Lower-income after-tax wage growth rose to 4.1% in June from a year earlier, the fastest pace since July 2023, according to Bank of America Institute transaction data. That outpaced middle-income growth of 3.4% and nearly matched higher-income growth of 4.2%, which slipped, narrowing a gap that had been widening for years. Bank of America economists attributed the trend partly to increased job-switching, with lower-income households getting pay bumps around 12% when changing employers compared to 9% for higher-income households. They also cited the One Big Beautiful Bill Act, which led some lower- and middle-income households to reduce tax withholdings, boosting take-home pay. The economists said the boost could last for a year from the tax changes and as long as the labor market remains firm, though lower-income wage growth would be vulnerable if labor demand slows.
Bank of America CorpBank of America's transaction data shows lower-income wage growth accelerating, which may boost consumer spending and transaction volumes, benefiting its consumer banking business.