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The leisure and hotel industry added 470,000 jobs over the past 12 months, accounting for nearly one-fifth of the nation’s new jobs, according to the Labor Department.
“There are many reasons to be optimistic about this [jobs report]”, said Julia Pollak, chief economist at ZipRecruiter. “Our stock market is off to a really good start, with real wages rising almost all year long, which is creating a wealth effect. “
Retail, transportation and warehousing, and professional and business services (including some technology jobs) have seen little or no job growth over the past year as post-pandemic shifts in consumer habits and rising Federal Reserve interest rates rippled through the economy. Many employers laid off employees or froze hiring.
ZipRecruiter economist Pollack said that while these industries are still cautiously waiting for the Federal Reserve to cut interest rates this year before fully resuming hiring, they appear to be rebounding.
Elsewhere, service-related industries including leisure and hospitality, healthcare and government continued to buck the trend, driving strong growth in other parts of the economy. Some economists believe this spending boom and rising consumer confidence in the economy could boost slow-growing industries.
Americans spend huge sums on vacations, dining out and entertainment. This demand is driving employer hiring, particularly in the leisure and hospitality industry. Since last May, hourly earnings have been beating inflation after years of lagging.
The industry as a whole is hiring far faster than the labor market as a whole.
More than 53,000 new restaurants opened last year, a 10% increase from 2022 and surpassing pre-pandemic levels, according to online review site Yelp. This helps facilitate recruitment across the board for entry-level and management positions.
After years of worker shortages, restaurant owners say it’s finally becoming easier to find staff, easing pressure for pay raises. A huge increase in immigration could also help fill many long-standing vacancies, with 3.3 million immigrants expected to arrive by 2023, according to the Congressional Budget Office.
Brent Frederick owns five restaurants in Minneapolis and St. Paul and hired 40 people last month.
“There’s been a downturn in technology and other industries, and we’ve noticed a lot of people are moving back into the hospitality industry,” he said. “We have a steady influx of available personnel.”
Franco Campilongo, a Bay Area restaurateur, has hired seven new employees in the past few weeks, including servers, cooks and dishwashers. Recent layoffs at technology companies and downtown cafeterias due to work-from-home norms have made it easier to recruit workers, he said.
“When Google and Apple started laying off people, we hired more people,” he said. “We used to have to negotiate — people would say, ‘Facebook will give me $35 an hour’ — but that’s changed now. Now I have a bunch of apps.”
Although hiring in the leisure and hospitality industry is becoming increasingly easier, the industry still has 1.7 million fewer jobs than it would have had in 2015-2019, when the growth trend continued.
“At a time when U.S. household wealth is up 40%, we actually have a huge gap compared to pre-pandemic trends,” said Pollak, an economist at ZipRecruiter. “And these are people who primarily consume leisure and hospitality. So there’s a lot of demand. It’s big and there’s a lot of room for growth.”
The industry is changing, too, with restaurants following customers who are working remotely and moving from cities to suburbs. Twin Cities restaurateur Frederick will open his newest restaurant, Starling, in the Minneapolis suburb of Edina, Minnesota, in a few weeks. This will be his first foray into the suburbs.
“Post-pandemic, a lot of people are working from home, which means they want breakfast, lunch, takeout and happy hour closer to where they live,” Frederick said. “Until now, we had never considered Do anything outside the big cities.”
The shift to the outskirts of towns is expected to drive strong hiring in the hospitality sector this year. Che Fico is one of San Francisco’s top restaurants and recently expanded to Menlo Park. Perry’s Steakhouse & Grille, which has 21 locations nationwide, is heading to Vernon Hills outside Chicago. Old Ebbitt Grill, a Washington, D.C. institution located across from the White House, is opening its first location in Reston, Virginia.
“We call it ‘the sexy sister of suburbia,'” said Jeff Owens, chief financial officer of Clyde’s Restaurant Group, which operates 11 restaurants in the Washington area. (Clyde’s is owned by Graham Holdings, which owned The Washington Post until 2013.)
Last month, Jaime James of Minnesota found a second job as a bartender outside of her day job in health care. The single mother said she hadn’t worked in the service industry in ten years but needed the extra cash. She rented a $2,000-a-month apartment in a building that was safer and cleaner than her previous rat-infested building.
“As a single mother, it’s very difficult to support two people on one income right now,” James said. “The service industry appeals to me because of the potential for immediate cash and tips after every shift.”
But James struggled to find an employer who could accommodate her day-to-day work and child care. She applied for 24 restaurant jobs between November and March but only received two callbacks before landing her current position.
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