Job openings in the hospitality sector topped 500,000 for the seventh consecutive month in July, the first such occurrence since before the Great Recession. While it’s not a full blown labor shortage yet, the gap between monthly hires and job openings is rapidly shrinking, according to the NRA’s chief economist Bruce Grindy.
The job openings rate in the restaurants-and-accommodations sector* remained near a post-recession high in July, according to the latest figures from the Bureau of Labor Statistics’ Job Openings and Labor Turnover (JOLTS) program.
There were 583,000 job openings at restaurants and lodging places on the last business day in July, on a seasonally-adjusted basis. This represented the seventh consecutive month with job openings in excess of a half-million, the first such occurrence in nearly seven years. It was also a jump of more than 100,000 job openings over what was reported at the end of last year.
At the same time, the pace of hiring in the hospitality sector is also the rise. Restaurants and lodging places filled 706,000 positions in July, which marked the third consecutive month in which total hires topped 700,000.
(Note: The ‘hires’ figures represent the total number of additions to the payroll during the month. Net job growth – which for eating and drinking places is in the +30,000 to -30,000 range during a typical month – is the difference between total hires and total separations during the month.)
Overall, both hiring and job openings trended upward during the last few years, as would be expected during an economic recovery. However, growth in the number of hospitality job openings accelerated sharply in recent months, a development that is out of sync with the pace of hiring.
As the chart below illustrates, the gap between monthly hires and job openings is much smaller than normal. In fact, during the last seven months, the average gap between the two indicators is the smallest that it has been since the JOLTS data series began in 2000.
So what does this tell us? While it doesn’t necessarily indicate that the industry is careening toward a full-blown labor shortage, the underlying fundamentals suggest that the labor market is likely tightening.
For their part, restaurant operators certainly appear to have bigger concerns on their plate right now. In the National Restaurant Association’s August 2014 Tracking Survey, only 9 percent of operators said recruiting-and-retaining employees is the number-one challenge currently facing their business. Meanwhile, 29 percent of operators said high food costs were their top concern in August.
In a historical context, the proportion of operators reporting labor availability as their number-one challenge remains well below 2006-2007 levels, when the reading averaged more than 30 percent and consistently topped the list of concerns.
In May, 16 percent of operators said recruiting-and-retaining employees was their top challenge, which represented the highest level since February 2008. This coincided with 674,000 hospitality job openings in May, the highest level on record for the JOLTS data series.
Although the level of concern among restaurant operators tapered off somewhat since May, it would not be surprising if the industry’s labor challenges reemerged in the months ahead.
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*Note that the figures presented are for the broadly-defined Accommodations and Food Services sector (NAICS 72), because the Bureau of Labor Statistics does not report data for restaurants alone.