A few years ago, we struck a nerve by pointing out the substantial share of new jobs in many metros coming from temporary help services. Another low-paying industry is in the news after the positive July jobs report, this time food services and drinking places.
Restaurants, bars, and the other establishments in the food services and drinking places industry added 53,100 seasonally adjusted jobs from June to July, continuing a trend that The Atlantic’s Derek Thompson and Bloomberg View’s Justin Fox did a nice job putting in context.
Golden Age of Restaurants Watch:
— Derek Thompson (@DKThomp) August 4, 2017
Thompson later pointed out on Twitter, “Restaurant jobs, 1% of the economy, accounted for 10% of net jobs created in last 12 months. As much as … health care.” And Fox, in this piece, noted that food services and drinking places in on pace to overtake manufacturing in total employment in three-plus years.
These numbers are striking. But even more wild: the share of new jobs that restaurants and bars account for in major metro areas like Cleveland and Chicago.
From 2015 to 2016, 42% of net new jobs in the Cleveland MSA came from food and drinking places (NAICS 722), a huge share for an industry that accounted for 8% of the metro’s wage-and-salary jobs in 2016. Meanwhile, in Chicago, restaurants and bars made up 22% of new jobs over the same time.*
The restaurant boom has meant even more to other metros. In Hartford, Connecticut, 96% of net new 2015-2016 jobs were in food services and drinking places. In Wichita, Kansas, it was 87%. (Update: Read Thompson’s take on our analysis and other restaurant jobs data.)
* You might wondering what kind of restaurant jobs these are. In Cleveland, full-service restaurants accounted for half of the 2,400 new jobs in food services and drinking places; limited-service restaurants (i.e., fast food) made up the bulk of the rest (806). In Chicago, limited-service and full-service restaurants are evenly split: both added around 4,500 jobs.
Several metros, like Baton Rouge, Louisiana, would have seen overall job loss if it weren’t restaurants and bars. The industry made up 116% of net new jobs the last two years in Baton Rouge—and nearly or over 200% in San Luis Obispo, California (197%), Tuscaloosa, Alabama (202%), Kankakee, Illinois (204%), and Lynchburg, Virginia (208%).
And this trend hasn’t just been playing out the past couple years.
What Restaurants Have Meant to Cities Since 2010
From 2010-2016, no industry has added more jobs than food services and drinking places—nearly 1.95 million. That’s 14% of all new jobs nationally.
In several big metros, the portion of new jobs from restaurants and bars is much higher. More than a third (36%) of New Orleans’ 2010-2016 net job growth came from food and drinking places. About a quarter (24%) of Pittburgh’s new jobs were in restaurants. And in the Washington, D.C. and Cleveland MSAs, it was 23%.
You might expect New Orleans to have an higher-than-average share of new jobs from restaurants because of the draw of the French Quarter and other parts of the city to tourists. Yet only 11% of 2016 jobs in the New Orleans MSA were in food services and drinking places. That’s the same as Las Vegas, where 18% of 2010-2016 new jobs flowed from restaurants and bars.
Notice Cleveland’s inclusion in the 2015-2016 and 2010-2016 lists for share of net new jobs from restaurants. Other metros that have at least 20% of news jobs from restaurants in both time frames include Virginia Beach-Norfolk-Newport News, Bridgeport-Stamford-Norwalk, Birmingham, Wichita, and Little Rock.
What This Means
There are a few things to note here.
First, outside San Francisco, New York, Key West, and a few other expensive-to-live-in MSAs, food and drinking places pays below $30,000 annually per job. Fox noted that some employee tips likely aren’t counted in these employer-reported figures. And it’s those tips (along with not being stuck in an office, or serving tables in addition to an office job) that are a major draw to servers in the restaurant industry.
Second, like most non-traded service industries, restaurants and bars aren’t an anchor industry for a community’s economic development strategy. A vibrant restaurant scene is a great sign for a community, but it’s a result, not the cause, of economic vitality in most cities. (The exception is central and neighborhood business districts, which often heavily recruit restaurants and retail establishments because they rely on tax revenue.)
Third, it may be the golden age for restaurants, but really, it’s a golden age for food as Thompson argues. What happens when the economy slows down and people have less discretionary spending? In the 2008-2009 recession, full-service restaurants lost over 110,000 jobs (-2%). Limited-service restaurants dropped slightly more than 50,000 jobs (-1%).
This should concern planners in cities like Cleveland and Little Rock where a disproportionate portion of post-recession jobs, both since 2010 and 2015, have come in food services and drinking places.
Data for this post comes Emsi’s 2017.3 data set, which includes industry data from the BLS’s QCEW data program and 2016 Occupational Employment Statistics, also from the BLS. Emsi mathematically removes suppressions (non-disclosed employment and wage figures to protect individual businesses) found in government data by integrating data from the BLS with Census Bureau and other data sets.
Job counts are for wage-and-salary employees (not self-employed).