As COVID-19 infections surge throughout the country again — with the virus causing nearly 1,500 daily deaths on average — the restaurant industry is preparing for further shutdowns, job losses, and permanent closures. Los Angeles has ended all restaurant dining except for takeout and delivery. New York Gov. Andrew Cuomo is threatening to do the same for parts of Staten Island, and has already ordered restaurants to shutter dine-in service by 10:00 p.m. citywide. And Mayor Bill de Blasio says a full prohibition on indoor dining could come in early December, following similar bans to that effect in other major U.S. cities.
These restrictions on the hospitality industry, however necessary from a public health perspective, couldn’t come at a worse time, smack in the middle of the season when many restaurants earn the bulk of their yearly revenue.
Danny Meyer, one of the city’s biggest operators, moved to re-close his restaurants for sit-down service in late November, resulting in 100 new layoffs. Other large restaurateurs like David Chang and Stephen Starr never even reopened some of their marquee properties in the wake of the spring shutdowns. And Ninth Avenue in Hell’s Kitchen, packed with bar and restaurant revelers over the summer, feels increasingly lonely and barren at night as the weather turns cooler.
The fact that things will get harder for the hospitality industry is crystal clear at this point. Still, a closer look at new federal and state economic data reveals an even more frightening narrative, which is that life has already been getting dire for both restaurants and workers — with no stimulus aid in sight. This isn’t a story about well-heeled folks who’ve been saving up for tough times; this is about a devastated industry and low-wage workers who are getting gut-punched again. A vaccine that’s not widely available until the spring or summer and a relief package that doesn’t get delivered until, say, late January (if it actually passes a Republican Senate) won’t mean much to businesses on the brink of closure — or ex-staffers facing inescapable poverty.
Here’s the TL;DR on how bad things look: Even as New York City opened for indoor dining in late September, restaurant jobs growth remained sluggish, suggesting that scores of local ex-staffers will remain out of work for some time to come. What’s even more sobering is that the failure of Congress to renew enhanced unemployment aid means millions of jobless restaurant workers must continue subsisting on barebones state and federal benefits. Those programs, which sometimes pay less than minimum wage, will expire for 12 million people the day after Christmas. Poverty rates are also rising, especially among Black people, and almost certainly among undocumented workers, who are excluded from most federal aid programs.
Also, vulnerable restaurant and food-processing workers will lose their federal paid sick leave benefits in the new year. And restaurant sales are flattening across the country as consumers remain strapped for cash.
The news here is that there is literally no good news for the hospitality industry. Over 1,000 restaurants have shuttered throughout the city since the beginning of the pandemic, from high-profile venues like the Michelin-starred Uncle Boons to beloved community spots and queer spaces like MeMe’s Diner to everyday neighborhood restaurants that seem to disappear before anyone has a chance to drop by for one last lunch. Without stimulus aid like the RESTAURANTS Act, more venues will continue to close as conditions worsen.
Or, put more bluntly: When my colleague Elazar Sontag wrote in August that we’re experiencing an extinction-level event for restaurants, things were much, much better than they are now. Here’s why.
The restaurant jobs market is terrible; so is jobless aid
October was the second-worst month for restaurant employment growth in the five boroughs since the pandemic began. Local bars, restaurants, and fast-food venues recovered just 11,700 jobs last month, according to the Bureau of Labor Statistics, which sounds like a great number until you realize that overall hospitality employment is still just 59 percent of what it was in February. That reality is particularly heartbreaking because those small gains came during the first month when indoor dining was permitted. The smaller category of full-service restaurants is faring even worse, employing just half of the pre-pandemic workforce.
To be clear, it’s doubtful anyone expected gangbusters growth at 25 percent capacity during a chilly month; it’s just that the numbers paint a bleak picture given that Cuomo is unlikely to allow city restaurants to let in more diners anytime soon. Heck, even outside the city, where half-capacity indoor dining has been legal for months, employment remains well below last winter’s peaks. Whether you look at city, state, or even national restaurant job hiring stats, you see the same thing: a flattening curve, which means slower growth.
The city now has 100,000 fewer restaurant staffers than in February — suggesting a de facto 41 percent unemployment rate if those workers didn’t find jobs elsewhere. Meanwhile, the country has 2 million fewer food and drink workers since the beginning of the pandemic.
What this means: Slower jobs growth means millions of unemployed hospitality staffers will continue to have an incredibly tough time finding work. That’s a big problem because it’s been months since the $600 weekly enhanced unemployment benefit lapsed in late July. Since then, many ex-workers have been earning well under the minimum wage on leaner state benefits.
