A store in San Francisco.
Many of the raises businesses have offered to attract and keep employees in a hot job market have been eroded by inflation.
Wage growth in certain sectors, such as hotels and restaurants, has outpaced consumer price increases.
Some of the country's lowest-paid jobs have seen the biggest raises, helping insulate families from rising food and gas prices.
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The Department of Labor said that the Consumer Price Index, a key inflation measure, jumped in December from a year ago, the fastest rate since 1982.
The index accounts for many goods and services, from alcohol to fruit, airfare, firewood, hospital services and musical instruments. A consumer who paid $100 a year ago would pay $107 today.
The Labor Department reported Friday that average pay increased to more than $32 an hour in 2021.
Higher consumer prices ate into household budgets despite the pay raise. The average worker got a 2.4% pay cut last year.
Greg McBride, chief financial analyst for Bankrate, said that the best year for wage growth in many years still comes up as a loss for many households. All of the benefit of the pay raise they had seen was eaten up by their expenses.
Real earnings are the wages minus inflation that vary from household to household. The experience will be different for each consumer.
The lowest-paid workers in the leisure and hospitality sector got a 16% raise in 2021, to $16.97 an hour. The average employee at a bar, restaurants and hotel saw their pay rise more than two times faster than inflation, amounting to a net 9% increase in annual pay.
In December, rank-and-file workers in transportation and warehousing saw their annual pay rise by 8.4% to $25.06 an hour. Retail workers got a raise. These exceeded or matched inflation.
Inflation has likely taken a significant bite out of workers' paychecks.
According to Daniel Zhao, a senior economist at Glassdoor, employers have had difficulty finding workers to fill jobs in these sectors.
Businesses have been forced to raise pay because of high demand for labor. Workers may want a bigger paycheck to compensate for the higher risk associated with front-line roles in order to get a bigger paycheck.
Wage gains have outpaced inflation for some lower-earning people, but that doesn't seem to be the experience for most households.
He said inflation has likely taken a significant bite out of workers' paychecks.
Wage growth among the bottom 25% of earners outpaced consumer prices over the course of two years, according to an analysis by an economist at Harvard University. He said that the rest of the workers have gotten a pay cut.
According to an analysis of recent pay raises, the jobs are not paying a living wage if average pay at the lower end has outpaced inflation.
Headlines about rising wages for frontline workers are often overlooked, as wage levels are still low. Even as wages rise, so does the minimal threshold for an acceptable wage level.
Prices gains have occurred across a broad swath of goods.
Americans who use public transit may have avoided some of the year's biggest jump in costs, such as gasoline and used cars and trucks. They jumped 50% and 37%.
Rent and groceries are hard to avoid. Their costs were up on the year. Chicken or fish may be substituted for beef to reduce the budget sting.
According to economists, an increase in annual rent may last longer than other areas. Even a small increase in percentage terms can quickly erode any paycheck gains for lower-earning renters.
It is not known how long inflation or wage gains will last. Many economists think that both will start to decline in 2022, if the supply of workers increases and the supply of prices decreases.
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