Leisure and hospitality workers who stay in their jobs are seeing wage growth that exceeds that of job-jumpers.
This according to a quarterly report from payroll service provider ADP called Today at Work.
When it comes to wage growth since the pandemic, leisure and hospitality workers are winners, the report concluded.
That’s not terribly surprising, given the hospitality industry was among those hit hardest by the Covid-related shutdowns, with more than 8.2 million jobs lost in 2020. But employment in the sector has not only climbed back to pre-pandemic levels, it is also a standout industry in terms of wage growth.
Base wages within the hospitality industry are typically at the bottom of the pay scale. But since November 2018, wages for industry new hires have jumped more than 38%, according to the report.
By November 2023, the median wage for new hires within leisure and hospitality was $15 per hour. In terms of wage growth, that’s second only to trade and transportation.
Once Covid eased its grip, demand for restaurant workers, in particular, soared and new hires were able to command wage premiums over existing workers. And, in 2021 and 2022, workers who left their old job for something new often saw bigger wage increases.
But in 2022, ADP said those wage trends flipped the script.
In December that year, workers in leisure and hospitality who stayed in their jobs started to see larger pay gains than new hires.
In September of this year, for example, job-stayers’ year-over-year pay levels were up 4.6%, compared to a 3.3% increase for job-changers, the report found.
The explanation: Employers are working harder not only to recruit new workers but to retain them, boosting pay levels for experienced employees.
According to the report, the leisure and hospitality sector was the only industry to claim double-digit annual pay gains for job-stayers between November 2021 and February 2023.
For tipped workers at full-service restaurants, meanwhile, wage growth has come mostly from increases in base pay, rather than tips.
Looking at data from close to 100,000 hourly workers at full-service restaurants across 50 states, ADP found that the median base pay for workers in September 2024 was almost $24 per hour, up from $18.60 an hour before the pandemic, a 28% increase.
The pandemic significantly reduced tipping, which forced employers in tip credit states to increase base pay to meet minimum wage obligations, the report said. As a result, over the past four years, base wages have grown faster than tipped wages, and those increases in base pay stuck.
Wage growth for tipped workers was elevated during the labor-starved 2022 recovery year, but as demand for labor cooled in 2023, the wage gains were “baked in,” the report said.
As of September, base wages made up 43% of restaurant worker pay, up from 35%. Tips as a share of wages were 57%, down from 67% at their peak in September 2021.
That’s due in part to regional efforts to eliminate the tip credit or increase the subminimum wage. Chicago, for example, has begun phasing out the tip credit.
ADP found that sit-down restaurant workers in Chicago saw wages increase 49% between January 2020 and September 2024, driven by a more than 100% increase in median base pay, from $5.21 to $11.02 per hour, the largest growth of any city.
Median tipped wages increased 37% during the same period.
States like California, where the minimum wage for fast-food workers increased to $20 per hour in April, also likely contributed to median base pay increases.
And wages for restaurant workers will continue to go up in 2025. Next year, 23 states are set to increase the minimum wage, ranging from 25 cents an hour in Montana to up $2.15 per hour in Michigan.
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