September's jobs report reveals a concerning trend for consumers, as average hourly earnings have failed to keep up with inflation. According to new Labor Department data, wages rose only 0.1% month-over-month and 3% year-over-year. In contrast, inflation was reported at a 3.4% rate as of August. This marks a continuation of a trend that began in the spring when inflation began to outstrip wage growth.
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Heather Long, chief economist for Navy Federal Credit Union, stated on X, "Inflation has eaten up all wage gains for the average worker since April. Many people are having to make hard choices about what to buy and what to skimp on right now." She also noted that the 0.1% increase in wages for September represents the weakest monthly gain since December 2025. The annual growth rate of 3% is the slowest since May 2021.
The jobs report also reflects disappointing overall economic performance, with only 29,000 jobs added in September—far below expectations. The unemployment rate increased, and previous months’ job figures were revised downward by 60,000. Despite these challenges, the long-standing "low hire, low fire" dynamic appears to persist, which is not ideal for job seekers but does not raise red flags for economists. Guy Berger, a senior adviser on labor markets at Access/Macro, expressed cautious optimism for labor market developments in 2026, noting that the primary concern remains slow wage growth.
Molly Moorhead is the economics editor at Yahoo Finance.