London Daily

Focus on the big picture.
Thursday, Jul 10, 2025

Low-wage workers are getting 'eye-popping' pay raises, Goldman Sachs says

Low-wage workers are getting 'eye-popping' pay raises, Goldman Sachs says

Low-wage workers are making "eye-popping" gains in their paychecks, according to Goldman Sachs.

The bank told clients in a note Thursday that low-wage-worker pay rose 5.3% year-over-year in the second quarter. For the third quarter, the data isn't complete yet, but preliminary readings are on pace for a three-decade high of 6%.

Some industries posted even more significant increases in wages during the second quarter, including a 13% year-over-year spike for leisure and hospitality nonsupervisory workers. Since March, the industry's wages have risen 22%, mostly because emergency unemployment benefits included in the American
Rescue Plan took a larger effect on labor supply at lower wage levels. Skyrocketing wages can also be attributed in part to the rising demand for low-wage workers as the service sector has started recovering following a surge in vaccination, according to the report.

But Goldman Sachs warned that these wage indicators "cannot be taken at face value" because they are being distorted by the pandemic.

Inflation concerns


As the economy has recovered from the Covid crisis, employers have struggled to find workers amid an ongoing labor shortage. To attract employees, many employers have hiked pay.

Low-wage-workers' pay growth drives inflation for for low-skill consumer services, including hotel lodging, dining and dry cleaner services.

But if low-wage-worker pay continues to rise, it will probably contribute to boosting inflation even more, as companies hand customers the bill for their increased overhead. A key measure of inflation, the PCE price index, which tracks consumer spending, was up 4.3% over the 12 months ending in August, marking the fastest increase since January 1991.

Some consumer services have admitted to raised their prices in response to wage pressure. Chipotle (CMG), for example, raised its prices by about 3.5% to 4% in June after it raised employee hourly wages by about $2 to an average of $15.

Although rising wages are a good thing for low-wage workers who have struggled with stagnant compensation while corporate profits have soared, low-wage growth could signal that inflation isn't as transitory as the Fed might like.

But pay raises alone haven't been enough to bring some workers back on the job: Although job gains were looking promising over the summer, the United States only added 235,000 jobs in August, because of the Delta variant.

Continued wage growth could normalize given the end of unemployment benefits, or if there is a better-than-expected growth in the labor force. If wage growth continues to increase and exert upward pressure on inflation though, prices for consumers could continue to rise well into 2022.

Newsletter

Related Articles

0:00
0:00
Close
Severe Heatwave Claims 2,300 Lives Across Europe
NVIDIA Achieves Historic Milestone as First Company Valued at $4 Trillion
Declining Beer Consumption Signals Cultural Shift in Germany
Linda Yaccarino Steps Down as CEO of X After Two Years
US Imposes New Tariffs on Brazilian Exports Amid Political Tensions
Azerbaijan and Armenia are on the brink of a historic peace deal.
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Weinstein Victim’s Lawyer Says MeToo Movement Still Strong
U.S. Enacts Sweeping Tax and Spending Legislation Amid Trade Policy Shifts
Football Mourns as Diogo Jota and Brother André Silva Laid to Rest in Portugal
Labour Expected to Withdraw Support for Special Needs Funding Model
Leaked Audio Reveals Tory Aide Defending DEI Record
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
London Stock Exchange Faces Historic Low in Initial Public Offerings
A new online platform has emerged in the United Kingdom, specifically targeting Muslim men seeking virgin brides
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
Music Banned by Henry VIII to Be Performed After 500 Years
Steve Coogan Says Working Class Is Being ‘Ethnically Cleansed’
Home Office Admits Uncertainty Over Visa Overstayer Numbers
JD Vance Questions Mandelson Over Reform Party’s Rising Popularity
Macron to Receive Windsor Carriage Ride in Royal Gesture
Labour Accused of ‘Hammering’ Scots During First Year in Power
BBC Head of Music Stood Down Amid Bob Vylan Controversy
Corbyn Eyes Hard-Left Challenge to Starmer’s Leadership
London Tube Trains Suspended After Major Fire Erupts Nearby
Richard Kemp: I Felt Safer in Israel Under Attack Than in the UK
Cyclist Says Police Cited Human Rights Act for Riding No-Handed
China’s Central Bank Consults European Peers on Low-Rate Strategies
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Musk Battles to Protect Tesla Amid Trump Policy Threats
Air France-KLM Acquires Majority Stake in Scandinavian Airlines
UK Educators Sound Alarm on Declining Child Literacy
Shein Fined €40 Million in France Over Misleading Discounts
Brazil’s Lula Visits Kirchner During Argentina House Arrest
Trump Scores Legislative Win as House Passes Tax Reform Bill
Keir Starmer Faces Criticism After Rocky First Year in Power
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
×