August 08, 2019

Restaurants continue to face staffing challenges

The restaurant industry continued to add jobs at a moderate – albeit uneven – pace in recent months. However, that trendline doesn’t tell the full story of labor market dynamics within the industry. To help fill in the gaps, we look to the Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics.

End-of-month job openings in the restaurants-and-accommodations sector* averaged 889,000 during the second quarter of 2019 (on a seasonally-adjusted basis). While this remains extremely elevated in historical terms, it represented a decline of 58,000 from the record-high average of 947,000 job openings during the fourth quarter of 2018. 

Meanwhile, the pace of hiring in the hospitality sector accelerated in recent months. Restaurants and lodging places filled an average of 970,000 jobs each month during the second quarter of 2019, which represented the strongest pace of hiring on record. 

(Note: The ‘hires’ figures represent the total number of additions to the payroll during the month. Net job growth – which for eating and drinking places is usually in the +30,000 to -30,000 range during a typical month – is the difference between total hires and total separations during the month.)

Overall, both hiring and job openings trended upward during the last several years, as would be expected during an economic expansion. However, as the chart below illustrates, the gap between monthly hires and job openings became much smaller than normal starting in 2017.

Then, during the five-month period between September 2018 and January 2019, the number of job openings in the hospitality industry surpassed the number of monthly hires. This was the first time on record that hospitality sector job openings exceeded hires, and it likely represented the apex of the industry’s difficulties finding workers to fill vacancies.

During the last few months, the number of job openings dropped back below the number of monthly hires, which potentially suggests that the industry’s labor challenges are starting to ease somewhat.

As with hires, the number of separations also trended higher in recent years as the economy improved. This is driven by growth in the number of voluntary separations, as people are more likely to quit their jobs when there are other employment opportunities available.

An average of 693,000 employees per month quit their jobs in the hospitality sector during the second quarter of 2019. This represented the highest quarterly level on record. The quit rate – calculated by dividing the number of quits (voluntary separations) by total industry employment – is on pace in 2019 to rise to its highest level since 2006. The high degree of correlation between hospitality sector hires and quits implies that many employees are leaving jobs at one business for another employer within the industry.

The number of layoffs and discharges in the restaurants-and-accommodations sector averaged 198,000 during the second quarter of 2019 (on a seasonally-adjusted basis). As the chart below illustrates, this level has remained generally steady during the nearly 20 years since the JOLTS data series began in 2000. However, the layoff/discharge rate – the number of layoffs/discharges (involuntary separations) divided by total industry employment – is currently on pace to fall to its lowest level on record in 2019. This indicates that employers are making concerted efforts to retain the employees that they have.

For their part, restaurant operators echo the existence of a shallow labor pool. During each of the last 28 months of the National Restaurant Association’s tracking survey, ‘recruiting-and-retaining employees’ was identified as the number-one challenge currently facing restaurant operators’ businesses. 

*Note that the JOLTS figures presented are for the broadly-defined Accommodations and Food Services sector (NAICS 72), because the Bureau of Labor Statistics does not report data for restaurants alone.

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