The hiring boom showed up in lower-wage hospitality jobs at first — but now, recruiters see a red-hot job market everywhere.
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- Wages have grown by 4.7% in the last year, according to the Bureau of Labor Statistics.
- Leisure and hospitality workers have seen their pay increase by a whopping 14.1% in the past year.
- Even so, it might not be enough to keep low-wage workers in the industry.
If you got a raise this year, you’re not alone. The newest trend of 2021 — alongside quitting your job — is getting paid more.
The latest Bureau of Labor Statistics data release shows that wages rose yet again in December 2021. Hourly wages rose by $0.19, bringing the average hourly earnings for all non-farm payroll workers to $31.31.
But, perhaps most starkly, wages have risen by 4.7% in just the last twelve months — 0.5% higher than economists surveyed by Bloomberg forecasted.
That officially marks 2021 as a year of blockbuster wage growth. It also shows some of the structural changes that the post-vaccine labor market has forced on the economy, as low-wage roles have been the hardest to fill during a historic labor shortage. Daniel Zhao, a senior economist at Glassdoor, told Insider he expects wages to continue to rise in 2022 as hiring remains competitive.
“Wage growth has been on the up and up because of how difficult it has been for employers to hire,” Zhao said. “Just as these labor shortages have continued, especially in lower wage service sectors, employers have had to throw everything in the kitchen sink at candidates to try to get them in the door.
As the chart below shows, year-over-year wage growth has been extraordinarily choppy over the last two years. In April 2021, average hourly earnings “grew” a historically high 8.2% from the previous year, but this was largely a side effect of the disproportionately high number of low-wage workers being furloughed or laid off in the lockdowns of the early pandemic. A year later, wage growth “plummeted” as those base effects reversed themselves.
But in the last few months of 2021, there has been a clear pattern of high year-over-year wage growth between 4.5% and 5%, well above the pre-pandemic trend:
Lower-wage workers have especially benefited from the rapid increase in pay. For instance, hourly earnings for workers in leisure and hospitality grew to $19.57 in December 2021 from $19.41 in November 2021. That’s more than $2 above their December 2020 earnings, when leisure and hospitality workers earned an average of $17.15 an hour.
Overall, leisure and hospitality workers saw their wages grow by 14.1% in the course of just one year — a ripple effect of the Great Resignation that’s shaking up the labor market and causing labor shortages. Anecdotally, raising wages has helped some employers retain and hire workers.
But if wages are on the rise, why do stories of labor shortages and crunches continue?
One reason: While low-wage industries are seeing pay swell, wages are still far below other sectors. The average hourly earnings for all private industry workers was $31.31 in December; in leisure and hospitality it was $19.57, and $22.48 for retail trade. Both of those industries are still the lowest-paying sector, even as they notch big increases
Economist Heidi Shierholz previously noted that some wage gains are essentially how much pay would have risen if there were no pandemic, therefore not amounting to too much of a real change.
Indeed, in November 2021 a record-breaking 1 million leisure and hospitality workers quit their jobs. Hiring remained robust, suggesting that low-wage workers were switching into higher-paying professions, as wages rose across the economy.
The lingering question is how much these new structural forces — quitting and wage growth — will continue into the new year, as America heads into its second year of the pandemic. There’s no way of knowing, especially as the impact of the Omicron variant on the economy is still relatively unclear.
“I think that we likely will see wage growth moderate in 2022, but I expect it to still be fairly high,” Zhao said. He added: “I believe it will continue to be difficult for employers to hire in 2022, just like we’ve seen in 2021.”
Read the original article on Business Insider