Restaurants and bars lost a nominal number of jobs in January

The U.S. economy added 353,000 jobs in January as hiring accelerated and far exceeded expectations of 180,000. According to the U.S. Bureau of Labor Statistics’ jobs report released Friday morning, the unemployment rate remains at a steady 3.7%.

The hospitality sector added 11,000 jobs during January, however restaurants and bars specifically lost 2,400 jobs. This marked just the third time in nearly two years the industry lost jobs on the month, though it still employs 12.3 million positions. The other two downturns were October 2023, with 2,000 jobs lost, and August 2023, with 9,300 jobs lost. Otherwise, restaurant employment finished 2023 with nearly 300,000 added jobs – well above 2019’s increase of 246,000 jobs in the industry. Eating and drinking places are currently over 30,000 jobs above their February 2020 employment peak.

Though overall restaurant employment has surpassed pre-pandemic hires, the industry’s workforce has more room to grow. According to a recent survey from the National Restaurant Association, 88% of operators said they are likely to hire additional employees in the next six-to-12 months, while 62% of operators said they’re “very likely” to expand payrolls. This bullishness extends to both limited-service and full-service operators.

According to the latest BLS report, wage growth is up 4.5% year-over-year, which far exceeds the overall inflation rate of 3.4%. Those higher wages have been cited for driving strong sales in the industry despite stubbornly high menu prices. The new year brought increased minimum wages to 22 states, impacting an estimated 9.9 million workers. Still, about 20 states continue to adhere to the federal minimum wage of $7.25 per hour.

Wage growth is likely to be a bigger part of the conversation this year as California’s AB 1228 is set to go into effect April 1. The bill raises the minimum wage for quick-service workers to $20 an hour, from the state’s current minimum wage of $15.50. Though written explicitly for QSRs, it is expected to intensify competition over workers across the restaurant industry and other sectors. Several brands are making adjustments ahead of the wage hike. Denny’s is among them; during the ICR Conference last month, CEO Kelli Valade said the company is rolling out a new “digital modernization program” to unlock menu opportunities and efficiencies.

“We believe the pursuit of additional efficiencies through our ongoing programs and technology will be critical as we anticipate higher wage impacts, especially related to California,” she said.

Contact Alicia Kelso at [email protected]