For decades, restaurants have been the cornerstone of the American economy. Whether it’s that favorite pizza shop in your hometown or the little ice cream parlor at the neighboring college, restaurants protect our sense of community and our fiscal success. But in a mere year, we lost over a hundred thousand restaurants. Forced to place tables 6 feet away and facing a populace that feared leaving their homes, many restaurants put workers on indefinite leave and shuttered their once bright doors. Now, many Americans walk down previously thriving streets and mourn the losses of the eateries that didn’t survive COVID. Vaccinations mean that Americans are flocking to restaurants to reclaim what they lost over the past 18 months, but that in no way means that the food industry is back up and running at pre-pandemic speed. With the loss of thousands of decades-old restaurants and attractive disincentives for workers to remain at home, the restaurant industry is unlikely to return to pre-pandemic productivity anytime soon. 

   The food industry pre-pandemic was on a fast track to increase employment and revenue. Employing one in ten Americans and boosting sales that represented 4% of the US GDP, an astounding $863 billion, the industry was projected to only grow further in the coming years. When COVID-19 hit, the restaurant industry was especially hard hit. Recently published statistics from the National Restaurant Association show that sales were down $240 billion from the expected levels. Not only were sales down, but employment was also down by 3.1 million from projected estimates. These statistics are incredibly worrying as they indicate a downward trend that will take lots of time to recover from. Consider this: the restaurant industry's employment was expected to rise by 1.6 million from 2019-2029. The loss due in the past 18 months of the pandemic is almost twice the projected employment gains of a ten-year period. Despite a fruitful 2019 fiscal year, the pandemic ravaged the restaurant industry’s economic success and employment numbers. 

   There are numerous reasons behind people choosing to remain at home, two of which are childcare concerns and unemployment benefits. When the pandemic started, schools and daycares closed, forcing many weary parents, especially women, to leave their jobs to care for children. A disproportionate amount of women work in essential services, whether in caretaker positions or industries related to food. The result has been close to 3 million women leaving the workforce. As these industries require workers to appear for work physically, workers in these industries have had to leave their jobs to care for their families and prevent a possible spread of COVID-19 to their households. There is hope that as the spread of coronavirus and schools reopen that workers will return to their jobs. However, should the Delta variant continue to infect people, especially children, parents are unlikely to risk their children’s health to work.

Furthermore, the incentive to return is not very appealing to some workers. The unemployment benefits offered by the government to offset higher rates of unemployment are, in some cases, approximately equivalent to a minimum wage job. For example, in the state of New Jersey, while a full-time minimum wage worker makes $480 every week, someone on unemployment with the additional federal aid can make up to $1,031 per week. Our country is set up so that someone can sit at home without working and still make more money than they did at a minimum wage job. So for some people, being able to stay at home with your kids or go to school while making more than you did at your previous job is very attractive. That is not to say the solution is to strip away the federal aid immediately. Although the number of people on unemployment declined in states that pulled this additional money, these numbers were already on the decline. There is still no clear evidence that removing these benefits decreases unemployment. The pandemic exacerbated problems that existed long before COVID-19 shook the world, but we can’t fault workers for choosing to weigh their options properly before returning to the workforce.

We won’t feel the full effects of the restaurant industry’s slow recovery for at least a few years. Still, current productivity demonstrates a concerning trend that may have damaging effects on America’s economy. It is more difficult for restaurants to invest in physical capital or assets for their locations as food services require actual people to cook, clean, and produce goods for consumption. In a recession, consumers begin to worry, causing a reduction in buying products, forcing many companies to lay off some workers. Previously, the economy was able to recover without a complete return of the workforce because of a premise called “jobless recovery.” Essentially, companies create more efficient methods of production and invest in technology, which helps the economy bounce back. While the restaurant industry may be able to utilize these methods to some degree, humans are essential to the success of restaurants. The food industry can’t use physical capital in the same way as other markets, prompting a significant problem for the restaurant industry. Even as a relative inability to fully apply new innovations emerges, the worry over a possible mass resignation presents a more pressing fear.

   Mass vaccinations have improved the outlook for the restaurant industry, but these gains may be quickly swept away in what is now being called “the Great Resignation.” Essentially, workers reassess their priorities in life and no longer feel fulfilled in their current position or career. Whether it's a terrible boss or a newfound love for the flexibility of remote work, a poll from Monster.com shows 95% of respondents were considering leaving their current job. Support for this premise is buttressed by the June release of the US Bureau of Labor Statistics’ new release stating, “job leavers—that is, unemployed persons who quit or voluntarily left their previous job and began looking for new employment—increased by 164,000 to 942,000 in June”. If this trend continues, the restaurant may not be able to recover to pre-pandemic levels. Alternatively, restaurants may include incentive employees and new hires by offering more benefits and higher wages. The current minimum wage at the federal level for tipped workers is a low $2.13 before tips, and many workers are no longer willing to work for so little. Remote and individual work is becoming more appealing for workers, and offers of free food or drinks upon hiring are doing little to mitigate shortages in many restaurants. 

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Sources

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Vinopal, Courtney. “What Happened When Some GOP-Led States Cut the $300 Unemployment Benefit.” PBS, Public Broadcasting Service, 16 July 2021, www.pbs.org/newshour/economy/what-happened-when-some-gop-led-states-cut-the-300-unemployment-benefit.