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Why the Restaurant Industry Is Paying Its Employees More

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Minimum wage increases mean higher paychecks.


The restaurant industry is notorious for its low paying jobs and lack of benefits, but new data suggests that food service workers' paychecks are on the rise. According to the Wall Street Journal, restaurant employees "received bigger raises last year than workers in most other jobs." Plus, hourly pay has grown 3.1 percent over the last year alone, compared to the two percent growth industry paychecks have seen over the past several years.

Since 2010, restaurants have "hired at a faster pace than the typical company."

The increase is partially due to the fact that many states and cities raised their minimum wage levels in 2014. Seventeen states, including California and New York, all increased their minimum wage last year, even though federal minimum wage has remained $7.25 per hour since 2009. This has had a significant impact on the restaurant industry: The Labor Department reveals that "nearly half of workers earning the minimum wage in 2013 worked in food service."

Americans are also dining out more frequently, which has lead to restaurant owners hiring more front and back of house staff and paying them more. Since 2010, restaurants have "hired at a faster pace than the typical company."
David Smith, a labor economist, tells the WSJ that there's "a lot of demand" for workers in "lower-wage sectors" like the hospitality industry, and that is "causing wages to inch up." Many restaurant owners have also turned to raising hourly rates as a way of decreasing turnover rates and incentivizing workers to stay.

While there may be a noted increase in paychecks for some restaurant workers, many continue to struggle financially. A report released last year revealed that nearly 40 percent of all restaurant employees currently live in poverty. Often those employed by the restaurant industry also do not receive benefits such as health insurance. Fast food workers have been pushing for a $15 per hour minimum wage to help combat these issues by launching several protests and strikes in many cities across the U.S.