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Above-average wage growth in the leisure and hospitality industry

The COVID-19 pandemic greatly reduced employment in the leisure and hospitality industry, at both the state level and nationally. The recovery in leisure and hospitality was uneven at the regional level; and, at the time of this writing, it hasn’t matched the bounce-back in overall employment. At the same time, wage growth in leisure and hospitality has surpassed overall wage growth.

The FRED graph above shows data on monthly median wage growth, averaged over the preceding 12 months, reported by the Atlanta Fed. The dashed black line applies to all types of economic activities, and the solid red line applies to the leisure and hospitality industry alone. Between December 1997 (when data are first available) and July 2021, labor earnings growth in leisure and hospitality occupations was almost always lower than the all-occupations benchmark. Since then, workers providing arts, entertainment, recreation, accommodation, and food services have recorded higher wage growth than the average worker.

Is a shortage of leisure and hospitality workers driving up those wages? Perhaps, although evidence from other sectors contradicts that straightforward explanation. For example, employment in trade, transportation, and utilities services fully recovered from the past recession ahead of overall employment; and labor earnings growth for those workers is also above average. Manufacturing employment and wage growth data tell a similar story. In short, other factors might be at play here.

To learn more about the labor market landscape in the leisure and hospitality industry, read this March 2023 “Macro Minute” by John O’Trakoun at the Richmond Fed. Notice that you could replicate all the graphs shown in that publication using data in FRED.

How this graph was created: Search FRED for and select “12-Month Moving Average of Unweighted Median Hourly Wage Growth: Overall.” Next, click on the “Edit Graph” button and use the “Add Line” tab to search for and add “12-Month Moving Average of Unweighted Median Hourly Wage Growth: Industry: Leisure and Hospitality and Other Services.” Last, use the “Format” tab to customize the color and style of the graph lines.

Suggested by Sean McQuade and Diego Mendez-Carbajo.

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