By Eric Morath and Jeffrey Sparshott
Wall Street Journal, Feb 27, 2015
Wage growth is breaking out in an unexpected corner of the U.S. economy: the nation’s restaurants and bars.
Food-service employment has surged since the recession ended nearly six years ago, growing twice as fast as overall payrolls. But those gains had largely failed to translate into better wages in the sector, until recently. Restaurant wages zoomed up to an annualized pace of more than 3% in the second half of last year from below a 1.5% pace in the first half of 2013, according to the Labor Department. Private-sector wages across the overall economy have grown at about a 2% pace for the past five years.
Many restaurant owners are now scrambling to hire and retain workers, a potential precursor to widespread wage gains if it signals diminished slack in the labor market.
Euclid Hospitality Group in St. Louis, operator of Pi Pizzerias, raised wages last year for kitchen staff and other employees who don’t earn tips in order to slow turnover and attract better candidates. Founder Chris Sommers said he is competing for workers, not just with restaurants, but with other industries.
“I’m seeing a lot more separations where people are leaving for a career in their chosen field—and that is great—but they were also some of my best people,” he said. The company even turned to LinkedIn and other recruiting services to find qualified workers. “We’ve never had to do that before.”
Driving the brisker wage growth are a number of factors, including a higher minimum wage in many states, falling unemployment and stronger demand for meals outside the home, fueled by growing disposable incomes. Other sectors also may be feeling pressure. Big retailers such as Wal-Mart StoresInc. and TJX Cos., the parent company of T.J. Maxx, for example, recently announced raises. ...
Stronger consumer demand, aided in part by falling gasoline prices, has fueled restaurant spending, which was up 11.3% over the past 12 months, more than in any other segment tracked by the government’s monthly retail and food-services report. ...
Food-service pay is also bolstered by 17 states increasing the minimum wage in 2014, including a 12.5% jump in California. Even more states raised pay at the start of this year. Nearly half of minimum-wage workers are employed in food service, according to the Labor Department. ...
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