Serving's up
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 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.
