April 03, 2020

Restaurant job losses in March were the largest in history – for now

The restaurant industry experienced its largest one-month employment decline on record in March. Eating and drinking places – which employ nearly 80 percent of the total 15.6 million restaurant and foodservice workforce – lost a net 417,000 jobs in March on a seasonally-adjusted basis, according to preliminary data from the Bureau of Labor Statistics (BLS). This was more than six times larger than the previous record decline of 67,000 jobs in October 2000.

Looking inside the numbers, it was somewhat of a surprise that the restaurant industry registered such significant job losses in the March report, which is based on the payroll period that includes March 12. If an employee worked only one hour during that payroll period, they would be counted as employed. The surge in unemployment claims of nearly 10 million during the last two weeks didn’t occur until after the March 12 payroll period, which led many to believe that the coronavirus-related employment impact wouldn’t show up until April. 

As a result, it is likely that the net job losses in March stemmed more from a reduction in hiring than a sharp increase in layoffs. Restaurant operators likely saw the approaching economic uncertainty associated with coronavirus, and a lot of planned hiring activities ground to a halt.

In a typical month, the restaurant industry both adds and subtracts more than 750,000 jobs, with the difference between the two representing net job growth. During the six months prior to March, eating and drinking places averaged net job growth of nearly 36,000 per month. If hiring slowed significantly in March, it wouldn’t even take an uptick in layoffs to see a net decline of 417,000 jobs.

While a monthly drop of 417,000 jobs is truly astounding in historical terms, it is only a fraction of the restaurant job losses that will be reported in April. When the April employment report is released by BLS on May 8, eating and drinking place job losses are expected to number in the millions. A single-month employment decline of more than 1 million has never happened for the overall U.S. economy in the post-World War II era – let alone a single industry. Both records will most certainly fall in April.

Read more analysis and commentary from the Association's chief economist Bruce Grindy.