The number on your pay stub is your nominal wage. What that paycheck actually buys — after price increases are stripped out — is your real wage. A quick approximation is subtraction: real wage growth ≈ nominal growth − inflation. The exact formula is (1 + nominal growth) ÷ (1 + inflation) − 1. A 4% raise with 3% inflation is a real raise of about 0.97%. A 4% raise with 8% inflation is a real pay cut of about 3.7% — the arithmetic behind feeling poorer despite a bigger paycheck in high-inflation years.
The US Bureau of Labor Statistics publishes a monthly Real Earnings news release on the same day as the CPI. It deflates average hourly and weekly earnings from the payroll survey by that month's CPI, producing constant-dollar earnings, and reports both monthly and 12-month changes. A typical line reads: "nominal average hourly earnings rose 0.3 percent, but the CPI rose 0.4 percent, so real average hourly earnings fell 0.1 percent." During the 2021–2022 inflation surge, this report documented something memorable: nominal wages were climbing at the fastest pace in decades, yet real hourly earnings posted negative 12-month changes for many consecutive months.
To find out whether your pay has beaten inflation over the years, convert your starting salary and your current salary into the same year's dollars and compare. Enter your starting year and salary into the inflation calculator to see its equivalent in today's money — if your current pay exceeds that figure, your raises beat inflation; if not, the nominal growth was an illusion. The same conversion is useful in salary negotiations: it turns "keeping up with inflation" into a concrete percentage.