Job growth Stall
Job growth in the restaurant industry ground to a halt in June, but the JOLTS data remains elevated
Eating and drinking places lost a net 800 jobs in June on a seasonally-adjusted basis (employment levels in April and May were also revised lower). That followed 29 consecutive months of employment gains, during which the industry added more than 2.5 million jobs, more than any other industry. During the second quarter, eating and drinking places added 27,300 jobs. That represented the weakest quarterly employment performance since the fourth quarter of 2020 when the industry cut nearly 250,000 jobs due to the onset of the delta variant. As a result, the industry’s staffing levels are still below pre-pandemic readings. As of June 2023, eating and drinking places were 80,000 jobs – or 0.6% – below their February 2020 employment peak. While not wanting to get too bearish, the JOLTS data remains elevated, suggesting a need to boost staffing levels. According to JOLTS data from BLS, there were nearly 1.2 million job openings in the combined restaurants and accommodations sector in May. That was unchanged from the previous three months, representing the 26th consecutive month with at least 1 million openings. Before this 26-month streak, hospitality sector job openings had only surpassed 1 million once during the entirety of the JOLTS data series, which dates back to 2000. Regarding pre-pandemic comparisons, there were an average of 875,000 hospitality job openings each month during 2019. Using this as a proxy for normal labor market conditions means there were more than 300,000 job openings above average in May 2023.
SBUX continues to face backlash on the labor front
Howard Schultz did not solve the Union issue and some might argue made it worse. The latest setback for the company was a ruling from NLRB judge Arthur Amchan that the shutdown of a store near Cornell University's campus was primarily done to discourage unionization efforts in Ithaca and elsewhere.
The judge said Starbucks failed to prove that it would close the store "absent its animus towards the pro-union employees who worked there." Of note, all three stores in Ithaca voted last year to unionize. Subsequently, the company announced that it would shut down the College Avenue store in Ithaca, and this year, it said it would close the other two as well. The company issued a statement indicating that it plans to appeal the ruling. "We strongly disagree with administrative law judge's recommendations," the company said in an email. Starbucks has said that the Ithaca stores had experienced numerous absences and high worker turnover. Separately, the NLRB sued SBUX last Thursday over an alleged refusal by the company to rehire 33 workers as it reorganized three stores in Seattle, including the well-known location in Pike Place Market. In a petition filed in Seattle federal court, the NLRB called Starbucks' plan to reorganize the stores an illegal response to unionization efforts at another store in the region. The company defended the actions and noted workers could seek to unionize through an NLRB-supervised election. Now today Reuters is running a story saying "Pro-union baristas at Starbucks are taking their campaign on the road on Monday and trying a new tactic along the way: asking the coffee chain's customers to organize pickets at non-unionized U.S. cafes."
