Wage Growth Stalls for Low-Income Workers After Years-Long Boom

After years of rapid wage growth for low-income workers in the United States, a slowdown has set in, The Wall Street Journal reported Monday (Aug. 11).

According to the latest government jobs report, average earnings for workers in the leisure/hospitality space rose 3.5% year over year, to $22.83 per hour, the report said. The average earnings for workers in the information sector increased 5.4%, to $52.61 per hour.

That’s a shift from December 2021, when leisure/hospitality workers — the lowest paid workers in the groups tracked by the Department of Labor — were up 14%, per the report. Meanwhile, well-paid information sector workers saw their wages go up by less than 2% during the same month.

The pandemic played a part in wage growth for low-paid workers, the report said. When the shutdown began, employers cut swaths of workers at hotels, restaurants and retail stores. When those businesses reopened, they had a demand for staff , letting workers in low-wage roles command better pay.

That trend seems to be over. Data from the Federal Reserve Bank of Atlanta showed that wage growth for the lowest-paid quarter of U.S. workers — people earning roughly less than $806 each week — slowed to an annual rate of 3.7% in June.

That’s down from a peak of 7.5% in late 2022, a time of severe post-pandemic labor shortages in industries like hospitality.

Wage growth has also slowed for high-paid workers, although not as much, the central bank found. Wages for the top quarter of U.S. workers — people taking home $1,887 a week — climbed 4.7% in the year to June, and for the overall workforce by 4.3%.

Precarious financial situations continue to be the norm for many U.S. consumers, according to the PYMNTS Intelligence report “ Consumers Say They Want Budgeting Tools but Aren’t Using Them .”

The Paycheck-to-Paycheck Index hit a new high of 68.4% in May, showing 684 out of every 1,000 consumers spending their monthly income on essential payments, with nearly a quarter saying they struggled to pay their bills.

Further PYMNTS Intelligence research showed a gender gap in how paycheck-to-paycheck consumers manage their monthly finances. When asked if they could stop living paycheck to paycheck if their earnings remained flat but their spending changed, nearly a third of men said “absolutely,” while fewer than 20% of women said the same.