(What's Left of) Our Economy, CCP Virus, coronavirus, drinking places, food services, Jobs, Manhattan Institute, New York City, private sector, private sector jobs, recession, restaurants, The New York Daily News, wages, Wuhan virus
If you’re interested in New York City and its economy, and how it’s been affected by the CCP Virus, and major changes in the nation’s economy and family life, Howard Husock’s op-ed piece in The New York Daily News last month dealing with all these subjects is a must-read. In fact, it’s so interesting and important that it led me to investigate how the rise of the restaurant sector in the City – his prime focus – has played out nationally.
As shown by the author, a researcher at the Manhattan Institute, the restaurant industry has become nothing less than vital to the city’s economy. The wallop it’s taken from the virus and resulting shutdowns has thrown its full recovery – at least for the foreseeable future – into serious doubt. And therefore its sagging fortunes and seemingly gloomy prospects are strongly influencing the debate over how fast the City should return to business-as-usual.
At least as consequential, Husock argues convincingly that the burgeoning importance of the broad food service industry in recent decades reflects a major New York economic and social trend: Restaurants “can no longer be understood as the luxury it once was but, rather, as both a prerequisite for a successful economic recovery and an indicator that one is underway.”
When I looked into the national data (some of which Husock presents), I found that something like this conclusion is warranted for the country as a whole as well – and that it’s worrisome news at best economically.
Husock’s national data goes way back to the early 20th century, and it looks at the U.S. labor market measured in terms of the types of occupations Americans hold. I’ve looked at the data measuring employment by sector of the economy, and although the restaurant figures only begin with 1990, they picture they draw looks comparable. (RealityChek regulars will note that I’m not using my usual method of comparing economic expansions to economic expansions, or recessions to recessions. My reason: the trends described here seem to hold during all kinds of economies – as I’ll indicate below.)
Chiefly, the numbers make clear that from 1990 to the end of 2019 (just before the virus struck), on a December-to-December basis, total U.S. employment in the private sector grew by 42.58 percent. But in the food services and drinking places category, the increase was 86.48 percent – more than twice as great. In food service businesses alone (excluding bars), the growth was 89.52 percent. That is, the workforces in these sectors, white- and blue-collar employees combined, nearly doubled during this period.
Particularly noteworthy – during the 2000s (which include the 2007-09 Great Recession), total private sector jobs fell by 2.99 percent. For the food service and drinking places, they increased by 14.44 percent, and for eating places alone, by 16.24 percent. So as I just stated, these trends seem to have unfolded during booms and bust alike.
Viewed through another statistical lens, in 1990, food services and drinking places employees represented 7.22 percent of all private sector workers. In December, 2019, this share was 9.44 percent. For eating places alone, the 1990-2019 rise was from 6.44 percent to 8.56 percent.
Also crucial to note: However, increasingly convenient dining or taking out has become for Americans, the rapid relative growth of restaurant-type jobs doesn’t look like a plus for their economy. The main reason? Restaurant industry jobs really do pay poorly.
In December, 2019, the average hourly wage in the private sector was $28.37 before adjusting for inflation. For food services and drinking places in toto, it was $15.34 (not much more than half the private sector average) and for eating places alone, only $15.09.
The only real bright spot in this picture: wages in restaurant-type jobs have been rising faster lately than those for the private sector overall. The data here only date from 2006, but during the 2010-2019 period examined above, on a December-to-December basis, pre-inflation-dollar hourly wages in the private sector advanced by 24.65 percent. For all food service and drinking places, the improvement was 32.12 percent, and for eating places, 31.68 percent.
So the wages gap is closing, but not dramatically.
Precisely because the U.S. workforce was steadily turning into Restaurant Nation until the CCP Virus arrived, as with the New York City economy (though not quite so heavily), the entire economy’s return to a pre-virus normal will depend on financing that will enable a critical mass of this sector to survive. But someone needs to ask whether whether Restaurant Nation is a healthy and sustainable structure for the national economy over the longer haul