By Peter Fuleky
Social distancing is necessary to slow the spread of COVID-19, to reduce the chance of overwhelming the healthcare system, and to save lives. But social distancing has significant economic impacts, hitting dine-in eateries disproportionately hard. Restaurant reservations in Honolulu had already started dwindling before the ban on dining at restaurants and bars went into effect Friday. As the figure illustrates, dine-in activity at restaurants in Honolulu on the OpenTable network has declined from typical levels to essentially zero in three weeks. Thousands of jobs will be lost as a result.
Food services are more labor intensive than most other industries. According to the most recent data on occupational employment, in 2018 more than 85,000 people in Hawaii (or 13% of all employees in the state) held food service related jobs. Restaurants cater to both visitors and residents, but due to the state’s large tourism presence, food services occupations in Hawaii are nearly one-and-a-half times more prevalent than for the nation as a whole.
The dine-in ban will not affect all employees equally. Of the total food services occupations, fewer than half were cooks or otherwise directly responsible for food preparation. A number of these jobs may be spared as some restaurants continue to cater to take-out orders. But shifting to take-out will eliminate the need for wait staff serving seated guests. And many restaurants will likely cease operations altogether.
With the median annual income in the industry at about $30,000, food service employees likely have limited savings and are not prepared to handle a system-wide shock to the visitor and local dining markets. To mitigate financial distress due to temporary job losses, the federal government is considering a rescue package that would include sending checks to individuals. While this will be an important support in the near term, many job losses in Hawaii’s food service industry could last months to a couple of years. Short-term income supplements will not go very far in addressing this longer-term problem.
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5 thoughts on “The Agony of Restaurant Workers”
What we should do is to make concerted effort to order take-outs from our/your favorite restaurant(s). This may not save all the jobs in that restaurant. But if the restaurant survives, it would be able to quickly rehire those who were laid off when the situation improves. And leave a 20% tip instead of an incidental one.
Thank you for this relevant and timely analysis.
Do you happen to know how representative the OpenTable data to HI? When I saw their dataset, I didn’t doubt the trend but I don’t see it nearly as often here as in the mainland, so wasn’t sure how representative it’d be.
On a totally different note, is it possible for states/counties to offer huge fiscal assistance to provide SMEs with payroll subsidies? I recognize the public choice and other political restraints/shenanigans that could accompany this but I wonder if it’s even feasible.
Laron, thank you for your interest in this analysis. According to OpenTable, there are more than 1200 Hawaii restaurants listed on the website (see also https://www.opentable.com/hawaii-restaurants).
The CARES Act passed by the US Congress contains several provisions to help small businesses survive the recession. States and counties are facing a dire fiscal landscape ahead, so this federal relief package is undoubtedly welcome at the local level.
Thank you for sharing