Dive Brief:

• The latest jobs report from the U.S. Bureau of Labor Statistics shows the foodservice sector experienced the largest net gain of all sectors in January, adding 108,000 jobs last month. But the unemployment rate in the leisure and hospitality industry is 8.2%, roughly more than double the rate of the general economy.
• The jobs report exceeded expectations despite the impact of the omicron COVID-19 variant. Employment growth in the restaurant segment is slightly above December gains (103,000 new jobs) though below November gains (127,000 new jobs). But the foodservice labor pool is still about 8% smaller than it was in February 2020, or the equivalent of nearly 985,000 jobs.
• Prior to the January report, the BLS estimated the gap between pre-pandemic employment was smaller, but significant revisions to previous calculations show the industry is still struggling. Sixty-six percent of small restaurant operators say they can't fill open positions, according to a new survey from Alignable.

Dive Insight:

This staffing trouble has ramped up labor costs and forced restaurants to trim operating hours and menus, putting pressure on bottom lines. 

Sixty-five percent of operators had to reduce their business hours in the past three months because they were short on staff, the National Restaurant Association's State of the Industry 2022 report finds. Another NRA survey estimates 80% of full-service operators and 73% of limited-service operators do not have enough labor to meet customer demand.

"When people working in leisure and hospitality are more than twice as likely to be unemployed, it's hard to argue the economy is thriving. More than 90,000 restaurants have closed during the pandemic, taking hundreds of thousands of jobs with them," Independent Restaurant Coalition Executive Director Erika Polmar said in a statement. 

To aid the industry as labor issues persist, the IRC has called on Congress to refill the Restaurant Revitalization Fund, noting 49% of independent restaurants that didn't receive grants from the fund were forced to lay off workers. Another stimulus round could help operators survive the challenging winter months and could give operators the ability to hire more staff.

Only 14% of small restaurant owners report they are fully recovered, down 18% compared to December, according to Alignable research. Alignable links this decline to the labor crisis, as well as the omicron variant and spiking inflation.

Many restaurants have increased wages to mitigate hiring and retention issues, but the gap between pre-pandemic and current restaurant employment levels persists. Throughout the past year, foodservice wages for all employees rose by 13% according to BLS numbers. In 2021, the average hourly pay for non-supervisory restaurant workers also surpassed $15 for the first time.

Still, workers have stated they're leaving the industry for reasons other than compensation, with some seeking jobs with more flexible hours and less workplace harassment.