Report: Rising Job Losses Could Affect Hiring

A sluggish job market and ongoing layoffs could bring relief to restaurants and other hourly wage industries struggling to stay fully staffed.

That’s according to a Sunday (Jan. 8) report by Seeking Alpha, citing analysis from Bank of America just two days after the U.S. Bureau of Labor Statistics released its monthly jobs figure, showing the U.S. economy adding 223,000 non-farm jobs in December.

As PYMNTS reported, while this figure was ahead of consensus estimates, it was also lower than the average monthly gain of 375,000 recorded for all of last year. It also marked the fourth consecutive month of declines and the lowest monthly job creation numbers in two years.

Notably, the Leisure and Hospitality sector saw the biggest gains in December, adding 67,000 jobs, including 26,000 in restaurants, the BLS data showed.

“The silver lining of a recession is that costs invariably fall — even when there are supply-related constraints,” wrote BofA equity analyst Sara Senatore. “Labor availability continues to improve. Both benefit operators who bear the costs of running restaurants.”

Her analysis argues growth in job openings in the restaurant peaked in late 2021 and has slowed down since then as employee turnover improves.

“We think pizza is well positioned for increasingly budget-oriented consumers as labor inflation slows,” Senatore said. “The benefits of a slacker labor market should manifest in the compositions (driver availability) and margins (wages) and unit growth (staff) for the system.”

Last year saw the restaurant industry’s ongoing labor challenges leading to an uptick in innovation and investment in automation technologies that can reduce headcount and cost. PYMNTS research found that without this tech, some restaurant operators actually had to turn away would-be customers.

According to the 2022 edition of PYMNTS’ Restaurant Readiness Index, which drew from a survey of more than 500 managers of quick-service and full-service restaurants across the country, 19% of eateries reported turning away customers in the face of labor shortages.

This is happening, as PYMNTS wrote Saturday (Jan. 7), at a time when several trends are roiling labor markets, including the combination of high inflation and wages amid a 50-year low in the unemployment rate, alongside a persistent 10.5 million unfilled jobs — all at a time when many households are struggling to make ends meet.

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