Economists' Outlook

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Job Losses in Leisure and Hospitality

Nearly half a million job losses in leisure and hospitality wipe out job gains in December 2020 and lead to rising unemployment rate among Hispanics

After seven months of job creation since May, the economy ended the year with a loss of 140,000, as the job gains in nearly all industries were offset by nearly half a million job losses in leisure and hospitality (-498,000), with the largest job losses in the food services and drinking places subsector (-372,000).

However, while total nonfarm payroll jobs fell, other industries that act as indicators on the state of the housing market, consumer spending, and business investment showed job gains, such as:

  • retail trade (+120,500)
  • professional and business services jobs (+161,000)
  • construction (+51,000)
  • transportation and warehousing (+46,600)
  • financial activities (+12,000)
  • manufacturing (+38,000)

Employment continues to be adversely impacted by social distancing, school closures, and workers working from home, leading to job losses in education and health services (-31,000), other services1 (-22,000), and the government sector (-45,000). Utilities (-400), and information services (-1,000) also had job losses but these industries had also been losing jobs prior to the pandemic.

Bar chart: Job Losses and Gains in December 2020, by Industry
Bar chart: Job Losses in Leisure and Hospitality, December 2020

Relative to February’s 15.24 million non-farm employment level, 12.3 million net non-farm jobs have been created but 9.8 million jobs still have to be recovered, with 40% of these jobs in leisure and hospitality.

Bar chart: Payroll Jobs Created May–December 2020, by Industry

Unemployment Rate is Rising Among Hispanics but Highest Among Blacks

By race, the Black and Hispanic populations are the most impacted by the job losses in the leisure and hospitality industry. Among Hispanics, the unemployment rate has increased from 8.4% to 9.3%, which is out of line with the general decline in the unemployment rate to 6.7% as of December 2020. However, Blacks still have the highest unemployment rate, at 9.9%, although the unemployment rate has been declining.

Line graph: Unemployment Rate by Race, January 2019 to December 2020

Hispanics and Blacks face higher unemployment rates because they account for a good measure of the workers in the leisure and hospitality industry and also because a higher fraction of Hispanic and Black workers are leisure and hospitality workers.  Of workers in the foodservice and housekeeping and personal care service in 2019, 25.4% are Hispanics and 13.4% are Blacks.  While the white population still accounts for the largest share of foodservice and housekeeping and personal care workers at 67.5%, a lower fraction of whites work in foodservice and as personal care service workers. Nearly 20% of Hispanics and 15% of Blacks are food service and personal care service workers compared to 12% among the white population and 13% among the Asian population.

The recently passed $900 billion second stimulus package that provides weekly federal unemployment insurance ($300 per week), another 11 weeks of funding for the self-employed workers, $25 billion in rental assistance, and $325 billion support for the Paycheck Protection Program is intended to provide relief to unemployed workers and prevent the closing of small businesses.

Table: Race/Ethnicity of Food Service, Housekeeping, and Personal Care Workers in 2019
Table: Race and Ethnicity of Workers by Industry in 2019

1 The "other services" category is comprised of repair and maintenance, personal and laundry services, membership associations, and organizations.

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