Some Low-Wage Workers Are Staying Ahead of Inflation

Higher costs for goods and services have eroded the pay raises many workers got during the pandemic, but here’s some good news: People in some of America’s lowest-paying jobs are actually staying ahead of inflation because of their bigger paychecks.   

No industry has seen a bigger percentage jump in hourly pay than leisure and hospitality, where workers are paid less on average than those in nearly any other type of job. The average hourly wage for hotel and restaurant workers and others in the sector jumped to $17.56 this March from $15.28 in March 2021, a 14.9% increase.

And those workers are still somewhat ahead of where they were before the pandemic, even though inflation, running at 8.5% in March, has completely wiped out the average wage gain when measured across all industries. As the chart below shows, inflation-adjusted pay in the leisure and hospitality industry was 4.91% higher than in February 2020, just before the pandemic hit.

The leisure and hospitality industry accounts for about 12% of private sector, nonfarm jobs. The average hourly wage for these jobs is 35% less than the national average of $27.06 for all private jobs. By comparison, workers in retail make $19.41 per hour on average. 

“If you look at the service sector workers, who we typically would be most concerned about in a rising inflation environment, their wages have risen the fastest across the economy,” said Michael D. Farren, a research fellow at George Mason University’s Mercatus Center. “Higher-educated and white-collar workers—as opposed to those working in the service sector—their wages are not keeping up with inflation as much. For once, the burden is falling on higher-income workers, rather than on lower-income workers.” 

A March report from the Congressional Joint Economic Committee found that workers in the leisure and hospitality industry, which includes employees at performing arts venues, amusement parks, casinos, and tourist attractions in addition to restaurants and hotels, are disproportionately young and without high school or college degrees.

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