Tri-County shows wage growth, but inflation threatens to offset gains
New data show wages for food service workers in Greater Peoria have risen sharply in the past year — although workers in most other industries are seeing inflation gobble up more modest wage gains.
Recently released data for the second quarter of the year from the U.S. Bureau of Labor Statistics show Peoria County workers are making about 3.7% more compared to the same time last year. Wage growth in Tazewell County was 2.6%, and in Woodford County, it was only 1.9%.
“Obviously, positive news. We like to see wages increase; that puts more dollars in people's pockets,” said Chris Setti, CEO of the Greater Peoria Economic Development Council. “I think the wage increases that we see here are on par with what we see the in rest of the state (4%), and my guess is if we looked at the national increases, as it would be about on par.”
But while higher wages are good, the challenge is inflation. National inflation for October climbed to 6.2%, the largest year-over-year increase in nearly three decades. Setti admits rising inflation may offset the wage gains.
“It very well could. I think it really will depend,” he said. “For lower wage earners, inflation hurts more than higher wage earners, and so it might wipe out some of this. I think it really kind of depends on each individual family, how inflation hits them.
“When we’re talking about wage growth, we’re talking on average. So, that means there are some families where it may have been greater than the numbers we’re seeing, and for others it would be less. Obviously, the impact of inflation will vary. The cost of gasoline doesn't impact you if you can walk to work or work from home, for example — or it doesn't impact you as much I should say.”
The leisure and hospitality sector saw significant wage gains year-to-year across the region, with the food service industry in particular up dramatically — led by Peoria County at 16.6%. Setti said that partly could be attributed to COVID-19 initially taking its economic toll in April-June 2020.
“Obviously, the leisure and hospitality industry was the hardest hit industry during COVID,” he said. “So, it stands to reason that as things return to some sense of normalcy, that they are going to have the largest rebound; they had the largest point from which to rebound.”
Peoria County food service workers saw average weekly wages rise from $331 to $388, according to BLS data. In Tazewell County, the year-to-year wage growth for food service workers was 14% ($308 to $351), while the sector’s growth in Woodford County was 11.2% ($233 to $259).
Looking back to before the pandemic, the percentages for each county were even higher compared to the second quarter of 2019: Peoria County at 20.6%, Tazewell at 15.3%, and Woodford at 19.9%.
“Anecdotally, in talking to a number of restaurant owners around the Peoria area, (we’re) finding that they're doing quite well, that they're seeing relatively full dining rooms,” said Setti. “They're seeing higher ticket prices (and) people are tipping better. I don't know if that is some pent-up spending. People have more money in their pockets, and so that could just be resulting in more discretionary spending.”
One sector that didn’t post significant gains was construction. Peoria County construction workers saw a 2.3% weekly wage decline, from $1,295 to $1,265. Construction wages in Woodford County fell sharply (down 9.9% from $1,314 to $1,184) and Tazewell County only had a modest gain (up 1.5% from $1,137 to $1,154).
“I know that my friends in the construction trades will tell you there's never been a better time, though, to pick up a trade like carpentry or plumbing or electrician because those jobs are in high demand right now,” said Setti, noting supply shortages during the pandemic impacted the industry.
Average weekly wages across all industries from April-June this year were $1,191 in Peoria County, $910 in Tazewell, and $849 in Woodford, and the gains could continue into next year. Last week, the Conference Board’s Salary Increase Budget Survey estimated an average 3.9% raise in salaries across the U.S. in 2022, which would be the largest one-year increase since 2008.
As a whole, Peoria County’s leisure and hospitality sector saw 9.3% wage growth in the second quarter of 2021. Other areas with large gains were professional and business services (8.9%), education and health services (8.1%), and manufacturing (7.8%).
Leisure and hospitality (14.9%) and education and health (12.7%) also saw significant gains in Tazewell County, while manufacturing (18.4%) posted the highest growth figure in Woodford County. Setti said he expects the third- and fourth-quarter wage reports to show similar upward trends, particularly with worker shortages forcing some employers to pay more.
“I think that the labor market will fix itself,” he said. “I do kind of tend to believe that these sorts of bubbles and bursts and oddities in labor markets, like any market, tend to correct over time. That may be the adjustment of employers to higher compensation, and it may be an adjustment of the employees to understand what's being offered and what their options are.
“And we won't be talking this time next year about a lack of workers. I do think we've had a bit of a fundamental reset in the way people think about work, which will be interesting to see how it plays out. I think we had a maybe a large group of older workers who simply decided not to go back in the workforce, and that has kind of a trickle-down impact.”