American restaurant and hotel workers got a big raise in July. So did everyone else.

Waiter restaurant coronavirus
Restaurant and hotel workers saw wage growth of 9.6% over the last year. Roy Rochlin/Getty Images
  • Average wages grew 4.0% year-over-year in July, much faster than the typical pre-pandemic pace.
  • The leisure and hospitality industry saw 9.6% wage growth since last July.
  • Firms have been raising wages to attract workers in an unusually tight labor market, as the pandemic is keeping many reluctant to return.
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American workers are getting a much-needed raise.

The July jobs report is the latest piece of data showing a booming recovery from last year’s COVID-19 pandemic. The US economy added nearly a million jobs and the unemployment rate fell much more than expected to 5.4%.

The good news doesn’t stop there. Workers are also getting paid more. Average hourly wages for all private sector employees rose 4.0% between July 2020 and July 2021, well above the 2019 average year-over-year growth rate of 3.1% in what was then considered a strong labor market. Not a single sector saw wage growth go in reverse in July. The closest was information workers, who saw just a 0.4% increase in wages over the last year, still technically an increase.

Average hourly wages have bounced around a lot in the COVID-19 era, as the massive job losses last March and April came disproportionately among lower-wage workers in sectors like restaurants and hotels. That caused an artificial spike in wage growth, as the remaining employed workers tended to have higher wages, dragging the average up.

Now that we’re past those strange base effects, the wage growth currently being seen suggests workers being able to demand more pay from their employers:


Wage growth was especially impressive across certain sectors. Leisure and hospitality, which encompasses businesses like restaurants and hotels, had 9.6% wage growth over the previous year.

The finance sector also had healthy wage growth of 6.8% year over year. Notably, Goldman Sachs announced this week that the storied investment bank is raising salaries for junior employees, although that development came after the data was gathered for the July report.


Throughout the pandemic, raising wages has emerged as one solid way to win back workers and ease labor shortages. Simply put, labor is more expensive than it was in 2019, and businesses are responding to that.

For instance, McDonald's CEO Chris Kempczinski said that the chain upping pay has helped ease its difficulty finding new workers (at one point, a location in Florida was paying prospective applicants $US50 ($AU68) simply to show up for an interview).

Businesses have also been increasingly saying exactly how much they pay in an effort to attract workers seeking out higher pay, according to a report from Bloomberg looking at data from analytics Emsi Burning Glass.

Similarly, data from remote and flexible jobs site FlexJobs found that jobhunters were frustrated by the search, with many finding only low-paying jobs. Those jobs might be upping wages to help close the mismatch.

Even President Joe Biden has stressed the importance of raising wages in addressing labor woes. In a CNN town hall, he said the restaurant and tourism industries might be in "a bind for a little while" - unless they pay at least $US15 ($AU20) an hour.

Overall, workers are getting paid more, and it's another sign of the red-hot US economy recovering rapidly from the pandemic.

Have you gotten a raise - or held out for more pay from a new job - due to the labor shortage? Email [email protected] and [email protected] to share your story.