Trend / Economy: Where have all the employees in the restaurant and hotel industry gone? | New
Restaurants, hotels and other businesses in St. Helens continue to face challenges in hiring employees. The tight labor market has been in the headlines for months in Columbia County, state and country.
The conversation about the difficulties in filling vacancies has been most acute among restaurants and hotels, the companies hardest hit by COVID-related layoffs. The Oregon Department of Employment’s Quarterly Job Vacancy Survey found that 71% of vacancies in spring 2021 were hard to fill with a particularly high share of those hard-to-fill vacancies for housekeepers. , housekeepers and cooks.
Last spring, the accommodation and food services sector lost nearly 95,000 jobs, or about half of all jobs in the industry. By August 2021, the industry had added about 63% of these lost jobs. However, that leaves the industry timid of picking up about 35,000 jobs. How is it possible for the industry to have difficulty filling vacancies if we are over 30,000 positions from the previous peak?
To answer this question, we followed the cohort of pre-COVID accommodation and food services workers (employed in the industry in Q1 2020) over the past year using salary records. and Unemployment Insurance (UI) claims. If an Oregon company reported wage income for a worker, or if a worker was claiming Oregon UI, that worker would appear in our data. Unfortunately, we don’t know anything about those workers who dropped out of the workforce (retired, back to school, etc.) or moved out of state. Let’s take a look at what happened to workers employed in the industry most affected by COVID one year after the first COVID layoffs.
Before the start of the pandemic, there were 181,712 workers in Oregon whose highest-earning industry was accommodation and food services. Of those, only about 89,800 (~ 49%) were still employed by an accommodation and food service company in Oregon in the spring of 2021, a year later. For some context on what retention looks like in a more typical year, the 2018 Q1 2018 Accommodation and Food Services cohort was examined. A year later, about 62% of that 2018 cohort remained employed in a restaurant or hotel, a significantly higher share than the 49% of the cohort affected by COVID. Where have these workers gone?
Over 20% (approximately 37,000) of the accommodation and food service workers who remained employed in Oregon moved their highest-paying industry to another industry. In other words, at least one in five workers had left the hotel and catering sector for another sector. The largest shares have shifted to retail trade (5.5%); professional and business services (3.0%); health care and social assistance (3.0%); and state or local government (2.3%). The pattern of industry change for these restaurant and hotel workers is not unexpected. These industries had opportunities for people with similar skills, offered higher wages, more consistent work schedules (less season and better hours), and were less affected by the pandemic.
Restaurants and hotels are losing workers to other industries every year, and changes in the industry have increased slightly during the pandemic. In a “typical” year, this industry experiences relatively high churn rates. This is expected as the industry has many entry level jobs for those entering the workforce for the first time. It is also one of the main least remunerative industrial sectors. If we look back at the 2018 cohort of accommodation and food services workers who were not affected by the pandemic, we see that approximately 17.5% of this cohort had changed jobs in an industry. different a year later. The impacts of the pandemic have resulted in an increase of about 2.5 percentage points in change in the industry, which is significant but also not a dramatic deviation from the previous rate of change in the industry.
That leaves about 30% of that original cohort not reporting wages in Oregon. As of spring 2021, approximately 18,900 (10.4%) of the original pre-COVID cohort were applying for unemployment insurance. The expansion of unemployment insurance through the CARES Act and other federal laws has led a very large proportion of these workers to apply for unemployment insurance. Looking back at the 2018 cohort of accommodation and food services workers, we find that only about 0.5% were on an unemployment insurance claim a year later, a significant difference from the 10 , 4% of this cohort affected by COVID. However, it is important to put the number of workers claiming unemployment insurance into perspective. Nearly twice as many workers moved to a new industry compared to the number of those receiving unemployment insurance benefits for this cohort a year after the start of the pandemic.
These data go up to March 2021; however, expanded UI benefits expired on September 5, 2021. Generic character for restaurants and hotels is what happened to the 10% of workers before the pandemic who were still claiming UI benefits in Canada. first quarter of 2021 when these benefits expired at the end of summer. If we see most of these workers returning to accommodation and food services, the impact on labor supply could be mitigated. However, if a large chunk of those UI workers moved to another industry, it would be a major job crisis for restaurants and hotels.
Around 36,000 workers are still missing (~ 19.8%). These workers no longer appear in wage reports from Oregon establishments or on an Oregon unemployment insurance claim. These are probably people who have left the state or who have dropped out of the workforce. There are many reasons why a person may be excluded from the workforce, including retirement, school, health issues, childcare constraints, discouragement, or a number of additional reasons. This share of unaccounted workers is fairly consistent with what we see in a more typical year. About 19.5% of the 2018 cohort of restaurant and hospitality workers were not claiming a salary or claiming unemployment insurance in Oregon a year later.
A growing share of accommodation and food service workers moving to different industries is a serious concern for an industry that is quickly trying to recoup jobs lost due to the pandemic. It’s too early to answer, but the most critical question right now is: What happened to workers who lost their UI benefits in early September? If many of these workers who were claiming unemployment insurance are re-employed in sectors other than accommodation and food services, the labor shortage for this sector is likely to persist for the foreseeable future.
It is important to note that the industry does not depend exclusively on the existing workforce. Many new entrants to the workforce start in a restaurant or hotel. Recent increases in starting pay and other signing benefits have helped attract young people to the workforce. A reversal of a decades-long decline in youth labor market participation is exactly what the doctor ordered from an industry struggling to fill entry-level jobs.
Damon Runberg is a regional economist with the Oregon Department of Employment. He can be contacted at [email protected] or 541-706-0777.