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Presidential Election Could Delay Stimulus for Restaurants and Workers Until 2021

New York’s battered hospitality industry will continue to suffer in the meantime

Donald Trump Campaigns In Arizona Ahead Of Presidential Election
| Photo by Chip Somodevilla/Getty Images

Congressional Democrats remain at odds with the White House over the next trillion-dollar stimulus, while the Republican-controlled Senate, necessary to pass any deal, adjourned until November 9 after ramming through a Supreme Court nominee. Translation: Any sort of fiscal relief won’t reach taxpayers until later this fall in a best-case scenario, and possibly not until 2021. As a result, scores of restaurants across the country will continue to shutter while hospitality workers teeter on the brink of poverty. This should surprise no one and enrage everyone.

The need for further aid was clear in May when the House of Representatives passed the HEROES Act, which would have extended $600 unemployment checks through the end of next January. The need for aid was clear at the end of July as those jobless benefits expired. The need for aid was clear in September as some of the biggest New York City restaurant groups extended their furloughs. And the need for aid remains crystal clear in October now that another surge in infections threatens renewed shutdowns.

Indeed, a new round of economic and health data shows that prospects remain grim for the local and national hospitality industries. In brief: New York food service hiring slowed down to a near halt in September. Jobless numbers throughout the city, in turn, still remain well above Great Recession levels, which doesn’t bode well for leisure activities like eating out. National consumer spending, a key driver of restaurant industry growth, has decelerated too, due in no small part to the evaporation of stimulus aid.

When precisely that stimulus aid will come is anybody’s guess at this point. A Washington Post story this week suggested that chances for a bill in the lame duck session — between November and early next year — is uncertain, with the possibility of an aid package being delayed until January, CNBC reports.

For now, here’s a look at how bad things are:

Food service hiring is slowing to a halt in the city

The total number of New York City bar and restaurant jobs rose by just 8.7 percent throughout August, according to the Bureau of Labor statistics. That was the slowest rate of food service growth since the pandemic began — until September came along, when that same figure fell to an even more disastrous 3.5 percent. By the beginning of the fall, the hospitality industry employed just 55 percent of its pre-pandemic workforce.

Slower hiring growth means jobless restaurant workers will have a tougher time finding work. It’s worth cautioning, however, that those numbers were gathered before the onset of indoor dining. Because of the delay with which local jobs data is released, we won’t know what October looked like — at 25 percent indoor capacity — until the week before Thanksgiving.

Indoor dining won’t be a panacea. Take a look at New York State outside of the city. Even though dining inside there has been permitted at half capacity since early July, food and drink places still have nearly one-quarter fewer employees than in March, according to BLS data. Yes, that’s a much better jobs situation than in the city, but it also means that up to 90,000 ex-food and beverage workers are still out of a job three months after indoor dining began. More broadly, throughout the country, nearly 2.3 million fewer people have food service jobs than before the pandemic.

What this all means: A lot of hospitality staffers are going to remain out of the workforce for some time, especially without clear guidance for moving to full-capacity dining indoors in New York. Without enhanced unemployment aid, those workers and millions more will surely fall into poverty, as a recent Colombia University study suggested.

Overall unemployment is still bad throughout the five boroughs

The New York City unemployment rate has improved to 13.9 percent. That’s wickedly worse than at any point during the Great Recession, but it’s a heck of a lot better than earlier this summer, when it was nearly double the federal rate. The bad news, however, is that the jobless rate is particularly bad in the Bronx, where it has only improved to 18.8 percent, versus Manhattan, where it has dropped to 10.9 percent.

Put differently: Over half a million people remain out of work in New York City, many of them collecting local unemployment benefits that fall below the minimum wage on an hourly basis. That’s 531,000 people that otherwise might not be struggling to pay their rent, buy groceries, or eat out at restaurants, the types of spending that are vital to the regular functioning of a normal economy. On that note…

Consumer spending has decelerated as benefits disappear

Common sense tells us that when the national economy has over 12.5 million unemployed people, spending at restaurants, bars, and other non-essential venues won’t be great. National economic data confirms as much.

In May, while enhanced unemployment support was readily available and when stimulus checks were freshly going out, nationwide consumer spending rose by 8.7 percent — even though the country was suffering from one of the worst recessions in a century. In June, that number dropped to 6.7 percent, then in July, it plummeted to 1.5 percent, before falling further to one percent in August, then ticking back up by 1.4 percent in September, probably due to Trump’s Lost Wages Assistance program.

The Bureau of Economic Analysis, the government agency that reported those numbers, has largely attributed the slower increases in spending due to the decrease in unemployment insurance benefits. The lesson is therefore simple: Without more government aid, consumer spending — one of the chief drivers of restaurant spending — will surely continue to suffer.

Virus counts keep rising as restaurant shutdowns loom

New York State’s COVID-19 positivity rate remains the second-lowest in the country. That’s a good thing. But inasmuch as the virus doesn’t stop at geographic boundaries, it’s worth keeping in mind that nationwide infections are now at the highest weekly average since the pandemic began, with nearly 72,000 cases per day, per the Centers for Disease Control. That number could very likely get worse as people move indoors during our Northern Hemisphere winter.

To cope with rising infections, Illinois banned indoor dining and drinking in Chicago this week. Across the Atlantic, France announced the closing of bars and restaurants across the country yesterday. And earlier in October, New York instituted partial restaurant shutdowns in Queens and Brooklyn neighborhoods where the virus was spiking. “We’re in a bad place now,” Dr. Anthony Fauci, one of the country’s leading infectious disease experts, told CNBC earlier this month.

Should those bar and restaurant closures rise, throughout the U.S. and New York — and there’s every indication they will — even more folks will be pushed to the brink of poverty without further assistance.

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