Children play inside the LEGO castle inside the lobby of the LEGOLAND New York Hotel during its grand opening at the LEGOLAND Resort on August 06, 2021 in Goshen, New York.
Michael Loccisano/Getty ImagesHiring in the leisure and hospitality industry accelerated in September, but still fell short of pre-pandemic levels as labor shortages and Delta variant fears stalled recruitment efforts.
The sector added 74,000 jobs in September, the Labor Department reported Friday, bringing the total number of employees in the sector to 15.3 million. That figure is still 1.6 million less than in February 2020, a 9.4% decline.
Hospitality and leisure was one of the hardest-hit sectors at the onset of the pandemic, seeing jobs plummet in March 2020 to a 10-year low of 8.6 million, according to the Bureau of Labor Statistics.
The industry recouped some of its major losses as the economy reopened, but growth flatlined in recent months partially due to concerns over the Delta variant, said David Sherwyn, professor of hospitality human resources at Cornell University. Sherwyn expected these concerns to abate as soon as the country turns the page on the pandemic, but was concerned about the industry’s struggle to attract job applicants.
“The big problem is more the question of Is there a structural abandonment of hospitality jobs?” he said.
Although hospitality and leisure companies have created jobs, they aren’t getting candidates through the door, Sherwyn said. For employees struggling with access to childcare or with lingering fears about contracting Covid-19, taking low-paying, people-facing jobs may not be an appealing option, Sherwyn said.
Moreover, hospitality workers have significantly benefitted from the extended unemployment paychecks awarded during the pandemic, said RBC Capital Markets Chief Economist Tom Porcelli. Porcelli calculated that industry employees made 25% more than their standard wage on average collecting unemployment benefits. The industry’s weekly average earning in September was $496.49, according to the Labor Department.
Regardless, Porcelli isn’t taking too much stock in the numbers themselves. Historically, September has been a month where hospitality jobs get shedded as the summer high season winds down. The jobs report usually takes this into consideration, but Porcelli suggested this year’s calculations may have been off.
“None of these industries are following classic seasonal hiring and firing patterns,” he said.
Hiring across all sectors slowed in September, casting doubt on the Federal Reserve’s plans to normalize monetary policy. Employers added 194,000 jobs that month, far below the 479,000 economists polled by FactSet predicted. For Porcelli, this disjunction points to a larger problem with the BLS’s report.
The markets seemed relatively unfazed by Friday’s reports. The Dow Jones Industrial Average has risen 41.26 points, or 0.1%, while the S&P 500 has advanced 0.2%. Invesco’s Dynamic Leisure and Entertainment ETF was up 0.4% within the last 5 days, gaining almost 0.2% today.
Darren Schuringa, CEO of ASYMmetric ETFs, had a less optimistic outlook. For him, the jobs report pointed to an overall decline in consumer discretionary spending as the Fed scales back on stimulus spending.
“I think a lot of the easy money’s been made, and now it’s the wait and see money,” he said.
Write to Sabrina Escobar at sabrina.escobar@barrons.com
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Hospitality and Leisure Jobs Still Lagging as Industry Struggles to Attract Workers - Barron's
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