America’s lowest-paid workers are experiencing the sharpest decline in wage growth, even as the broader economy shows signs of resilience. New data underscores a widening income gap that poses political and economic challenges for the Trump administration, particularly amid concerns over data transparency and economic inequality.
Wage Growth for Lowest Earners Drops Sharply
According to the Federal Reserve Bank of Atlanta, wage growth for the bottom 25% of earners—those making less than $806 per week—fell to 3.7% year-on-year in June, a steep decline from the 7.5% peak in late 2022. That surge came during a post-pandemic labor shortage, particularly in hospitality and service sectors.
In comparison:
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Top 25% of earners (those earning over $1,887 per week) saw wages grow by 4.7%.
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Overall wage growth across the U.S. workforce stood at 4.3%.
This disproportionate slowdown threatens to erode recent gains made by low-wage earners and is occurring as inflation remains persistent in key consumer categories, reducing real purchasing power.
Turbulence at the BLS Sparks Debate Over Data Integrity
The wage figures come in the wake of President Donald Trump’s dismissal of BLS Commissioner Erika McEntarfer, just hours after the release of a disappointing jobs report. The move, which many economists viewed as politically motivated, raised alarms over the independence of federal statistical agencies.
“The data can’t be propaganda,” said Kevin Hassett, senior White House economic adviser, in defense of the decision.
Meanwhile, William Beach, a former Trump-era BLS chief, warned: “It undermines credibility in BLS.”
Low-Wage Jobs Lag in Advertised Salaries
Job market data from Indeed shows a similar pattern in posted wages. Sectors such as law, marketing, and engineering have seen stronger wage growth, while lower-wage roles in driving, logistics, and hospitality have lagged behind. Economists note that low-wage jobs are often more sensitive to downturns due to limited bargaining power.
“It takes a tighter labor market for them to have any leverage,” said Elise Gould, labor economist at the Economic Policy Institute.
Policy Impact: Tariffs and Budget Cuts Hit the Poor Hardest
The wage stagnation compounds the effect of Trump’s broader economic policies, including tariffs, spending cuts, and a controversial tax bill.
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The Yale Budget Lab estimates that recent tariffs will reduce disposable income for the poorest 10% of households by over 3%, compared to just 1% for the richest.
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The Congressional Budget Office (CBO) reports that Trump’s new tax-and-spend bill, known as the “One Big, Beautiful Bill,” would:
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Reduce resources for the bottom 10% by $1,600 annually
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Increase income for the top 10% by $12,000 per year
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The legislation includes permanent extensions of previous tax cuts, alongside reductions in access to Medicaid and food stamps. However, it does provide tax deductions for workers in tipped or overtime-heavy roles—common among low-income earners.
Uncertainty Clouds Business and Labor Decisions
Bank of America CEO Brian Moynihan told CBS that the economic slowdown and policy ambiguity are prompting business caution. While companies are gaining clarity on taxes and trade, they remain unsure about deregulation and immigration policies.
“They’re being a little more cautious, really waiting for some answers,” Moynihan said.
He also urged the government to improve data collection, warning that repeated revisions in jobs data can undermine public and investor trust.
Inflation Outpaces Pay for Millions
Despite headline median wage growth outpacing inflation, 40% of U.S. workers now earn wages that fail to keep up with rising prices, according to Indeed economist Cory Stahle.
“The people who are already at the bottom and struggling may be the ones who are losing the most purchasing power,” he said.
Service workers dependent on tips are particularly vulnerable to drops in consumer spending and tourism, said economist Diane Swonk of KPMG.
Trump Administration: Optimism and Deflection
White House spokesperson Kush Desai defended the administration’s strategy, stating that Trump’s economic approach had previously reduced income inequality and boosted working-class prosperity.
“President Trump is implementing the same mix of deregulation, fairer trade, and pro-growth tax cuts on an even bigger scale,” Desai said.
“As these policies take effect, the best is yet to come.”
Conclusion:
As wage growth weakens for the lowest-paid Americans and political interventions cast doubt on data credibility, the nation’s most vulnerable workers face heightened economic pressure. With inequality rising again, the effectiveness and equity of current U.S. economic policy remain under close scrutiny.