The Federal Reserve Bank of Cleveland published an Economic Commentary by Daniell R. Carroll and Christopher J. Walker analysing wage compression after Covid-19 and finding that below-median-wage workers saw the largest pay increases when switching jobs into industries that rely heavily on low-wage labour, especially leisure and hospitality and trade and transportation, with similar results for manufacturing. Pay gains for workers earning less than the US median wage were relatively large when changing employers in those industries, and even larger when moving into them from other industries. In mid 2022, earnings for these workers were growing roughly 4 percentage points faster than for similar workers who stayed in their jobs and 2 percentage points faster than for those who switched jobs without changing industries. High-wage workers received a smaller pay boost from moving into the same industries and the boost arrived later, as wage growth accelerated in late 2021 when demand for labour increased and firms competed for a limited pool of workers.
Federal Reserve Bank of Cleveland 2025-04-21
Federal Reserve Bank of Cleveland research finds low-wage workers saw the biggest post-pandemic pay gains by switching into leisure and hospitality, trade and transportation, and manufacturing
The Federal Reserve Bank of Cleveland's Economic Commentary by Daniell R. Carroll and Christopher J. Walker highlights significant wage compression post-Covid-19. Below-median-wage workers saw the largest pay increases when switching to industries like leisure, hospitality, trade, and transportation, with earnings growing 4 percentage points faster than peers who stayed and 2 percentage points faster than those who switched jobs without changing industries. High-wage workers experienced smaller and delayed pay boosts in these sectors as wage growth accelerated in late 2021.