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National Restaurant Association - Economist's Notebook: Hospitality employee turnover rose slightly in 2013

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Economist's Notebook: Hospitality employee turnover rose slightly in 2013

The National Restaurant Association's Chief Economist Bruce Grindy looks at the latest trends in employee turnover.  The turnover rate for employees in the restaurants-and-accommodations sector was 62.6 percent in 2013, compared to a 42.2 percent turnover rate in the overall private sector.  Restaurant employee turnover is higher than the private sector due to several factors, including higher proportions of students and part-year employees in the industry workforce.

Employee turnover in the restaurants-and-accommodations sector* rose slightly in 2013, according to figures from the Bureau of Labor Statistics’ Job Openings and Labor Turnover (JOLTS) program.

The turnover rate for employees in the restaurants-and-accommodations sector was 62.6 percent in 2013, up slightly from 61.0 percent in 2012.  In comparison, the turnover rate for the overall private sector stood at 42.2 percent in 2013, up from 41.5 percent in 2012. 

Although employee turnover rose for the third consecutive year, it remains relatively low in historical terms.  In 2007, prior to the Great Recession, the turnover rate in the restaurants-and-accommodations sector was 80.9 percent.  This was on par with the previous five years (2002-2006), when the annual turnover rate averaged 80 percent.

Most sectors of the economy saw their turnover rates decline during the challenging economic environment of 2008 – 2010, as workers were less likely to quit their current jobs with fewer other employment opportunities available.  Turnover in the restaurants-and-accommodations sector has risen six percentage points since its low of 56.6 percent in 2010, while overall private sector turnover is up less than two percentage points during that period.

The JOLTS program breaks turnover into three components, with the sum of the parts representing the overall turnover rate.  The quits rate was 41.9 percent in 2013, while the layoffs-and-discharges rate was 17.8 percent.  Other separations, which include retirements, transfers, deaths, and separations due to disability, comprised 3 percent of the turnover rate in 2013.

Restaurant industry turnover tends to be higher than overall private sector turnover for a number of reasons.  First, the restaurant industry employs a high proportion of students, who typically don’t work on a full-year schedule.  Twenty-eight percent of eating and drinking place employees are enrolled in school, versus just 11 percent of the total U.S. employed labor force, according to the U.S. Census Bureau’s 2012 American Community Survey (ACS). 

The restaurant industry also boosts seasonal staffing levels at various points throughout the year, which adds to the normal cyclical turnover numbers.  For example, the restaurant industry is one of the economy’s largest creators of seasonal jobs during the summer months, adding more than 400,000 jobs during an average summer season. 

Overall, nearly 31 percent of the eating and drinking place workforce are part-year employees, compared to 19 percent of the total U.S. workforce, according to the ACS.  

Full-year employees also contribute to the industry’s comparatively higher turnover rate, as upward mobility in the restaurant industry often happens when employees move from one restaurant to another.  More than any other industry in the economy, the existence of multiple restaurants in nearly every community gives employees additional opportunities for upward mobility and career growth.

Read more from the Economist’s Notebook and get additional analysis of restaurant industry trends on to Restaurant TrendMapper (subscription required).

*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.

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