Employment in Full-Service Restaurants Disproportionately Impacted by COVID-19

Few, if any, industries have been harmed by COVID-19 lockdowns as much as Full-Service Restaurants in terms of employment and earnings. With the release of the December Economic Situation Report from the Bureau of Labor Statistics, it is possible to quantify that impact after eight months of the pandemic.

Employment

Between April and November of 2020, employment in this industry was 32% lower than during the same months in 2019.[1] Employment in the U.S. economy, other than Full-Service Restaurants, between April and November 2020 was 7.4% lower than the same months in 2019. Put somewhat differently, although Full-Service Restaurants account for less than 3.7% of U.S. employment, this single industry has accounted for 14.3% of the job losses due to COVID-19 lockdowns. In addition, the preliminary figures for December 2020 indicate that employment in Full-Service Restaurants will be lower than in October and November.

Figure 1 illustrates that some states experienced even larger declines in restaurant employment than the national average. The seven states listed in this figure, California, New York, Illinois, Michigan, Pennsylvania, Connecticut, and New Jersey, and cities and counties within these states, have enacted more restrictions on restaurant dining than other jurisdictions in the U.S. New York has experienced a greater than 50% decline in employment in Full-Service Restaurants between April and November, while California, Michigan, Pennsylvania, and New Jersey experienced a greater than 40% employment decline over the same period.

Figure 1

Figure 1

Figure 2 illustrates the decline in restaurant employment by state and month during 2020. This figure indicates that while the decline in Full-Service Restaurant employment in April was 62% relative to 2019 in most of the U.S., job losses were 84% in New York, 80% in Pennsylvania, and 77% in Michigan. By August 2020 restaurant employment had recovered somewhat, so that in most of the U.S. job losses were less than 20% relative to 2019, while New York (42%), Michigan (40%), and California (36%) continued to experience the largest job losses. As of November 2020, Full-Service Restaurant job losses in most of the U.S. recovered to about 15% relative to 2019, and the highest job losses were in Michigan (40%), New York (36%) and Illinois (34%).

Figure 2

Figure 2

Earnings

Full-Service Restaurant employees are generally paid less than most workers in other industries and sectors. The median earnings of restaurant workers in 2019 was about 39% less than the median earnings in the U.S. overall.[2] In 2019, about 93% of the 5.45 million employees in Full-Service Restaurants worked as food preparers and servers, including 1.18 million cooks and 1.98 million waiters and waitresses. The median earnings of waiters and waitresses was $22,480 per year while the median earnings of cooks was $27,320 in 2019. These relatively low paid workers have experienced some of the greatest job and earnings losses due to COVID-19 lockdowns.

Looking Ahead

Perhaps no industry has been harmed more by COVID-19 lockdowns than Full-Service Restaurants. Restaurant job losses have been about four times larger than in the rest of the U.S. economy. Restaurant workers also have substantially lower earnings than workers in other sectors and industries, even in a healthy economy. As a result, the economic losses from COVID-19 lockdowns have had a disproportionate impact on many workers who live paycheck to paycheck. Finally, the substantial job losses in Full-Service Restaurants, especially in certain cities and states, suggest that many of these restaurants will struggle to survive the decline in demand for their services over the past 10 months.

 

[1] These employment figures are based on the Bureau of Labor Statistics (BLS) Current Employment Statistics survey.
[2] Median earnings in 2019 in all industries was about $39,810 compared to $24,450 in Full-Service Restaurants according to the BLS Occupation Employment Statistics survey.

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Stephen G. Bronars, PhD

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Stephen G. Bronars, PhD

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