The past six months haven’t exactly been smooth sailing in the US, at least politically-speaking. Since President Trump took office in January 2017, the nation’s capital hasn’t witnessed any major economic policy changes, like tax reform or healthcare. Yet economic conditions remain optimistic — particularly for US restaurant operators, who rely on strong jobs and wage reports. In fact, business appears to be booming, with restaurant jobs growing faster than those in the health care, construction, or manufacturing sectors.
So far, 2017 US restaurant labor data signals a positive future for restaurant operators. US job growth surged in July, with the economy adding 209,000 jobs, the unemployment rate ticking down to 4.3% (compared with 4.4 % in June), and wages rising by 2.5% from the year prior.
As it isn’t always easy to extrapolate (or even pull together) the most important reports concerning labor data affecting restaurants, we did it here, and we’ll be updating it each month moving forward. Below, we take a further look at where employment and wages stand as of July 2017, along with how they’ll shape the industry and impact restaurant companies in the months ahead:
The nonfarm payroll report, released each month by the US Bureau of Labor Statistics, is a major tool used to determine the overall health of the economy. The total nonfarm payroll (i.e. any job with the exception of farm work, unincorporated self-employment, the military and intelligence agencies) accounts for approximately 80% of the workers who produce the entire gross domestic product (GDP) of the United States.
In July 2017, non-farm payrolls in the US totaled 146,615,000 (1.5% above July 2016), growing uninterruptedly for the previous six years and ten months. The restaurant industry contributes a large portion of US jobs to the non-farm payroll, and it is also quite a dynamic sector. In fact, since 2011, the average employment growth at restaurants and bars has grown at least 50% faster than the rate of growth in all non-farm payroll. In other words, restaurant jobs have grown faster than the overall economy every single month over the past seven years.
Employment in Food Services and Drinking Places (FS&DP) stood at 11,759,000 persons in July 2017, 2.7% above the same month of the year before — growing almost twice as fast as overall non-farm employment (1.8 times as fast, to be exact). FS&DP employment has been growing uninterruptedly for 5 years and two months. As of July 2017, 8% of nonfarm payrolls are generated by FS&DP.
Overall, July 2017 saw 209,000 new non-farm jobs created, 13% higher than the average of the year overall, so far. Some 53,100 new jobs were created in FS&DP in July 2017, 77% higher than the year’s average and a record high since April 2014. In July, a full one-quarter of the jobs created in the non-farm employment sector originated in foodservice, and there don’t seem to be any signs of growth exhaustion in the labor market.
Leisure & Hospitality was the largest contributor of new jobs (nonfarm employment) in July, contributing 62,000 new jobs -almost 30% of the new jobs of the month.
The average hourly wage for employees in the private sector was $26.36 in July 2017. By comparison, the average employee in the Leisure & Hospitality sector earned an estimated $15.46 per hour, or 59% as much.
However, wages for Leisure & Hospitality workers are growing faster (+3.8% in July) than the private sector average (+2.5% in July). The growth in wages is higher than inflation measured from consumer prices (which was 1.6% in June, according to the most recent data available). In other words, these trends translate into the growth of real wage (i.e. those adjusted for inflation).
Given the higher pace of jobs created in the restaurant industry than in the overall economy, wages are increasing faster for restaurants than for the average business. This is positive news for foodservice overall and a signal that the economy continues to thrive, even after an extended streak of job and wage gains in recent years.
For more about the above categories, and the reports used to quantify these charts, visit US Restaurant Labor Data: An Overview.
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, span all 6 inhabited continents and 100+ countries, with locations totaling tens of thousands.