Based on the service industry enterprise data of the second national economic census of China in 2008, this paper analyzes the impact of FDI participation on both labor income share and skill wage premium. The results indicate that foreign enterprises have a higher labor income share. Furthermore, FDI participation within the same industry and region has a positive spillover effect on domestic firms. By introducing the interaction of ownership types and skilled-labor share into the equation, we find that foreign enterprises have a higher skill wage premium. We further examine the spillover effect of foreign participation on the skill wage premium of local market, and find that the entry of foreign firms prompts the local enterprises to improve the wage of skilled employees. Therefore, we should capitalize the optimization effect of foreign participation on income distribution in service industry while taking relevant measures to prevent the widening wage gap.