What The Latest Labor Statistics May Say About The State Of Restaurants

It's no secret that working in the service industry is tough. But, judging by the latest labor statistics, it might be a tougher scene than ever.

According to recent data released by the U.S. Bureau of Labor Statistics, restaurant hiring slowed by 75% from July to August (via Restaurant Business). Businesses categorized under the Leisure and Hospitality Sector, which includes restaurants, only took on 31,000 new workers in August – a dramatic drop from the 95,000 hired in July, and the 202,000 in August 2021. Now, there are a whopping 600,000 fewer employees working in the service industry than before the pandemic – 5.1% lower in August than just one month prior in July.

The nationwide unemployment rate hit 3.7% in August. That's over 6 million people without a job – the highest rate since February, per Trading Economics. Yet, in the same month, the "labor force participation rate" hit 62.4%: the highest in five months. In California, says CBS, July unemployment dropped to 3.9%, a record low for the state.

Michael Bernick, former director of California's Employment Development Department, is optimistic. Restaurant employment might increase at first, says Bernick, as the current conditions are ideal for prospective workers – but he's unsure about how long the tide will last. "In the more than 40 years that I've been involved, this is one of the best job markets," Bernick commented, in August. "I think, though, it's going to change." Here's what that means for restaurants.

Slower service as workers are stretched thin

Per the BLS report (via Restaurant Business), folks are returning to in-person work. The proportion of people working from home fell from 7.1% to 6.4% in August. Yet, according to Reuters, short-staffing might be the "new normal" for restaurants. Applebee's and IHOP have 90% of the employees they had in 2019, and employers are cutting hours. Many businesses are adapting to consumer preferences toward delivery services, kiosks, and mobile ordering – all of which emerged on a mass scale during the pandemic. But, that also means new job creation is halting. Tony Libardi, co-CEO of Marco's Pizza, says, "We would like to hire and be fully staffed but we're preparing for the inability to do that, permanently."

Unhappy customers cited "long waits" 23% more often and "short staffing" 300% more often in their Yelp! reviews during the first quarter of 2022 than in 2021, reports CNBC. But, Dave Nicholas, a founder of Alexandra Restaurant Partners, says employers need to actively incentivize workers to stick around. "Before, you could hire them as fast as you needed them. These days, that's not the case," Nicholas commented, in July. "Our mission is to be the employer of choice. That comes with benefits we maybe didn't have before." Already, service industry workers may be seeing this idea play out on a nationwide scale: Per "preliminary BLS data," average hourly wages for in-person service industry workers saw an 18% hike in June to $18.42.