Restaurant employment sags despite high sales

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Snapshot for April 24, 2002.

Restaurant employment sags despite high sales
 The restaurant industry holds a unique place in the labor market for several important reasons. It employs more people than any other private industry. It has the largest number of low-wage and part-time workers. The restaurant industry also has the largest concentration of new entrants into the labor force and has absorbed more former welfare recipients than any other single industry. Finally, the restaurant industry is also one of the hardest hit industries in the current recession.

Sales and employment in eating and drinking establishments, from peak to March 2002 (seasonally adjusted)

Prior to December 2001, employment and sales basically mirrored one another. As the figure above shows, between July 2001 and March 2002, eating and drinking establishments have shed more than 111,000 jobs (adjusted for seasonal factors). This drop occurred despite the fact that restaurant sales have nearly rebounded over this period, increasing 6.5% since November 2001, and is now just $1.05 billion less than its peak (less than 4%) in August 2001. Both sales and employment have held relatively steady in the first several months of 2002. Employment, however, is up by only 12,000 since its low in October 2001.

Job loss won't be the end of the troubles for the restaurant industry's unemployed. Since low-wage and part-time workers have the most difficulty meeting the requirements to qualify for unemployment insurance, many of these workers will be ineligible for assistance. And former welfare recipients will find it increasingly difficult to find work in an industry that has previously hired one out of every six of them. In short, the recession's toll on restaurant industry employment has a direct impact on low-wage workers. Even after the industry has declared its recovery, there is a good chance that former restaurant workers will be left behind.

This week's Snapshot by EPI research associate Matthew Walters with EPI economist Heather Boushey.

Check out the archive for past Economic Snapshots.