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Sectoral Unemployment: Accommodation And Food Services

Updated : April 3rd, 2020

unemployment accommodation food services

The latest report from the Department of Labor for the week from March 21-28 is just in. The unemployment claim numbers are at an all-time high for the second week running at 6,648,000 seasonally adjusted initial claims. The labor department reports that most states attribute these numbers to layoffs led by the accommodation and food services sector.

In this post, we take a sectoral overview of accommodation and food services as an employer and see the unemployment scenario from its perspective. The coronavirus-induced economic slowdown has made the futures of thousands of chefs, bartenders, wait staff, baristas, etc. uncertain. Now, all these employees have been made eligible for Unemployment Insurance claims.

Profile Of Accommodation And Food Services Sector

According to the Bureau of Labor Statistics, this sector employed 14 million people in 2018. It showed an average unemployment rate of 5.4% over the last 4 months.

 The top occupations in this sector are waiting or food service, food preparation, and cashiers. The largest number of employees are wait staff, followed by cooks. Employees earn an average hourly wage of $15.87. Many are employed and paid on an hourly basis in this sector.

The working hours’ number a minimum of 25 on average. Cooks may work much longer hours in a week.

COVID-19 Causes Unemployment in Accommodation And Food Services

This sector has reported the highest number of layoffs in the following states:

  • Texas
  • Michigan
  • Illinois
  • New York
  • Indiana
  • Wisconsin 
  • Virginia
  • Iowa
  • Missouri
  • Tennessee
  • Rhode Island
  • Maine
  • Alabama
  • Georgia

The reason for this is the lockdown of hotels, restaurants, pubs, bars, etc. by the US government in light of these places being potential clusters. As this sector depends on very regular cash flow, it doesn’t have the nest egg that bigger conglomerates can gather. The impact of dropping sales is seen very quickly.

In turn, employment in related businesses such as hotel aggregators like Booking.com gets affected. Such businesses survive on commissions from their third party services between customers and providers of accommodation and food services.

The sector’s nature makes remote work impossible, forcing layoffs and furloughs. Americans are clearly following social distancing norms well.

Types Of Jobs Still Available

As you can see in our post on jobs that are still hiring, dining out took a huge hit, but meal delivery services survive and some are thriving. Pizza chains, take-out meal joints, etc. have scaled up hiring to deal with larger order volumes. A few restaurants have switched to offering delivered and take out meals and are thus surviving with the staff getting reduced wages.

The most common job roles will be in food preparation, delivery services, and stocking/inventory work. It will be very difficult to find more specialized and high paying job roles at this point in time.

Projections For The Future

If the coronavirus-triggered shutdowns continue for too long, worldwide recovery for this sector will be difficult. The growth of accommodation and food services as an employment generating sector was fueled in recent years by the general economic growth and the resulting rise in disposable incomes.

With many big employers having global supply chains, the worldwide economic shutdowns in response to coronavirus will cause losses everywhere. Another big driver of the growth of accommodation and food services is tourism which will surely fall due to job losses.

 

The American Hotel and Lodging Association says that the hotel sub-sector alone has had losses of over $5 billion. Making up the amounts to retroactively pay employees still on rolls when the economy revives, will be hard without a quick revival of global trade and supply chains. 

The restaurant industry was facing labor charge pressures, spiraling rent costs and criticism about food wastage even before the pandemic. This is a good opportunity for corrective actions that go beyond merely restarting production and service.

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  1. Cindy,

    Please wait for an update from the office. There will be thousands of applications for the office to be processed. Make sure to check the status at regular intervals.

  2. I have only received two of these payments and I did my application on April 9 through the Pega system. I was later allowed to file for PUA on April 28 and received two $600 payments on 05/04/2020. I have not received any more payments of the $600 and I have been claiming my weeks since April 12th until May 21. Why have I not gotten any more of the FPUC payments since?

    1. Michelle,

      They might be en route. Please wait for a couple of days and reach out to the Unemployment Office accordingly.

  3. I been try to apply an you dont have a page to apply
    Please keep in touch with me .
    Need help.

    Respectfully

    Maria Elena Rojas

    1. Mary,

      Please note this is a private forum and we do not have access to your claim file. Please reach out to the office directly.

  4. I closed my business 03/25/2020 due to covid 19. Is it too late to apply for unemployed benefits? Is it retroactive to the March closure date? We plan to reopen early June.

  5. I want to know what is the Thais on my unemployment benefits and what decisions have been made and why I am still pending.

    I am still waiting on claim information my name is samuel Jones my I would like to know what is the final decision thank you.

    1. Samuel,

      Please note this is a private forum and we do not have access to your claim file. Please wait for an update from the office. There will be thousands of applications for the office to be processed. Make sure to check the status at regular intervals.

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