I was reading the comments under my recent article on America’s middle-class affordability crisis when one reader challenged the premise behind much of the discussion.

His argument was simple. American hourly earnings had risen by roughly as much as consumer prices since 2020. If an hour of work still bought approximately what it bought six years ago, could we really say workers had become poorer?

I could have dismissed the comment because it complicated the argument I had just published. Instead, I went back to the numbers and found that his objection deserved attention.

In August 2020, average hourly earnings for employees on private nonfarm payrolls stood at $29.47. By August 2026, they had reached $37.75, an increase of about 28 percent. Consumer prices also rose sharply over those six years.

Put the two figures beside each other and an uncomfortable result appears. The number printed on the average worker’s paycheck increased substantially, but hourly purchasing power made remarkably little progress.

There is an important complication in choosing August 2020 as the starting point. The pandemic had disrupted employment so severely that the U.S. Bureau of Labor Statistics warned at the time that changes in the mix of lower- and higher-paid workers made average hourly earnings unusually difficult to interpret. I examined that baseline problem separately in Same Economy, Different Story: How the Starting Date Changes What Inflation Data Tells You.

That caveat matters. It is one reason we should resist turning a six-year average into a sweeping claim about every American worker. It does not, however, make the affordability question disappear.

In my earlier Medium article, America’s Middle-Class Affordability Crisis in 2026, I examined the gap between improving inflation headlines and household experience. A reader’s objection now pushes the argument further.

If average wages have broadly kept pace with the general price level, why do so many households still find ordinary life difficult to afford?

Inflation Fell. The Price Level Didn’t

Part of the confusion comes from the way inflation enters everyday conversation.

When inflation falls, prices do not normally fall with it. They continue rising at a slower rate.

Take something that costs $100. After a 10 percent increase, it costs $110. If inflation then falls to 3 percent, the price does not return to $100. It moves to $113.30.

Headlines announcing lower inflation therefore describe the speed of additional price increases. They do not mean that the earlier increases have been reversed.

The latest American figures make the distinction useful. Average hourly earnings increased 3.1 percent between August 2025 and August 2026, reaching $37.75. Consumer prices increased 3.4 percent over the same period. The Bureau of Labor Statistics real earnings release calculated that real average hourly earnings fell 0.3 percent during those twelve months.

That is a small decline, not evidence of collapsing American living standards. Yet it helps explain why moderating inflation does not automatically produce the relief households expect. Prices can rise more slowly while purchasing power still slips.

The Average Household Doesn’t Exist

National statistics have another limitation. People do not consume the national average.

A renter in Boston and a mortgage-free homeowner in Ohio can receive the same percentage wage increase without experiencing anything close to the same change in disposable income. Family size and commuting patterns alter the calculation further.

Housing makes the difference particularly visible. The latest complete BLS Consumer Expenditure Survey summary shows that housing absorbed 33.4 percent of average household expenditure in 2024. Transportation accounted for another 17 percent. Together they consumed slightly more than half of average spending.

Those figures tell us something useful about American households collectively. They cannot tell a particular family what happened to its budget.

Averages describe the economy. Bills arrive at an address.

Someone who bought a home years ago with a low fixed-rate mortgage occupies a different financial world from a younger household trying to buy its first property. Both appear inside the national statistics. Their experience of affordability can be miles apart.

Fuel Changed the Household Calculation

The difference between national inflation and household inflation became particularly visible this year.

Consumer prices were 3.4 percent higher in August 2026 than a year earlier. Energy prices rose 16.3 percent. Gasoline increased 27.4 percent, while fuel oil rose 52 percent, according to the BLS Consumer Price Index release.

Those increases do not affect every household equally. Someone commuting by subway can receive the same percentage wage increase as a suburban employee driving forty miles to work, yet the energy shock enters their monthly budgets very differently.

Fuel costs can also travel beyond the filling station as businesses transport goods and operate vehicles. The effect varies across products and industries, so a 27 percent increase in gasoline certainly does not produce an equivalent increase in everything transported by road.

The commuter needs no economic model to notice the immediate effect. The higher number is already glowing on the petrol pump.

