Jan 3, 2024 - Food and Drink

New Orleans restaurant wage growth falls after post-pandemic spike

Data: Square; Note: Earnings include base wages, tips and overtime; Chart: Axios Visuals
Data: Square; Note: Earnings include base wages, tips and overtime; Chart: Axios Visuals

Year-over-year wage growth for restaurant workers in the New Orleans metro area rose slightly in October to 3.5%.

  • That's down from a peak of 17.2% in August 2018.
  • The data comes by way of Square's new third-quarter restaurant industry report, and includes base wages, tips and overtime.

The big picture: Nationally, restaurant workers' wage growth has slipped considerably since the end of the COVID-19 pandemic, falling below even pre-pandemic rates.

  • Restaurant workers' wages grew 4.9% year over year nationwide in October 2023.
  • That's slowed from peak growth of 10.5% in December 2021, when the average base wage was $12.60 and average hourly earnings totaled $15.85.

Why it matters: It's a sign that restaurants are no longer quite as desperate for workers as they were during the late pandemic era, when many struggled to replace employees who had left for other industries during the pandemic slowdown.

  • It's also a reflection of inflation's impact on restaurants and consumers alike.

Zoom in: In New Orleans, restaurants have stuttered through an especially difficult year, with closures up and uncertainty high.

Driving the news: Restaurants' costs are up due in part to inflation, while consumers are often loath to pay higher prices because they're also getting hit with higher costs on basically everything in life.

  • Discretionary spending on dining out is often the first thing to go when times get a little tougher — and tips may be shrinking, especially amid a growing sense of "tipping fatigue."

Be smart: Wage growth is best considered alongside inflation — if your wage grows 3% but so does inflation, your wage didn't really grow at all.

Between the lines: Some of what's happening here is also being driven by the fact that most of America's downtowns still haven't fully recovered from the pandemic — meaning there are fewer people visiting bars and restaurants in many cities, and thus fewer bills and tips.

  • "Compared to January 2019, downtown neighborhoods in American cities appear to have flatlined at roughly 72% of their pre-pandemic activity as of the end of September 2023," per Square's report.

Yes, but: Restaurant workers in some cities are thriving, comparatively speaking.

  • Cincinnati, Las Vegas and Jacksonville all saw particularly notable wage growth in October, per Square.
  • Vegas also happens to have more foot traffic now than it did pre-pandemic, per separate research based on mobile device activity — so no doubt revived tourism is driving a relatively healthy restaurant business there as people flock to casinos, Golden Knights games and The Sphere.
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