Who conducted this employment research?

Research conducted by the MyEyze finance Desk.

November 30, 2025 at 21:36

BLS Proves It: A Few Service Sectors Drive Most Private-Sector Pay Increases

Authored by MyEyze Finance Desk

Breaking it down: a decomposition of the 2024 gain in private-sector average hourly earnings by major industry sector" analyzes how industry shifts drove a $1.37 increase in private-sector earnings, peaking amid post-COVID recovery effects.

At A Glance

A new BLS decomposition of the 2024 $1.37 rise in average hourly earnings shows that a handful of service industries — led by leisure & hospitality — punched far above their weight, while goods-producing sectors lagged.

What the Review Is Actually About

The November 2025 Monthly Labor Review article by Michael McCall and Lindsay Walk performs a precise decomposition of the 2024 over-the-year change in total private average hourly earnings ($1.37) by major industry sector. Using the standard shift-share identity that isolates within-industry wage growth while holding employment shares constant, the authors quantify exactly how much each sector contributed to the aggregate gain and compare those contributions to each sector’s employment weight.

The Key Finding

The central result is starkly uneven: service-providing industries (84.8 % of private jobs) delivered 87.6 % ($1.20) of the total $1.37 gain, while goods-producing industries (15.2 % of jobs) contributed only 12.4 % ($0.17). Within services, leisure & hospitality stands out as the single biggest over-contributor, delivering 16.1 % of the national gain despite employing just 10.1 % of private workers.

Deep Dive: Industry Contributions Table

Industry Sector	Employment Share (%)	Earnings Change ($/hr)	Contribution to Total ($/hr)	% of Total $1.37 Gain
Total Private	100.0	1.37	1.37	100.0
Goods-Producing	15.2	1.12	0.17	12.4
Service-Providing	84.8	1.41	1.20	87.6
• Leisure & Hospitality	10.1	2.15	0.22	16.1
• Professional & Business Services	14.2	1.55	0.22	16.1
• Trade, Transportation & Utilities	19.8	1.22	0.24	17.5
• Education & Health Services	15.4	1.34	0.21	15.3
• Manufacturing	9.7	1.05	0.10	7.3
• Financial Activities	5.9	1.67	0.10	7.3
• Information	2.3	1.89	0.04	2.9

The Shift-Share Identity: How BLS Did This

The BLS used a simple trick called the “shift-share identity.” They froze employment shares at 2023 levels and asked: “If no one had changed jobs last year, how much would the national average wage have gone up just from pay rises inside each industry?” The answer is exactly the $1.37 we see in the headlines — proving the entire increase came from real pay rises, not from people moving to better-paying sectors.

What the Numbers Actually Mean

In 2024, the average hourly pay for all private-sector workers in the U.S. rose by $1.37 compared to 2023 — that is the headline number you see in the news. But when the BLS opened the hood, they found the increase was not evenly spread. Restaurants, hotels, and bars (leisure & hospitality) gave their workers huge raises (an extra $2.15 per hour on average) and were responsible for 16 cents of every extra dollar earned nationwide, even though they employ only one in ten private-sector workers. Meanwhile, factories and construction sites gave much smaller raises (around $1.05–$1.12) and together contributed just 17 cents of the total $1.37. In short: almost all of the wage growth came from a few service industries, even though they are not the biggest employers.

Why Leisure & Hospitality Led the Wage Surge: Post-COVID Recovery Effects

The outsized contribution of leisure and hospitality to the 2024 wage growth is strongly linked to ongoing post-COVID recovery dynamics. After severe closures and labor shortages during the pandemic, these sectors have been forced to raise wages aggressively to attract and retain workers. This reopening and recovery effect explains why leisure and hospitality workers saw a $2.15 per hour increase—significantly higher than most other industries.

The report highlights that these elevated wage gains are part of temporary labor market imbalances as consumer demand rebounds and businesses race to fill open positions. This structural disruption skews aggregate wage averages upward, meaning the headline 4.9% nominal private-sector hourly earnings growth rate represents what many workers experience, particularly in goods-producing sectors.

While these pandemic-driven effects are beginning to moderate, the labor-market tightness in these service sectors remains a key driver of wage growth and inflationary pressures heading into 2025. Investors, companies, and policymakers should view aggregate wage growth through the lens of these underlying sectoral dynamics to gauge how persistent and broad-based future pay increases might be.

Implications for 2025 and Beyond

This pattern is very likely to continue. If restaurants and hotels keep struggling to hire staff, they will keep pushing wages up — and that will make the overall “average wage growth” number look stronger than what most factory or office workers actually experience. For investors and companies, it means:

(1) consumer-facing service businesses (travel, dining, staffing firms) will face higher labor costs and may raise prices.

(2) manufacturing and goods companies will have calmer wage bills and less need to increase prices.

(3) when the Federal Reserve looks at “overall wage growth” to decide interest rates, the number can be misleadingly high because it is being pulled up by just a few hot sectors.

In everyday terms: your server or bartender probably got a nice raise in 2024 and will again in 2025; the person building cars or appliances probably did not — and that split will keep shaping inflation, interest rates, and company profits.

“Leisure and hospitality… contributed 16.1 percent of the total gain despite representing only 10.1 percent of private employment.”
“Manufacturing added just 7.3 percent of the total gain while holding 9.7 percent of jobs.”
“Service-providing industries accounted for 87.6 percent of the $1.37 gain.”

Bottom Line

U.S. private wage growth in 2024 (and likely 2025) is overwhelmingly driven by a small group of service industries. Investors who overweight those winners and underweight goods-producing laggards will be best positioned for the wage and inflation environment ahead.

Source: U.S. Bureau of Labor Statistics, Monthly Labor Review, November 2025

Disclaimer

This content was created with formatting and assistance from AI-powered generative tools. While we strive for accuracy, this content may contain errors or omissions and should be independently verified. "The final editorial review and oversight were conducted by humans.