The lowest-paid U.S. workers are seeing their wages surge faster than any other group of earners

By Hannah Erin Lang

The trend is 'a notable reversal of fortune' for some of the country's lowest-earning workers, researchers say

The lowest-paid workers in the U.S. economy have seen their wages surge in the past four years, outpacing gains for any other group of earners, according to a new report from Economic Policy Institute - but their wages remain "grossly inadequate."

Real wages of the lowest-paid workers grew 12.1% between 2019 and 2023, researchers at the left-leaning think tank found, surging faster than the wages of any other group of earners. That number is adjusted for inflation.

The trend is "a notable reversal of fortune for lower-wage workers in the U.S. labor market," researchers wrote in the report, released Thursday.

Those gains were driven by state-level minimum-wage increases, pandemic-era stimulus payments and a tight labor market, researchers wrote. Wages grew particularly fast for Black men, young workers and working mothers.

Despite the "exceptional" wage increases, the country's lowest-paid workers still don't earn enough to meet most families' basic needs, the report said.

"Low-wage workers are still not paid enough to make ends meet," senior economist Elise Gould said in a statement. "Policy makers need to strengthen labor standards so that workers can lock in the gains made and continue to build on them, even in weaker labor markets."

Is the gap between lower- and higher-paid workers shrinking?

The EPI report is the latest piece of research showing surprising gains for low-wage workers over the course of the pandemic.

A working paper distributed by the National Bureau of Economic Research last year found that the gap between lower- and higher-paid workers grew smaller following the height of the pandemic. That was partly because lower-paid workers switched jobs more often, researchers found, and earned higher wages as a result.

"Labor-market tightness is really what drives these gains," said Annie McGrew, an economist at the University of Massachusetts Amherst and one of the paper's co-authors.

Millions of low-paying jobs disappeared overnight at the outset of the pandemic when hotels, restaurants and other businesses shut down. But as the economy recovered, those industries quickly bounced back, and employers struggled to find enough staff to keep up with demand.

That gave workers more leverage and created competition among employers - which, in turn, helped boost pay, even in notoriously low-paying industries like fast food.

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The labor-market tightness and ensuing wage gains represented "a profound shift in U.S. labor-market conditions," the authors of the NBER paper wrote.

Some sectors with a large share of lower-paying jobs, particularly leisure and hospitality, have continued to add jobs over the last year despite a slowdown in hiring for some other industries.

Even "exceptional" wage gains aren't enough to ensure financial security for the country's lowest-wage workers, the EPI report said. That 12.1% real wage increase over the last several years translated to the lowest-earning 10% of workers making less than $13.52 an hour, or an annual salary of $28,120.

For a family of four, that falls below the federal poverty level.

The research shows that certain low-wage workers - particularly those that switched jobs - are better off than before the COVID-19 pandemic, McGrew said.

"But wages are only one dimension of your well-being," she added. "Even if you're better than you were compared to prepandemic, you might still really be struggling."

-Hannah Erin Lang

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03-23-24 1151ET

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