BofA: U.S. July Wages Up 2% YoY, Low-Income Group Growth Outpaces High-Income for the First Time
N.R. Finch
Bank of America's internal deposit data shows U.S. wages grew 2% year-over-year in July, while low-income after-tax pay surged 5.2% — overtaking high-income households for the first time since December 2024, signaling a structural shift in wage growth.
How fast are overall wages growing?
BofA estimates July U.S. wages grew 2% year-over-year (non-seasonally adjusted), based on a three-month moving average of its internal consumer deposit data.
This means → wages are still rising, but the pace has cooled well away from "overheating" territory.
Who is driving job growth?
Employment gains were led mainly by low-income households; unemployment-benefit payments were flat.
Low-income after-tax wages rose 5.2% year-over-year (seasonally adjusted) — the first time since December 2024 that their growth outpaced high-income households.
In plain terms = higher earners used to lead the pay race; now lower earners are catching up.
What does this structural shift mean?
Wage growth flipping from "high-income-led" to "low-income-led" signals that labor-market tightness is concentrating in lower-paid sectors such as services and retail.
This means → spending patterns could follow — low-income workers have a higher marginal propensity to consume, so extra pay is more likely to be spent, a near-term positive for everyday-consumption sectors.
Yet headline wage growth is only 2%, suggesting aggregate momentum is fading; a better structure may not be enough to sustain the whole picture.
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