Pay for the average line worker The leisure and hospitality industry has grown at an annualized rate of 23% over the past few months – from $ 14.81 an hour in January to $ 15.87 in May – the fastest growth rate ever.
The good news is that soaring wages are unlikely to be a harbinger of accelerating inflation or a warning of labor shortages through relatively generous government unemployment benefits.
But the latest numbers shouldn’t be taken as an encouraging indicator that the worst paid Americans are on the verge of significantly increasing their relative standards of living. The data so far are more in line with a return to the prepandemic norm than anything else.
In the years leading up to the pandemic, unsupervised workers in bars, restaurants, hotels, and the rest of the leisure and hospitality industries – mostly museums, casinos, and live entertainment – saw wages rise rapidly. The average hourly wage increased by around 4.2% per year between January 2017 and February 2020. Among the main categories, bars saw the fastest growth, with the average hourly wage rising 6.5% per year, followed by restricted-service restaurants at 4.8%. Museums had the slowest prepandemic wage growth with only 2% per year, followed by hotels and motels with 3.4% per year.
Part of this is likely to be due to the significant increase in the effective minimum wage since 2014 based on state and local regulationswhich likely drove up low end wages to raise the overall average. The wage increases also reflected the improvement in the labor market after the long slump after the financial crisis.
The pandemic has derailed all of that. Overall, unsupervised wages fell from $ 14.91 in February 2020 to $ 14.58 in May. Bartender wages fell the most, from $ 16.71 an hour in February to a low of just $ 14.98 in June. Hotel and motel workers saw their wages fall from $ 15.72 an hour in February to $ 14.42 in June. Restaurant workers, especially those at fast food and other limited service establishments, were doing better, but they were all worse off than if there had been no pandemic.
It is noteworthy how quickly things are reversing as the number of cases has fallen and the vaccination rate has skyrocketed. In May, the average non-regulatory hourly wage for leisure and hospitality workers was only 1% higher than would have been expected if wage growth had maintained the pre-pandemic trend, compared to 5% below the late 2020 trend, improvement is something that celebrated as a return to normal and need not be feared.
Furthermore, the recovery is not due to a change in the employment mix. While the most detailed wage data is only available until April, it is clear that the rapid wage increases this year have so far mainly been about bringing employee compensation back to the pre-pandemic trend.
Interestingly, the picture looks very different for managers, who made up around 12% of total employment in the leisure and hospitality industry as of February 2020. Before the pandemic, many of the worst paid workers in America were doing better while their bosses were not. While the Bureau of Labor Statistics does not explicitly track the salary of regulators, it is easy enough to deduce from the average non-supervisory salary figures and the average salary data for all employees. Managers missed the pre-pandemic gains non-supervisory workers were experiencing, with regulator wages largely unchanged since early 2018 at around $ 31.50 an hour.
Once the pandemic broke out, however, managers were less likely to lose their jobs and experience fewer pay cuts than unsupervised employees. As the situation has improved, managers have once again fallen short of their reports, which may explain some of the rhetoric about labor shortages and unemployment benefits.
Write to Matthew C. Klein at firstname.lastname@example.org