Leisure and hospitality pay surged during COVID. Now?
Don't read any further. You'll just get depressed.
The good news is all those price increases you sucked up during the pandemic well...they're not going away. Enjoy!
I'm not being negative. This is as cheerful as I get.
For years, the pay packets of America’s leisure and hospitality workers grew at a less-than-stellar pace, falling behind the wider economy. The end of the pandemic changed this dynamic dramatically. American consumers emerged from lockdown with some $2 trillion in excess savings, leaving restaurants, bars, and hotels scrambling to keep up with the spending shift from stuff to stuff-to-do.
The good: To entice workers, service industry employers hiked salaries. That meant, for the first sustained period in recent memory, the wages of leisure & hospitality services employees climbed faster than wages in the wider economy. According to data from the Federal Reserve Bank of Atlanta, median wages in the sector rose some 7.2% in the 12 months to Jan 2023.
The bad: The pay surge seems to be fading, with the latest data showing a 5.8% increase in the last 12 months, in line with other industries.
The ugly: This data doesn’t account for inflation, which hit ~9% year-on-year in June 2022, and has likely wiped out much, if not all, of the post-pandemic wage gains for services workers.
The point: As wage growth slows, lower-income consumers might begin to pull back on their spending, which has been a bedrock of the American economic recovery until now.