The 16.9 Million Leisure and Hospitality Jobs are at Risk. Laid Off Employees Search for Help


Bloomberg Businessweek March 30, 2020 pp30-32 Economics “Collateral Damage” “Measures to control the epidemic are crushing a sector employing more than 1 in 10 U.S. Workers”

Shut down by government, the leisure and hospitality sector, consisting for restaurants, hotels and entertainment venues, responded by immediately laying off workers. The restaurant industry alone may lose 7.4 million jobs and unemployment may reach 30%. In all, the industry accounts for 8.6% of the American economy or $1.3T annually. The hardest hit cities by % of workforce are Miami, Las Vegas, and Orlando at over 13% lost followed by cities like Los Angeles, San Francisco, Phoenix, Detroit, Riverside, Denver, Tampa, St. Louis, Charlotte and Portland Oregon at 12-13%. By number of employed in the industry totaling 16.9M, New York accounts for 1M workers followed by Los Angeles, Chicago, Dallas and other major cities. Transportation services from Airlines to UBER account for another ~$0.5T in economic activity. Workers in these industries are especially dependent on a steady stream of work averaging only $16.83/hr as compared to manufacturing at $28.17 and construction at $31.19.

Past downturns have left leisure, hospitality and transporrtation workers relatively unscathed as initial layoffs started in manufacturing. In that more common scenario, consumers may defer buying big-ticket items but continue spending some money for a meal or night out. This is full economic loss for businesses and employees because those outings-the UBER ride, the before dinner drinks, the restaurant meals etc. are not deferred they were cancelled. Truthfully, “Economists don’t really have a good road map [for recovering]” from this.

Much like the fallout in Hong Kong following student strikes, some older workers may survive on savings but younger workers without savings are most vulnerable. All will immediately be looking for help with rent and other necessities. Resolving the pandemic quickly will help reduce the suffering as will help from the “Economic Rescue Package”. Most workers will receive a small direct lump sum of $600-$1,200 from this first package. It’s unclear but likely other packages will be needed in direct and indirect aide to workers.

In total $850B is available to affected businesses with $359B of that for small businesses that retain their employees. Businesses that survive will likely be battered and unable to afford retaining or rehiring at the pre-pandemic levels.

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