Restaurant Hiring Rebounded in July, but Job Openings and Labor Market Cooled Significantly

Dr. Chad Moutray

There were 795,000 accommodation and foodservices job openings in July, down from a revised 816,000 in June. Overall, job postings in the accommodation and foodservices sector have cooled notably over the past year and a half, with the overall level normalizing dramatically from post-pandemic record highs. Over the last three months, job openings in the sector have averaged 786,000. This was lower than the average seen in the 2017–2019 period (835,000). As such, job openings in the sector have dropped below pre-pandemic levels.

Meanwhile, accommodation and food services businesses hired 782,000 workers in July, bouncing back from 626,000 in June, which was a post-pandemic low. (Excluding the pandemic, June’s reading was the weakest since November 2012.) At the same time, there were 787,000 total separations in the sector in July, up from 706,000 in June, which was a level not seen since October 2020. In sum, labor market activity in the sector remained challenged in July, with net hiring (or hires minus separations) of -5,000 for the month.
In the larger economy, nonfarm business job openings declined from 7,910,000 in June to 7,673,000 in July, the lowest since January 2021. At the same time, there were 7,163,000 unemployed individuals reported in July.  Therefore, for every 100 job openings in the U.S. economy, there were 93.3 unemployed workers.
While there continued to be significantly more job openings than people actively looking for work (roughly 500,000), that gap has narrowed significantly over the past year and a half, approaching a 1-to-1 ratio. In contrast, it was nearly a 2-to-1 ratio in December 2022, or 51.8 unemployed workers for every 100 job openings, with a gap of nearly 4.7 million more job openings people looking for employment.
Meanwhile, the number of accommodation and food services quits ticked up from 551,000 in June, the fewest since September 2020, to 573,000 in July. Despite the uptick, the number of quits in the sector has been decelerating, with the averages for 2022 and 2023 being 787,000 and 704,000, respectively. This is a sign that churn in the labor market has ebbed notably in the past couple of years. In fact, quits are now well below the pre-pandemic average of 633,000 seen in the 2017 to 2019 period. At the same time, nonfarm payroll quits increased from 3,214,00 to 3,277,000, but with total quits just below but not far from the pre-pandemic average of 3,339,000.

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