The US labor market recently took another step: for the first time, the average wage in restaurants and supermarkets exceeded $ 15 an hour. Wages have increased rapidly as the economy reopens, and businesses are struggling to hire enough workers. Some of the biggest gains have gone to workers in some of the lowest paid industries.
Overall, nearly 80% of American workers now earn at least $ 15 an hour, up from 60% in 2014. Job boards and recruiting companies say many job seekers won’t consider even more jobs that pay less than $ 15. For years, low-wage workers have struggled to earn at least that much. Now it has effectively become the new baseline.
As competition for workers intensifies, large employers are taking notice and increasing starting wages. CVS said it will increase the starting salary from $ 11 to $ 15 by next summer, joining other big employers like Target, Best Buy, Costco and Disney. When major employers increase their wages, it pushes smaller competitors in the region to follow suit, researchers from Brandeis and Princeton recently found. The overall effect has been one of the fastest periods of wage increases since the early 1980s for grassroots workers and a marked increase from pre-pandemic trends. This higher salary is likely to be permanent, as salaries rarely drop once they rise.
Economists warn that a higher average wage is not the same as a minimum wage of $ 15. Half of the workers in these industries still earn less than $ 15 an hour. Nonetheless, rising wages are still a game-changer for millions of workers.
“It wouldn’t be fair to call $ 15 an hour the new minimum, but I think it’s a flagship salary. It’s a base salary that people are comparing offers to,” said Nick Bunker, Director of Economic Research at Indeed Hiring Lab.
Some cities and states have also increased their minimum wages, although most are phasing it in and no state is still over $ 15. The federal minimum wage is still $ 7.25 an hour.
Restaurants, bars, retailers, cleaners and other services have had to lay off millions of workers during the pandemic. As they try to grow quickly, employers are struggling to get workers back unless they raise wages and offer other new benefits. Many laid-off workers have had a “big re-evaluation” of what they want to do in their careers, and the extra unemployment benefits have given them a financial cushion to look for something different.
The average hourly wage of non-managers in all industries is $ 25.83, up 7.8% since the start of the pandemic. It is growing faster than normal, but continues to increase at less than half the speed of a few lower-paid industries, where compensation has skyrocketed. The average salary of non-executives in the hotel sector has increased by 10.5% since the start of the pandemic. Retail trade is up 9.7%.
At Boomers Parks, a chain of amusement parks in California, Florida and New Jersey, many jobs are now paid at or near $ 15 an hour. Yet it has been a challenge to fill all of their positions this summer. In their New Jersey water park, only about 75% of the rides were open because despite the increase in wages, they couldn’t find enough lifeguards.
Last summer, entry-level jobs at the New Jersey site were paying $ 10 an hour. This summer, they pay $ 14 plus an additional retention premium of $ 1 or $ 1.50 per hour more if workers stay all summer. Retention incentives have helped, said Boomers Parks general manager Tim Murphy, but the company has been surprised by the number of workers who just don’t show up.
“In the past, when you paid more, you got better people,” Murphy said. “Now you pay more and you don’t have as many people physically coming to work.”
Of the 150 applications presented at a recent career fair, half did not bother to complete the application. Another 30 were hired and did not show up on day one, Murphy said. Some of their best successes this summer have been hiring workers as young as 15 who were more enthusiastic.
Before the pandemic, the average non-executive restaurant worker earned $ 13.86 an hour. In June, the most recent month for which data from the Ministry of Labor is available, it had skyrocketed to $ 15.31, an increase of more than 10%. Supermarket workers just crossed the $ 15 threshold in June – their wages have risen 7% since the start of the pandemic, to $ 15.04 an hour.
Other new entrants to the $ 15 an hour club include butchers and seafood markets, office supply stores, liquor stores, parking lot attendants, daycare services, services janitorial services and care for the elderly or disabled. There are only a few industries that pay even less than $ 15 an hour, and some of them are seeing skyrocketing wage growth – convenience store workers got a 16.9% raise during the pandemic, at an average of $ 13.16, and cafeteria and buffet staff saw an increase of 16.8% to $ 14.08 per hour.