Service-sector pay surge outpaces AI-driven office wage stagnation

Wage growth in service industries like leisure and hospitality is outpacing that of white-collar workers, with bartenders and baristas earning significant raises that exceed inflation. Meanwhile, entry-level professionals in sectors such as finance and technology are facing stagnant wages and uncertain career advancement opportunities. A Bankrate analysis reveals that wages in leisure and hospitality have increased by nearly 30% since 2021, outpacing inflation by more than 4% [1]. Health care workers have also seen substantial wage growth, with salaries rising around 25% in the past four years. In contrast, workers in professional and business services, finance, and education have not seen comparable wage gains relative to the rising cost of living. Teachers, for example, are earning wages that lag behind inflation by nearly 5% [1].

The shift in wage growth is reshaping the labor market, particularly for younger workers. Gen Z graduates entering the workforce are encountering a reality where their non-degree peers in hospitality and service sectors are earning more substantial raises. This trend highlights a broader reallocation of economic opportunities, with young workers in service roles experiencing more robust wage growth than their counterparts in white-collar jobs [1]. While entry-level tech positions still offer higher hourly wages—averaging $19.57 in the U.S. compared to $16 for baristas—the purchasing power of white-collar workers has been eroded due to inflation. Over the past four years, real wage gains for white-collar workers have not kept pace with the rising cost of living, leading to a growing disparity in earning potential between service and office jobs [1].

The impact of artificial intelligence is a key factor contributing to the stagnation in white-collar wage growth. Major tech firms like Meta and Amazon have announced hiring pauses in AI-related divisions, signaling a shift in investment and employment strategies [1]. Amazon CEO Andy Jassy has stated that AI is expected to deliver efficiency gains, potentially leading to job cuts in white-collar roles. The slowdown in hiring and promotion rates across professional services has created a "frozen" job market for many young professionals, particularly in tech and finance. Promotion rates in the U.S. have fallen from a peak of 14.6% in May 2022 to 10.3% in May 2025, reflecting a broader trend of reduced mobility in white-collar sectors [1].

In contrast, the demand for service workers has surged, especially in industries like health care and hospitality. These sectors have seen strong job growth and wage increases as post-pandemic recovery has driven demand for in-person services. The leisure and hospitality sector, for instance, has accounted for a large share of private-sector job growth in recent months [1]. While the hourly wages in these industries remain lower than those in white-collar jobs, the overall trajectory of wage growth has allowed service workers to outpace inflation and improve their financial outlook. The growing wage gap between white-collar and blue-collar workers is reshaping perceptions of career paths, with younger workers considering the earning potential of service roles more seriously.

Economic analysts attribute the wage trends to labor market imbalances and the shifting impact of AI on employment. Sectors with higher demand for in-person services have seen stronger wage growth due to tighter labor markets, while white-collar industries are experiencing a surplus of qualified workers and reduced hiring activity. This dynamic has led to a reversal of wage compression patterns, with the lowest-income workers experiencing slower wage growth as the post-pandemic labor market tightens. The broader economic implications of these trends include shifting consumer spending patterns and potential political consequences, particularly in regions with high concentrations of service-sector employment [1].

Source: [1] AI is gutting office jobs—now bartenders and baristas ... (https://fortune.com/2025/08/21/ai-office-jobs-white-collar-work-blue-collar-making-more-money/)