This week the Bureau of Labor Statistics released unemployment numbers for December 2020. The overall unemployment rate stayed the same at 6.7%, but underlying numbers tell a grim story about the future of the restaurant industry.
Leisure and Hospitality have been hit the hardest of all industries with “employment declining by 498,000, with three-quarters of the decrease in food services and drinking places.” That is roughly 372,000 people out of work in what could be labeled as the restaurant industry. Couple these deficits with losses in parallel sectors like amusement, gaming, and recreation or other service-based industries, and the number of casualties for the service industry as a whole, is devastating. For perspective, Education and Government sectors came in a far second with a combined employment loss of 108,000.
There were upticks in employment too. Professional and business services increased along with temp service jobs. The December BLS numbers also showed a significant surge in the retail trade. “Retail trade added 121,000 jobs in December, with nearly half of the growth occurring in the component of general merchandise stores that includes warehouse clubs and supercenters (+59,000)”. Food and beverage stores also were reported as adding 8,000 jobs.
The BLS report shows that there were gains in Construction, Transportation, Warehousing/Storage, Healthcare Services, Manufacturing, and Wholesale Trade employment. They state that employment changed very little in other major sectors, like mining and information industries.
The depressed numbers for the Leisure and Hospitality sectors don’t come as a surprise to any of us who have been employed in them. Many full service restaurant workers have not worked since the initial shutdown in March. This is not for lack of eagerness to return to work, but a combination of fear, driven by COVID and the perpetual start and stop treadmill that many states have served up to the industry. Workers navigating openings and closings of their workplaces put them in jeopardy of losing unemployment insurance benefits with no promise of continuous employment. For many, taking a risk of going back to work and giving up the unemployment safety net only to lose the job because of another lockdown mandate can be excruciating.
“Today’s report shows that the economy generally continues to recover, but that employment in certain sectors and States remains challenged,” said U.S. Secretary of Labor Eugene Scalia commenting on the BLS report. The Restaurant Law Center shows that six states in particular are the culprits in keeping service workers at home in December. Washington, Minnesota, Michigan, Pennsylvania, New Mexico and Oregon all reverted back to closing indoor dining and allowing restaurants to only provide take-out. Outdoor dining in these states is still allowed, but in most places will be impossible due to winter weather. California and Illinois already had closed down indoor dining. California went even further by shutting down outdoor dining in LA county, throwing many full service restaurants into permanent closure.
One LA county restaurant owner, Angela Mardsen, became an outspoken advocate to reopen restaurants when her video showing the hypocrisy of the mandated outdoor dining ban went viral. Mardsen’s video showed a film industry kraft services dining area that was allowed to operate next to her patio dining she had opened just days before Governor Gavin Newsom mandated outdoor dining to close. Several restaurant owners across the country have defied these mandates by keeping their doors open and some have gone as far as taking their cases to the courts. They are asking for risk assessments and specific data that supports the mandates or otherwise helps owners navigate the COVID risks so they can stay open.
While restaurant owners and civic leaders duke it out, workers are left deciding whether waiting for reopening is actually worth it. As the weeks go on, permanent closures are taking root, diminishing restaurant job prospects. Unemployment benefits are running dry and stimulus is gridlocked, leaving service industry workers to face a new reality. The question on everyone’s mind is “what to do now?”
I wanted a snapshot of what workers were thinking about and took a small poll of 147 restaurant industry workers from across the country. 68% were Front of House tipped workers like servers and bartenders. 13% were kitchen or Back of House workers, and 16% of the workers polled were management.
The poll showed me that most workers were either unsure or not going to keep working in the restaurant industry. Most had said that they are deciding to throw in their aprons and try another line of work. The careers they would move into varied considerably with tech and medical occupations being most popular. 42% of the workers polled said they had already completed an undergraduate degree with only 23% saying they would consider going back to school. The type of education workers said they would entertain was split pretty evenly between Graduate, Undergraduate and Trade School degrees. HR professionals, while understanding that there is a large worker pool waiting to be tapped into, have said that a lack of transferable skills from service industry workers make them more likely to skip over them for workers with industry specific resumes—and were not willing to take chances in hiring those workers without any specific experience related to the job.
Tech and medical jobs may be in restaurant workers’ sights as a new career path, but the hurdle will be education and experience. With the job numbers going up in Big Box stores, Supercenters, Automobile centers and Food and Beverage stores, it is easy to speculate that some restaurant workers are finding homes in these industries by flexing their sales skills and ability to hustle while going back to school to earn the degrees HR managers are looking for. There is a big shift in labor now as workers are being abandoned by the small business models of restaurant work and being pushed, many unwillingly, into lower paying work that requires more hours and perhaps offers the benefits of a traditional career.
When the dust settles from the pandemic, the fear is there will no longer be a restaurant industry to go back to. There certainly has been a record loss of closures. Those that are surviving have changed their service models from full service that requires a lot of labor, to take out or counter service that help owners to navigate the mandated restrictions by employing fewer people.
Whatever the outcome, workers in the service industry understand that after the pandemic, our world is going to look quite different.