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Restaurant Hiring Was Rising Before Omicron, but What’s Next?

The leisure and hospitality industries posted solid job growth in December, but it remains to be seen how the fourth wave of COVID-19 will affect consumer demand and labor force participation.

BLS Report Muted Compared to Estimates

Total nonfarm payroll employment rose by 199,000 in December, while the unemployment rate declined to 3.9%, according to the Labor Department’s Bureau of Labor Statistics (BLS).

This figure was down from some economist estimates of 400,000 new jobs, and well below the 807,000 jobs reported by ADP.

The leisure and hospitality category added 53,000 jobs in December, according to BLS, and added 2.6 million jobs overall in 2021. However, BLS noted employment in the industry was still down 1.2 million (-7.2%) when compared to February 2020.

For food services and drinking places, employment rose by 43,000 but remained down 653,000 jobs when compared to pre-pandemic levels.

ADP Reports 807,000 New Jobs

In its own report, ADP said 807,000 new jobs were undertaken in the U.S. nonfarm private sector for the last month of 2021. The company reported a 246,000 rise in leisure and hospitality jobs during the period, and none of the categories tracked by the company in its National Employment Report showcased a decline.

ADP also reported a 39,400 job increase in U.S. franchise employment for December 2021, with restaurants adding 23,900 jobs to the economy. Food retailers shed 200 jobs during the month.

Record Voluntary Separations

These reports were on the heels of a BLS release indicating 4.5 million people had voluntarily left their jobs in November 2021. BLS said this was a series record for quits, and the quits rate at 3.0% matched the high set in September 2021.

Of note for the food industry, BLS said that open positions in the accommodation and food services industries had dropped by 261,000 jobs during the month, as well. Total separations for the categories increased by 130,000.

The number of layoffs and discharges was little changed at 1.4 million, with the rate of those events unchanged at 0.9%.

Unemployment Claims Rise from Pandemic Low

BLS reported that seasonally-adjusted initial unemployment claims reached 207,000 the week ending Jan. 1, rising 7,000 from the previous week’s revised level.

BLS also said the four-week average advance number for seasonally adjusted insured unemployment during the week ending Dec. 25, 2021, was 1,754,000, an increase of 36,000 from the previous week’s revised total. The previous week’s revised total, at 1,798,750, was the lowest since the onset of the COVID-19 pandemic.

Keeping Talent from Leaving

Amid the record separations, many companies were assigning new titles and giving raises to existing talents to help keep them from walking out the door, according to a Wall Street Journal report (Jan. 7).

Some operations are re-hiring employees who left the company in new roles, while others are moving more quickly on pay raise requests that would often be bumped down the line or turned down outright.

“There’s such a war [for] talent right now that it’s a candidate’s market and they’re holding court,” said Tiffany Dyba, a New York-based recruiter and career consultant, to the Journal.

Looking Forward

Many new workers are likely already quarantining at home after catching Covid, and Capital Economics economist Andrew Hunter told The Associated Press roughly 2% of America’s workforce could be stuck at home with the virus in the next week or so.

This could affect January’s numbers, as any workers without sick leave who miss a paycheck are classified by the government as jobless. The AP report also hinted that omicron will weigh heavily on restaurants and bars, with OpenTable data indicating restaurant traffic fell nearly 25% from November levels as of Dec. 30.

That said, TD Securities economist Jim O’Sullivan argued the effects of omicron would likely “be modest and relatively brief.”