden Pay Cut

Although the real wage growth by state increased in raw dollars for every state, the majority of workers ultimately ended up worse off in real terms.

• Nominal wages rose 18% nationally from 2020 to 2024, but real purchasing power fell by 2.6%.
• Only nine states saw real gains in buying power after accounting for inflation and local costs.
• Idaho (+3.1%) and Florida (+2.6%) led the nation, in which wage increases still outpaced inflation.
• New Jersey, Rhode Island, and Maryland suffered the sharpest real declines (–5% to –7%).
• Even in high-wage states such as California and Massachusetts, rising costs eroded most gains, suggesting that higher wages do not necessarily translate into better living standards.

In short, Americans are working harder or relying on supplemental income for paychecks that buy less, a dynamic that defines much of the post-pandemic economy

Top 10 States Where Paychecks Go the Farthest

These states experienced the largest increases in real purchasing power from 2020 to 2024, meaning workers there actually came out ahead once inflation and local prices were taken into account.

1. Idaho: +3.1%
2. Florida: +2.6%
3. Washington: +2.3%
4. Montana: +2.3%
5. Wyoming: +1.8%
6. South Carolina: +1.5%
7. North Carolina: +0.9%
8. Tennessee: +0.9%
9. Maine: +0.5%
10. Utah: 0.0%

Bottom 5 States Losing the Most Buying Power

These states experienced the largest declines in real purchasing power between 2020 and 2024, indicating that workers there faced the sharpest gap between rising wages and increasing costs.

1. Massachusetts: –5.3%
2. New York: –5.3%
3. Maryland: –5.4%
4. Rhode Island: –6.9%
5. New Jersey: –7.0%

For workers in these states, nominal wage growth was insufficient to keep pace with inflation and high living costs, in some cases prompting workers to choose job security over career moves.

Full Ranking: How All 50 States Compare

Every U.S. state saw wages rise between 2020 and 2024, but after adjusting for inflation and cost of living, only a handful of states experienced real gains in purchasing power.

The table below ranks all 50 states by real purchasing power change (PPP-adjusted, 2024 dollars), showing how wage growth changes after accounting for both inflation and local prices.

Why It Matters

The findings highlight a crucial truth: A high-paying job doesn’t automatically mean a higher standard of living. The American workforce entered the mid-2020s with more pay on paper, but less real financial freedom. For most, inflation has quietly reversed years of progress. 

For media inquiries, please contact Nathan Barber at nathan.barber@bold.com.

Methodology

MyPerfectResume conducted this analysis to measure changes in real earnings and purchasing power across all 50 U.S. states from 2020 through 2024.

Wage data

Average annual wages were sourced from the Bureau of Labor Statistics (BLS) Quarterly Census of Employment and Wages (QCEW) for 2020 and 2024. QCEW reflects actual employer payroll records rather than survey-based estimates.

Inflation adjustment

2020 wages were converted into constant 2024 dollars using the Consumer Price Index for All Urban Consumers (CPI-U) annual averages (258.811 in 2020 vs. 313.689 in 2024), representing approximately 21.2% cumulative inflation. This allowed for a direct comparison of real wage changes over time.

Cost-of-living adjustment

To compare purchasing power across states, we incorporated Bureau of Economic Analysis (BEA) Regional Price Parities (RPP) for “All Items,” benchmark year 2022 (U.S. = 100). Because the most recent RPP release does not yet include 2023–2024, the 2022 index was applied consistently to both years. RPP reflects differences in relative price levels, including housing, goods, and services.

For each state:

1. 2020 wages were inflation-adjusted into 2024 dollars.
2. CPI-adjusted wages were divided by the state’s RPP index to estimate purchasing-power-adjusted income.
3. The percentage change in these values from 2020 to 2024 determined the final ranking of real gains or losses in purchasing power.

All figures are expressed in 2024 dollars and rounded to one decimal place. Results reflect state-level averages and do not account for within-state variation or industry mix.

About MyPerfectResume

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