The U.S. labor market has picked up in 2024, churning out more jobs per month on average than before the pandemic, and leisure and hospitality job growth is playing a big role.
The March jobs report, to be released Friday morning, is expected to show a continuation of this jobs boom, with economists forecasting 200,000 new jobs and the unemployment rate holding at 3.9 percent.
During the past 12 months, the leisure and hospitality sector has added 470,000 jobs, accounting for nearly 1 in 5 of the country’s new jobs, according to Labor Department data.
“There are lots of reasons to be bullish about this [jobs report],” said Julia Pollak, chief economist at ZipRecruiter. “We’ve had a really great start for the stock market and almost a full year of real wage growth and that’s causing a wealth effect.”
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Over the past year, retail, transportation and warehousing, professional and business services, which includes some tech jobs, saw little or no job gains because of shifts in post-pandemic spending habits and as the Federal Reserve’s interest rate hikes rippled throughout the economy. Many employers laid off employees or froze hiring.
Although these industries are still cautiously waiting for the Fed to cut interest rates this year before they fully resume hiring, they appear to be on the rebound, said Pollak, the ZipRecruiter economist.
Elsewhere, service-related industries, including leisure and hospitality, health care, and government, have continued to buck the trend, fueling the strength in the rest of the economy. Some economists suggest this spending boom — and rising consumer sentiment about the economy — could boost industries with sluggish growth.
Americans are spending big on vacations, dining out, and entertainment. And that demand is driving employers to hire, especially in leisure and hospitality. Hourly wages have been beating inflation since last May after years of falling behind.
Hiring in the overall sector is vastly outpacing the overall labor market.
More than 53,000 restaurants opened last year, up 10 percent from 2022 and exceeding pre-pandemic levels, according to data from online review site Yelp. That’s helped boost hiring across the board, in entry-level positions as well as managerial roles.
Restaurateurs say it is finally becoming easier to find employees, after years of worker shortages, relieving the pressure to raise wages. A major pickup in immigration has also helped fill many long-standing openings, with 3.3 million immigrants arriving in 2023, according to the Congressional Budget Office.
Brent Frederick, who owns five restaurants in Minneapolis and St. Paul, has hired 40 people in the past month.
“There have been pullbacks in tech and other industries, and we’re noticing that a lot of people are landing back in hospitality,” he said. “There’s been influx in the pool of people available to us.”
Franco Campilongo, a restaurateur in the Bay Area, has hired seven new workers, including servers, cooks and dishwashers, in the last few weeks. Recent layoffs at tech firms and downtown cafeterias rocked by work-from-home norms have made it easier to recruit employees, he said.
“When Google and Apple started laying off, we got more people,” he said. “We used to have to negotiate — people would say ‘Facebook gives me $35 an hour’ — but that’s changed. Now I have a stack of applications.”
Even as leisure and hospitality hiring is getting easier, the sector remains 1.7 million jobs short of where it would have been had it continued its 2015-2019 growth trend.
“We actually have a massive gap relative to the pre-pandemic trend at a time when the U.S. household wealth has gone up like 40 percent,” said Pollak, the ZipRecruiter economist. “And it’s those people who mostly consume leisure and hospitality. So there’s plenty of demand, and there’s plenty of room for growth.”
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The industry has also been changing, with restaurants following remote-work customers who moved to suburbs from cities. Frederick, the Twin Cities restaurateur, is a few weeks away from opening his newest restaurant, Starling, in Edina, Minn., a suburb of Minneapolis. It will be his first foray into the suburbs.
“Post-pandemic, a lot of people are working from home, which means they want to get breakfast, lunch, takeout and happy hour closer to where they live,” Frederick said. “It was never on our radar to do anything outside of a major city, until now.”
That shift to the outskirts of town is expected to fuel brisk hiring in hospitality this year. Che Fico, one of San Francisco’s top restaurants, recently expanded to Menlo Park. Perry’s Steakhouse & Grille, which has 21 locations nationwide, is heading to Vernon Hills, outside of Chicago. And Old Ebbitt Grill, a D.C. institution just across from the White House, is opening its first spinoff in Reston, Va.
“We’re calling it our ‘sexy sister in the suburbs,’” said Jeff Owens, chief financial officer at Clyde’s Restaurant Group, which operates 11 Washington-area restaurants. (Clyde’s is owned by Graham Holdings, which owned The Washington Post until 2013.)
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Last month, Jaime James of Minnesota picked up a second job as a bartender on top of her day job in health care. The single mother said she hadn’t worked in the service industry in a decade, she said, but she needed the extra cash. She rents a $2,000-a-month apartment in a safer and cleaner building than her previous mice-infested one.
“As a single mom, it’s very tough to survive right now on one income for two people,” James said. “The service industry appealed to me because of the possibility of immediate cash after every shift with tips.”
But James struggled to find an employer that would schedule her around her day job, as well as child-care needs. She applied for 24 restaurant jobs between November and March and only got two callbacks before she landed her current position.
Source link: https://www.washingtonpost.com/business/2024/04/05/jobs-march-unemployment-rate/