Economy

Hospitality industry sees job growth come to a halt, with little hope ahead

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Dilak Dernando places a bet at a roulette table during the reopening of Bellagio hotel-casino, closed since March 16, 2020 as part of steps to slow the spread of the coronavirus disease (COVID-19), in Las Vegas, Nevada, June 4, 2020.
Steve Marcus | Reuters
Key Points
  • Signs of hope for workers in the hard-hit leisure and hospitality field all but disappeared in November, and their prospects for getting rehired grow bleaker by the month.
  • In hospitality, which faced the steepest losses in the spring and remains down by 3.4 million jobs compared with February, November job growth was flat.
  • With sources of government aid drying up at the end of the year, it's likely that consumer spending will decline and more small businesses will close without additional sources of aid. That means there may be fewer employers available for those looking for work in the field.

Signs of hope for workers in the hard-hit leisure and hospitality field all but disappeared in November, and their prospects for getting rehired grow bleaker by the month.

Friday's jobs report showed yet another slowdown in U.S. hiring, with 245,000 new jobs created in the lowest monthly total throughout the labor market recovery that began in May.

In hospitality, which faced the steepest losses in the spring and remains down by 3.4 million jobs compared with February, job growth was relatively flat. With the Covid pandemic surging, positive signs from a summer and fall hiring spree in the sector are harder to find.

Since the spring, there has been a "disproportionately large effect on the leisure and hospitality sector," said Wendy Edelberg, director of The Hamilton Project at the Brookings Institution and former chief economist at the Congressional Budget Office.

Added unemployment benefits and government assistance through the Paycheck Protection Program have helped spur consumer spending and kept small businesses like restaurants afloat, she said, and Bureau of Labor Statistics data show that the industry has recovered nearly 5 million jobs from its April lows.

But with sources of government aid drying up at the end of the year, Edelberg said it's likely that spending will decline and more small businesses will close without additional sources of aid. That means there may be fewer employers available for those looking for work in the field.

Amy Harmon, 37, and her husband both lost their Los Angeles restaurant jobs on the same day in March. She was only a few months into a new job as a sommelier at an Italian restaurant called chi SPACCA, and was close to qualifying for benefits such as a 401(k) for the first time in her hospitality career.

In September, Harmon was called back to an old server job at The Tasting Kitchen near Venice Beach, but was laid off again after five weeks.

"When we found out we were going to shut down again and knowing that there is no foreseeable help on the way, it's absolutely terrifying," she said. Her family had to ask their landlord for relief on rent so that they didn't lose their apartment. Harmon said they are "barely keeping our heads above water" as bills and student loan payments still arrive even though she's out of work.

Her prospects for returning to work seem bleak, Harmon said, because there are so many laid-off workers applying for the few jobs available and she doesn't feel she has the experience to apply for work in other sectors where remote jobs are more readily available.

And she can't count on going back to either restaurant job when dining reopens in L.A., because the positions may not exist any more. The Tasting Kitchen ownership told staff they were "hanging on by a thread" financially before shutting down and sending workers home.

Sources of real-time economic data, which can provide a more current view than government reports that lags by weeks or months, show that harder times may be ahead.

Data from restaurant reservations service OpenTable shows U.S. bookings at their lowest levels since August, down more than 60% compared with 2019. Job search site ZipRecruiter has seen a "remarkable downturn in new job postings in restaurants and hotels" over the 10 days leading up to Friday's jobs report, Julia Pollak, an economist with the firm, said in an interview.

Because the jobs report survey for this month's numbers was conducted from Nov. 8 to 14, a further hospitality downturn may not show up until the December report, released in January.

Bruce Grindy, chief economist at the National Restaurant Association, cited a recent survey conducted by the organization as a warning sign.

"In a survey the Association just fielded, 49% of operators said they expect their staffing levels to decline during the next 3 months. Only 5% expect staffing levels to rise," Grindy said in an email.