# Real Wages

*Everyday Money — Finicade finance glossary*

Real wages are pay adjusted for inflation — what your salary actually buys rather than what it says. A 4% raise in a 6% inflation year is a 2% pay cut in real terms, which is why periods of high nominal wage growth can coincide with falling living standards. Real wages are the number to track over a career: nominal pay always rises, so the only meaningful question is whether it's rising faster than prices.

**Formula:** `Real wage growth ≈ Nominal wage growth − Inflation rate`

**Also known as:** real pay, inflation-adjusted wages

**Related terms:** [Purchasing Power](https://finicade.com/glossary/purchasing-power), [Inflation](https://finicade.com/glossary/inflation), [Cost of Living](https://finicade.com/glossary/cost-of-living), [Real vs Nominal](https://finicade.com/glossary/real-vs-nominal-interest-rates), [Consumer Price Index (CPI)](https://finicade.com/glossary/cpi)

Source: https://finicade.com/glossary/real-wages