Big swings in foodservice employment create challenges
The labor market is tight in Ohio, and nowhere is demand hotter than in the foodservice and hospitality sector.
The COVID-19 pandemic and subsequent recovery have caused great swings in the state’s unemployment rate, with recent trends making labor hard to find.
The unemployment rate in Ohio was just 5.2% in May of 2021, about half the rate of June 2020 and about one-third of the record high unemployment rate of 16.4% in April 2020.
According to the U.S. Bureau of Labor Statistics, Ohio employed 574,800 in the leisure and hospitality industry in February 2020, but the onset of the COVID-19 restrictions caused that number to plummet to 296,4000 in April of 2020. Since that time, employment in the leisure and hospitality industry has gradually increased, rising to 493,200 in June this year. That is an increase of 14% over June 2020.
The June employment numbers for the leisure and hospitality in Ohio represent the biggest year-over-year gain for any economic sector in the state and compare with the overall jobs gain of 3.7% for all non-farm jobs compared with a year ago.
The Bureau of Labor Statistics also reported average weekly wages in Ohio were up substantially from a year ago.
In fact, June weekly wages in Akron were 13.7% higher than in June 2020, while Cleveland wages were up 6.9% and Columbus weekly wages were 9.3% higher, according to the Bureau of Labor Statistics.
Restaurant outlook
The restaurant outlook is a mixed bag, said John Barker, president and CEO of the Ohio Restaurant Association.
“I think that many restaurant companies are doing significantly better,” Barker said. “I’d say most operators who were down 60% or 70%, back in 2020, they are close to their 2019 (sales) levels now, which is terrific.”
COVID-19 social distancing mandates in Ohio were lifted several months ago, and that has resulted in the growth of foot traffic to restaurants, he said.
Still, restaurants face big challenges, he said.
“One issue is that (operators) lost so much money in 2020, and in early 2021, they are still digging out,” he said.
About 20% of restaurants were forced to close because of the pandemic. For the state, the number of restaurants declined from about 23,000 before the pandemic to about 20,000 now.
On the labor front, Barker said that short-staffed operators have been forced to limit hours of operation or close for certain days of the week in order to consolidate their workforce.
Industry outlook
The COVID-19 pandemic was like a Great Depression event for the restaurant industry.
Getting the vaccination rate up is a key to recovery, Barker said, and that includes restaurant staff.
As of mid-July, the number of Ohioans who were fully vaccinated totaled 5.3 million, or 45.86% of the state’s adult population. Ohio ranked 28th out of 50 states in its percentage of population fully vaccinated, according to the Centers for Disease Control and Prevention.
“We strongly encourage our restaurant operators to put incentives in place for their staff being vaccinated,” he said.
While the restaurant business is rallying with the easing of the pandemic, Barker said the workforce issue is longer-term.
“What’s going on in our workforce today is we don’t have enough people working to fill all the jobs across many industries, not just hospitality,” he said.
Manufacturers, retailers, airlines and many other industries are facing labor shortages.
Barkers said the stimulus plans that the government provided during the pandemic kept some workers out of the market. Just paying people to stay home has proven to be disastrous, he said.
“We’re asking our elected officials to really think long and hard about the steps that they’re taking to try to get people to come back to the workforce,” he said. “For example, we have encouraged state and federal government to offer back-to-work bonuses, as opposed to just unemployment (benefits).”
Barker said a change in mindset is needed.
“It’s nice to have somebody send you a check every couple of weeks, and not have to work,” he said.
“That’s not how America has become the greatest nation on Earth. We work hard, we show up on time, we do our work, pay our taxes, and we help everybody do better, so we got to get back to that.”
While the official unemployment rate is relatively low, Barker said there are more people in the workforce that can be hired. Wages are increasing in the restaurant industry, with chains like McDonald’s and White Castle offering $13 to $15 per hour for starting jobs.
Quick serve restaurants such as McDonald’s and Chipotle, chains that rely on a limited workforce, are doing much better than full-service restaurants, he said.
“COVID … has really caused the separation between limited service and full service,” he said.
Some restaurants have slimmed down their menus during the pandemic.
Barker said full-service restaurants are going to be careful about how they manage adding to the menu again.
“They just don’t have the staff, plus if you’re constantly changing people in your kitchen, it’s difficult to teach them how to make all the complicated dishes,” he said.
“You might go from where (a restaurant) used to have 120 different dishes down to 50,” he said. “We’ve seen examples of that.”
2022 outlook
Barker said that the profit and loss statements for many restaurants would mostly return to pre-pandemic levels by next year, but those restaurants that really struggled during the pandemic may not see “normal” profits until 2023.
Alex DiNovo, president and chief operating officer for DNO Inc., Columbus, Ohio, said the state of Ohio did stop some of its stimulus payments in June, which had contributed to an increase in job applicants for the company’s openings in fresh-cut processing, drivers and warehouse labors. Still, he said labor remains short.
“I know the restaurants are still suffering (with short staffs), so it is definitely still an issue,” he said.
