Leisure and hospitality workers have emerged as pay winners since the pandemic.

Leisure and hospitality businesses were hit hard by the coronavirus pandemic. As social distancing took hold, restaurants and other high-contact services were forced to rethink their business models while concert halls and other group venues shuttered operations. Over March and April 2020, the sector shed 8.2 million jobs.

The pain was severe, but short-lived. By March 2024, leisure and hospitality employment had climbed back to its pre-pandemic level. In fact, industry workers today stand out as big winners when it comes to wage growth.

Big gains in new-hire wages

Base wages for leisure and hospitality workers typically fall at the bottom of the pay scale. To see how these people have fared since the pandemic, we tracked the base pay of new hires each month, indexing their pay to November 2018.¹

An unusual pay premium for job-stayers

It’s accepted wisdom that workers who change jobs enjoy a pay premium above what they could earn by staying in their current job, and ADP Research data bears that out. When we look at the year-over-year pay gains of job-changers and job-stayers, people who quit their old jobs for something new typically enjoy bigger wage increases than workers who stick with their employers.²

Leisure and hospitality, however, has challenged that rule.

Why does job-stayer wage growth outpace job-changers now? One big reason is that restaurants, hotels, and other employers have been forced to work harder to not only acquire talent, but retain it. As they’ve raised wages for new hires, they also have boosted pay for their current workers. Leisure and hospitality was the only sector that claimed double-digit annual pay gains for job-stayers between November 2021 and February 2023.

The case of California fast food

On April 1, 2024, the hourly minimum wage for workers at many California fast food restaurants (in a state where tip credits are not permitted) rose to $20 from $16. Specifically, the new rule applies to limited-service restaurants that are part of a restaurant chain of at least 60 establishments nationwide, and are primarily engaged in selling food and beverages for immediate consumption. Limited service refers to fast-food and fast-casual eateries where patrons order food at a counter.³

Overnight, the median wage for California’s limited-service restaurant employees jumped above the median wage for all other California leisure and hospitality workers.

While it’s too soon to draw broad conclusions about the impact of California’s new minimum wage law on employment, we know that leisure and hospitality workers, because they are more likely to earn minimum wage or close to it, tend to be most affected by changes in minimum wage.

Labor shortages, employer demand for certain skills, and government efforts to raise pay for low-wage workers have led to higher median pay. But that higher pay translates to higher costs for employers.