Holiday Paychecks Shrink Fastest in San Francisco and Seattle; New York and Atlanta Workers Show Most Wage Resilience

New Analysis Reveals Real Hourly Pay is Falling Double-Digits Behind Inflation in Major Metros, Fueling a Localized Affordability Crisis and the Most Geographically Uneven Holiday Earnings Season Since the Pandemic

SAN FRANCISCO, CA / ACCESS Newswire / December 2, 2025 / As businesses gear up for the holiday rush, a new Instawork analysis reveals the widest affordability declines are now concentrated in San Francisco and Seattle, where real hourly pay has fallen furthest behind inflation since early 2022.

By contrast, Atlanta and New York have swung into positive real-wage territory, making them the most affordable major metros heading into the holidays. Chicago sits squarely in the middle, though worsening year-over-year.

Pay Index Winners and Losers

Hourly wages on Instawork have risen 13.65% since February 2022, but inflation rose faster - 14.81% - confirming that real wages nationally have slipped behind rising prices.

But, importantly, the national average masks a hyper-local labor market reality: These affordability challenges vary dramatically by metro area, widening the gap between what workers earn and the price of everyday essentials.

How to Read the Data:

The percentages represent the gap between local wage growth and inflation (Consumer Price Index or CPI) since early 2022.

Specifically:

A negative number = wages are losing to inflation.

A positive number = wages are outpacing inflation.

Hardest-Hit Markets: Largest Declines in Real Purchasing Power

Here's where the gap between wage growth and inflation has widened the most since February 2022 - and where workers are staying closer to even.

San Francisco: -18.94%
Now the most expensive major metro. Affordability eroded sharply over the past year, driven by elevated services inflation and cooling wage growth in events and logistics.

Seattle: -14.91%
Still deeply underwater. Tech-sector cooling and softer warehouse demand slowed wage gains while living costs continued to rise.

Middle Tier: Real Wages Eroding, But Not Collapsing

Chicago: -9.97%
Real earnings are slipping faster year over year. Wage growth has not kept pace with local prices, particularly across warehouse and hospitality segments.

Most Resilient Markets: Real Purchasing Power Improving

Atlanta: +5.34%
One of the few markets beating inflation. Strong logistics infrastructure, film production cycles, and warehouse competition are pushing wages ahead of prices.

New York City: +1.40%
One of the biggest turnarounds in the country. Wage growth has finally overtaken inflation, boosted by hospitality demand, warehousing activity, and sharper peak-season staffing discipline.

"The labor market isn't one story - it's five very different ones," said Ashwin Somakur, Senior Economics Analyst at Instawork. "In some cities, a paycheck stretches less than ever. In others, wages are finally beating inflation. That split is changing how businesses staff - and how workers earn - in real time.

"Where affordability gaps are widest, companies are leaning on flexible labor to stay agile, and workers are taking extra shifts to keep up. It's the clearest sign yet that flexibility is no longer optional - it's the adjustment mechanism in a high-cost economy."

Signals for 2026: What the Wage-Inflation Gap Suggests for the Year Ahead

Instawork's analysis points to three early trends that could shape local labor markets in 2026.

1. Stable Wages May Attract New Investment

Cities like Atlanta and New York, where real wages have held steady with inflation, could become more attractive for logistics, hospitality, and events investment next year. Stable real wages often signal a healthier, more predictable balance between labor supply, demand, and pricing pressure.

2. Flexible Staffing as a Volatility Hedge

As businesses face unpredictable consumer spending and cost pressure, more are relying on shift-based staffing to precisely match labor to real-time demand. This allows employers to stay responsive without the risk of committing to permanent headcount changes.

3. Real-Time Staffing is the New Competitive Advantage

Instawork filled ~95% of shifts in 2025, often within hours - giving operators a clear, fast way to match labor to real-time needs and compete in unpredictable markets.

About the Instawork Quarterly Pay Index

The Quarterly Pay Index measures the relationship between hourly wages and consumer prices across key U.S. metros, providing one of the most accurate real-time views of current labor market dynamics. All series are indexed to February 2022 (100), with real-wage change calculated as wage growth minus the Consumer Price Index (CPI). Data sources include Instawork transactions (2022-2025), and The Bureau of Labor Statistics, including the Employer Cost Index and Consumer Price Index.

About Instawork

Instawork is the leading AI-powered marketplace in the U.S. and Canada, connecting local businesses with more than nine million skilled hourly professionals across hospitality, industrial, and retail. With its network of verified professionals and industry-leading trust and safety, Instawork helps companies like DoorDash, Hilton, Alibaba, and Walmart scale staffing with speed and confidence.

Our top-rated app attracts the largest pool of talent by offering flexibility, competitive pay, and meaningful opportunities for advancement - keeping businesses fully staffed and operational in fast-changing labor markets.

SOURCE: Instawork

• 2025 Dec Quarterly Pay Index .pdf

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