For first time, average pay for supermarket and restaurant workers tops $15 an hour

(WAPO) - $15 an hour is suddenly the rule, not the exception, for U.S. workers. It’s a major shift from pre-pandemic norms.

For first time, average pay for supermarket and restaurant workers tops $15 an hour

The U.S. labor market hit a new milestone recently: For the first time, average pay in restaurants and supermarkets climbed above $15 an hour. Wages have been rising rapidly as the economy reopens and businesses struggle to hire enough workers. Some of the biggest gains have gone to workers in some of the lowest-paying industries.

Overall, nearly 80 percent of U.S. workers now earn at least $15 an hour, up from 60 percent in 2014. Job sites and recruiting firms say many job seekers won’t even consider jobs that pay less than $15 anymore. For years, low-paid workers fought to make at least that much. Now it has effectively become the new baseline.

As competition for workers heats up, large employers are taking notice and bumping up starting pay. CVS said it will increase starting pay from $11 to $15 by next summer, joining other large employers like Target, Best Buy, Costco and Disney. When major employers raise their wages, it pushes smaller competitors in the area to follow suit, Brandeis and Princeton researchers recently found. The overall effect has been one of the fastest periods of rising wages since the early 1980s for rank-and-file workers and a clear spike from pre-pandemic trends. This higher pay is likely to be permanent as wages rarely fall once they move up.

Economists caution that a higher average wage is not the same as a $15 minimum wage. Half of workers in these industries are still making below $15 an hour. Nonetheless, rising pay is still a game-changer for millions of workers.

“It wouldn’t be fair to call $15 an hour the new minimum, but I think it’s a guiding star wage. It’s a baseline wage that folks compare offers to,” said Nick Bunker, the economic research director at Indeed Hiring Lab.

For nearly a decade, the “Fight for $15” movement has pushed companies and governments to hike pay, and it has cemented the $15 level in the minds of many workers. Some cities and states have raised their minimum wage, though most are phasing in gradually and no state is above $15 yet. The federal minimum wage is still $7.25 an hour.

Restaurants, bars, retailers, cleaners and other services had to lay off millions of workers during the pandemic. As they try to scale up quickly, employers are finding it hard to bring workers back unless they raise pay and offer other new benefits. Many laid off workers had a “great reassessment” of what they want to do in their careers, and the additional unemployment payments gave them a financial cushion to search for something different.

The average hourly wage for non-managers across all industries is $25.83, up 7.8 percent since the pandemic began. It’s growing faster than normal, but still increasing at less than half the speed of a few lower-paid industries, where compensation has skyrocketed. Average pay for non-managers in the hospitality sector is up 10.5 percent since the pandemic began. Retail is up 9.7 percent.

At Boomers Parks, an amusement park chain with locations in California, Florida and New Jersey, many of the jobs now pay $15 an hour or close to it. Still, it’s been a challenge to fill all of their positions this summer. At their water park in New Jersey, only about 75 percent of the rides were open because despite raising pay, they could not find enough life guards.

Last summer, entry-level jobs at the New Jersey location were paying $10 an hour. This summer they pay $14 plus an additional retention bonus of $1 or $1.50 an hour more if workers stay the entire summer. The retention incentives have helped, said Boomers Parks chief executive Tim Murphy, but the company has been surprised by how many workers simply don’t show up.

“In the past, when you paid more, you get better quality people,” said Murphy. “Now you pay more and you don’t get that many folks who are physically coming in to work.”

Before the pandemic, the average nonmanagerial restaurant worker earned $13.86 an hour. By June, the most recent month for which Labor Department data is available, that had skyrocketed to $15.31, a more than 10 percent increase. Supermarket workers just crossed the $15 threshold in June — their pay is up 7 percent since the pandemic began, to $15.04 an hour.

Other fresh entrants in the $15-an-hour club include butchers and seafood markets, office supply stories, liquor stores, parking-lot attendants, day-care services, janitorial services, and care for the elderly or disabled. There are only a few industries that still pay less than $15 an hour, and some of them are seeing blistering wage growth — convenience-store workers got a 16.9 percent raise during the pandemic, to an average of $13.16, and cafeteria and buffet staff saw a 16.8 percent boost to $14.08 an hour.

Workers are noticing. When companies make those announcements, more job seekers look at the jobs ads for those companies.

Out of 150 applications at a recent job fair, half didn’t bother to finish the application. Another 30 were hired and then didn’t show up for their first day, Murphy said. Some of their best success this summer has been hiring workers as young as 15 years old who have been more eager.