An average cook, for example, will take in about $337 per week in unemployment aid, or the equivalent of $8.43/hour, less than half the Manhattan living wage. If there’s a silver lining of sorts, it’s that New York’s high jobless rate means state residents continue to qualify for an extra 20 weeks of unemployment. But the expiration of other federal aid programs means that 12 million Americans, most of them living outside of New York, will lose their benefits on the day after Christmas. For those individuals, including gig workers for food- and grocery-delivery apps, the threat of poverty will loom large.
NYC unemployment is terrible; Bronx food insecurity is among the country’s worst
The city’s unemployment rate is thankfully no longer hovering near Depression-era levels, but it’s been improving quite slowly in recent months, dropping by less than a percentage point to 13.1 percent in October. That’s still nearly double the national rate. And the jobs market recovery remains an unequal one across the five boroughs. As Manhattan unemployment improved to 10.3 percent in October, it only fell to 17.5 percent in the Bronx, a borough where over a quarter of residents lived below the poverty line even before the pandemic.
And nationally, the ranks of Americans unemployed for over six months jumped by 1.51 million last month to 3.56 million, nearly triple last year’s rate.
What this means: High unemployment rates aren’t exactly a recipe for the type of discretionary consumer spending that fuels restaurant sales. And workers who remain unemployed for longer than six months, many of whom are hospitality workers, are more likely to experience poverty, health problems, and lower salaries upon getting rehired.
A new study showed that national poverty rates increased by about 2 percent, or roughly 7 million people, after the expiration of the $600 jobless aid. Poverty rates among Black people were even higher, rising 5.4 percent. And undocumented workers, who make up a significant portion of the restaurant industry, face even greater financial devastation as they contend with the dual challenges of not being able to find work for months at a time and not being eligible for federal aid.
New York’s 15th Congressional District, comprising Latinx-heavy portions of the South Bronx, now has the country’s highest number of food-insecure people due to COVID-19, according to a recent analysis by the Feeding American nonprofit. That same study also found that 72 percent of U.S. counties projected to have the highest food-insecurity rates have a predominantly Black population. What we have here aren’t small-scale questions of charity; what we have is the possibility of a full-blown economic and humanitarian aid crisis throughout our country.
Expiring paid sick leave will leave millions of workers stranded
One of the cruel ironies of the current novel coronavirus resurgence is that it’s on track to coincide with the expiration of federal paid sick leave, a benefit that one Columbia University professor estimated to have reduced virus spread by 600,000 cases over a six-week period, HuffPost reports. Before that policy went into effect, leisure and hospitality employees had among the lowest rates of paid leave in the U.S. economy.
Democrats argued for a permanent benefit in March, but Republicans insisted that the two-week COVID-19 leave policy lapse at the year’s end. Stronger laws in New York state, fortunately, will continue to offer paid leave to most local workers, including undocumented employees.
What this means: If COVID-19 continues to spread unabated through the new year, millions of food-service workers in other states will not be entitled to automatic pay if and when they have to quarantine due to COVID-19. Those workers will face tough choices about whether to truthfully answer daily screeners about mild symptoms or exposure to the disease, which could result in serious new outbreaks across the country. This is a particularly acute issue at food-processing plants, which were tied to at least 16,000 cases by July, and which harbor high rates of asymptomatic and pre-symptomatic spread, according to the Centers for Disease Control and Prevention.
Restaurant spending will get even worse as shutdowns rise
Nationwide, restaurant sales are about 85 percent of pre-pandemic levels, which is not terrible, but those numbers have been tapering off since at least June. In fact, advance retail sales at food-service places actually dropped, albeit marginally, in October for the first time since the country began to emerge from the pandemic, according to new census data.
Monthly consumer spending growth, a sturdy 6.5 percent in June, has slowed as well, falling to 0.5 percent last month, the weakest increase since April; the U.S. Bureau of Economic Analysis attributed that deceleration to the lapse in stimulus aid.
What this means: The act of going out to eat, besides supporting hundreds of thousands of workers, fulfills important social and cultural functions throughout the city. It gives people relief and release from their tiny apartments, especially when they’ve been cooped up for months. That said, dining out remains a leisure activity. When people are short on cash, that $40 strip steak or even $14 salad bowl doesn’t seem too smart. Throw in customers who are increasingly aware of the risks of dining out (well, some of them), a consumer populace that’s often spending more time working from home than in the office, and a New York state government that has shown it is ready and willing to shut down indoor dining at a moment’s notice, and you have a very solid equation for a very horrible winter for restaurants and their workers.