Wages Caught Up. Purchasing Power Barely Moved

The reader who challenged my earlier argument was right about something important: American wages did rise substantially. That fact should not be buried simply because it complicates a story about economic hardship.

Average hourly earnings increased from $29.47 in August 2020 to $37.75 in August 2026. Adjust for consumer prices, however, and the movement becomes much smaller.

BLS historical data put real average hourly earnings at $11.36 in August 2020 and $11.30 in August 2026, measured in constant 1982–84 dollars. The pandemic distortion makes the starting point imperfect, but the comparison still exposes an important distinction between nominal progress and purchasing power.

A worker looking only at the paycheck sees a large increase. Once prices enter the calculation, much of that apparent gain disappears.

Workers do not normally spend six years hoping merely to preserve what an hour of labour could already buy. Experience accumulates, people change jobs, and families expect some improvement in material circumstances. The paycheck grew substantially, but much of that increase went toward maintaining roughly the same purchasing power.

I explored the same wage-versus-personal-inflation problem from another direction in Why a 3% Pay Rise May Not Beat 3% Inflation.

Housing Exposes the Weakness of the Average

The problem becomes more obvious when we move from buying consumer goods to building what Americans traditionally regard as a middle-class life.

In 2024, households spent an average of $26,266 a year on housing, about $2,189 a month. Yet the national average combines people occupying very different financial positions.

An owner with an older fixed-rate mortgage does not confront the current housing market each month. A prospective first-time buyer does. Renters face another set of conditions, heavily influenced by where they live.

A younger professional household can therefore preserve its purchasing power over many consumer goods while finding homeownership harder to reach. CPI measures changes in consumer prices. It was never designed to determine whether a particular salary still opens the same route to middle-class economic security.

The affordability argument is therefore larger than whether Americans can buy the same basket of goods. It also concerns whether income still opens the same doors.

Debt Changes What a Salary Can Buy

Household debt introduces something an hourly wage cannot show: monthly obligations.

The Federal Reserve Bank of New York reported total household debt of about $18.8 trillion in the second quarter of 2026. Credit-card balances stood at $1.26 trillion, while auto-loan balances reached $1.71 trillion.

Those enormous aggregate figures do not prove that American households as a whole are in financial crisis. Population, income and economic growth also influence total borrowing. The New York Fed reported that aggregate delinquency improved slightly during the quarter, although new credit-card and auto-loan delinquencies remained elevated.

Debt matters here for a narrower reason. Two households earning identical salaries can have very different amounts left after housing, car payments and revolving-credit obligations have been met. A wage statistic cannot show the space remaining in either household’s budget.

There is a related household channel in America’s public finances. In America’s $40 Trillion Debt Is Not a Crisis Yet. The Cost Is Already Moving Toward Households, I examined how borrowing costs and fiscal pressure can eventually reach family budgets.

The Comment Changed My Argument

I began with a reader who questioned the way we talk about Americans becoming poorer. Checking his claim improved the argument.

Average hourly wages have risen by roughly as much as the broad consumer price level since 2020, although the pandemic makes August 2020 an unusually complicated starting point. Any serious discussion of affordability should acknowledge both facts.

Neither settles the question. Comparing two national averages cannot tell us how an individual household experienced six years of economic change.

One family may be protected by an old fixed-rate mortgage. Another is trying to enter today’s housing market. A commuter can absorb an energy shock that barely touches someone working from home. Debt commitments can leave two people earning identical salaries with very different amounts available at the end of the month.

The broader numbers still tell us something important. Nominal wages rose dramatically. Average hourly purchasing power did not make comparable progress.

That finding is more interesting than simply claiming that American wages failed to rise. They clearly did. The harder question is what those additional dollars actually bought.

For many workers, a substantial part of the wage increase appears to have been consumed by the higher price level they were trying to outrun. Perhaps that is why lower inflation has brought less relief than the headlines might suggest.

The worker sees a much larger paycheck than in 2020. Then the household expenses arrive.

After six years of higher wages, why does staying in roughly the same place still require so much running?