Despite job gains in January, restaurant industry continues to struggle

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Diving brief:

  • The latest employment report from the US Bureau of Labor Statistics shows that the restaurant sector had the largest net gain of any industry in January, adding 108,000 jobs last month. But the unemployment rate in the leisure and hospitality industry is 8.2%, about more than double the rate for the general economy.
  • The employment report exceeded expectations despite the impact of the omicron variant COVID-19. Employment growth in the restaurant segment is slightly higher than December’s gains (103,000 new jobs) but lower than November’s gains (127,000 new jobs). But the restaurant labor pool is still around 8% smaller than it was in February 2020, the equivalent of almost 985,000 jobs.
  • Prior to the January report, the BLS estimated the pre-pandemic employment gap was smaller, but significant revisions previous calculations show that the industry is still struggling. Sixty-six percent of small restaurateurs say they can’t fill vacancies, according to a new Alignable survey.

Overview of the dive:

This staffing issue has driven up labor costs and forced restaurants to reduce hours and menus, putting pressure on bottom lines.

Sixty-five percent of operators have had to reduce their hours of operation in the past three months due to staff shortages, National Restaurant Association 2022 State of the Industry Report find. Another NRA investigation estimates that 80% of full-service operators and 73% of limited-service operators do not have enough manpower to meet customer demand.

“When people working in leisure and hospitality are more than twice as likely to be unemployed, it’s hard to say the economy is booming. More than 90,000 restaurants have closed during the pandemic, taking away with them hundreds of thousands of jobs,” the Independent Restaurant Coalition said. executive director Erika Polmar said in a statement.

To help the industry as labor issues persist, the IRC called on Congress to replenish the Restaurant Revitalization Fund, noting that 49% of independent restaurants that did not receive grants from the fund were forced to lay off workers. Another round of stimulus could help operators survive the harsh winter months and could give operators room to hire more staff.

Only 14% of small restaurateurs report having fully recovered, down 18% from December, according to an Alignable study. Alignable links this decline to the labor crisis, as well as the omicron variant and the surge in inflation.

Many restaurants have raised wages to ease hiring and retention issues, but the gap between pre-pandemic and current restaurant employment levels persists. Over the past year, salaries for all food service employees have increased by 13% according to BLS numbers. In 2021, the average hourly wage for non-supervisory restaurant workers also topped $15 for the first time.

Still, workers said they were leaving the industry for reasons other than pay, with some seeking jobs with more flexible hours and less workplace harassment.

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