The February jobs report remains hotter than expected, with 311,000 jobs added on the month. The unemployment ticked up slightly to 3.6%, from January’s 3.4%, though the leisure and hospitality sector gained a robust 105,000 jobs – more than any other industry.
The Bureau of Labor Statistics report shows that food and drinking places specifically gained 70,000 on the month, while accommodation was up by 14,000. This is compared to 128,000 total in the sector in January, or 99,000 food and drinking establishment jobs and nearly 15,000 accommodation jobs.
By comparison, professional and business services increased by 45,000, while healthcare added 44,000 jobs in February.
The leisure and hospitality’s labor flow the past two months has far outpaced previous months, indicating a shift in the workforce as other categories, like technology and retail, experience some losses. In December, for instance, eating and drinking places added just over 26,000 jobs, while the sector added 59,400 jobs in November and just over 36,000 in October.
The category overall remains well below its pre-pandemic employment level by 410,000 people, or 2.4%. But it’s moving in the right direction. In January, for instance, the category was down by nearly 500,000 jobs versus pre-pandemic levels, or nearly 3%.
That said, while clear progress has been made, operators remain challenged by labor shortages. According to the National Restaurant Association’s recently released State of the Industry report, 89% of restaurant operators say recruitment and retention are “significant challenges.” Further, 62% of operators say they can’t support demand with their current staffing levels, while 67% say their restaurant is more than 10% below necessary staffing levels. A little over a quarter are currently more than 20% below needed levels.
Nearly 90% of operators say they’re likely to hire more employees during the next six to 12 months, though 35% believe that recruitment and retention is going to be even harder this year. Part of the challenge is higher labor costs; 86% of restaurant operators say total labor costs were higher in 2022 than they were in 2019. Indeed, labor outlays were up 18.3% in that timeframe, so a restaurant with annual sales of $900,00 paid $297,000 on labor in 2019 and $351,351 in 2022.
Still, the National Restaurant Association projects and increase of 500,000 jobs in the industry this year. The industry is also projected to add an average of 150,000 per year with total staffing levels reaching 16.5 million by 2030, from the 15.5 million projected at the end of this year. This is compared to the 12.2 million workers at the end of 2020 from Covid-induced layoffs and furloughs.
Contact Alicia Kelso at Alicia.Ke[email protected]