As the number of 16-to-24-year-olds in the labor force continues to decline, foreign-born employees will become increasingly important to the restaurant industry’s ability to expand, according to the NRA’s chief economist Bruce Grindy. His Economist’s Notebook commentary and analysis appears regularly on Restaurant.org and Restaurant TrendMapper.
As national economy inches toward full employment, employers across all industries are finding an evaporating pool of talent available to fill positions. According to data from the Bureau of Labor Statistics, end-of-month job openings in the economy averaged 5.6 million during 2016, up from 5.3 million during 2015 and the highest level since this data series began in 2000.
Competition for employees is also heating up in the restaurant industry. In the National Restaurant Association’s January 2017 Tracking Survey, 27 percent of restaurant operators said recruiting-and-retaining employees is the single most important challenge facing their business. This was up from just 9 percent two years earlier, and represented the highest level since October 2007.
In addition to the effects of the current tightening labor market, the restaurant industry has also been impacted by some longer-term structural changes in the nation’s labor force. The restaurant industry has the youngest workforce out of any sector in the economy, and the steady decline in labor force participation among 16-to-24-year-olds presented additional challenges in recent years.
Based on the demographic projections, these challenges will only intensify in the years ahead. According to the Bureau of Labor Statistics, the number of 16-to-24-year-olds in the U.S. labor force will decline by 2.8 million between 2014 and 2024 (see chart below). This drop comes on top of the decline of 1 million 16-to-24-year-olds in the labor force between 2004 and 2014.
The shrinking availability of individuals in that age cohort will have serious implications for the restaurant industry, as 16-to-24-year-olds currently represent about four in 10 restaurant workers.
All of this means foreign-born employees will be increasingly important to the restaurant industry’s ability to expand and create jobs in the years ahead. According to the U.S. Census Bureau’s 2015 American Community Survey (ACS), restaurants employ nearly 2.3 million foreign-born workers. This represents over 8 percent of the 28.1 million foreign-born workers in the U.S workforce.
Restaurants also have a higher concentration of foreign-born workers than the overall U.S. economy. More than 23 percent of individuals employed at restaurants are foreign-born, versus 19 percent for the overall economy.
Foreign-born workers are comparatively more likely to hold higher-paying jobs in the restaurant industry, according to ACS data. Forty-five percent of restaurant chefs are foreign-born, as are 24 percent of restaurant managers.
Immigrants are also more likely to be business owners in the restaurant industry. Twenty-nine percent of businesses in the combined restaurant/hotel sector are immigrant-owned, compared to just 14 percent of all U.S. firms, according to data from the Census Bureau’s 2012 Survey of Business Owners.