May 2018 US Jobs Report: Foodservice Adding Jobs But Wage Growth Slowing

May 2018 US Jobs Report: Foodservice Adding Jobs But Wage Growth Slowing

The May 2018 US jobs report revealed that wage growth is slowing down in the foodservice and hospitality sector and now sits 40% lower than the private-sector average. Below, we take a further look at where employment and wages stand as of May 2018, along with how they’ll shape the industry and impact restaurant companies, investors, and operators in the months ahead.

MAY 2018 US RESTAURANT LABOR DATA: EMPLOYMENT

Some 223,000 jobs were created in the US in May, marking seven years and eight months of uninterrupted growth. Average monthly job creation is 207,400 year to date, 14% lower than 2017.

These numbers are largely influenced by the positive figures in the restaurant industry: foodservice & drinking places saw an increase of 17,600 employed persons, 53% higher than the previous month. YTD, however, there’s a deceleration of 40%.

As of May, the leisure & hospitality sector (including arts, entertainment & recreation in combination with accommodation & food services) employed 16.3m people in the country, making it the third largest non-government employer, behind education & health services (23.6m jobs) and professional & business services (20.9m positions).

Leisure & hospitality ranked fourth in job creation in May. A full 21,000 jobs were created in the industry, behind the job creation figures for education & health services, retail trade, professional & business services, and construction. Year to date, the leisure & hospitality industry has created 6% of the new jobs, amounting to 68,000 positions.

MAY 2018 US RESTAURANT LABOR DATA: WAGES

Meanwhile, wage growth continues to be moderate. Average hourly earnings for the private sector increased 2.7% (compared to last May), reaching $26.92. Hourly wages in the leisure & hospitality sector increased slower than the average for the first time since the end of 2015, growing 2.5% in May year over year. Overall, wages in leisure & hospitality are close to 40% lower than the overall average in the private sector.

Since March, the rate of wage increases in the foodservice sector has been decelerating, while wage growth in the private sector has slightly accelerated.

Unemployment and wages are highly related, and the restaurant industry is no exception. As unemployment has consistently decreased over the last five years, this high correlation translated in wage increases of 20% in response to a 43% unemployment decrease.

May 2018 US Restaurant Labor Data

ABOUT AARON ALLEN & ASSOCIATES:

Aaron Allen & Associates is a leading global restaurant industry consultancy specializing in growth strategy, marketing, branding, and commercial due diligence for emerging restaurant chains and prestigious private equity firms. We have helped helped restaurant companies around the world drive revenues, increase profits, and enhance the guest experience through improved marketing, messaging, and menu engineering. Collectively, our clients post more than $100 billion in annual sales, span all six inhabited continents and 100+ countries, with locations totaling tens of thousands.

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