The Restaurants Are Eating the Jobs

Josh Wright / EMSI

How did this happen? As Justin Fox points out, the trend didn't appear overnight. For the past three decades, restaurants have steadily grown, as part of the most fundamental shift in American work—from making things to serving people. Between 1990 and 2008, 98 percent of new jobs came from so-called "nontradable" industries that aren't sensitive to international trade, according to the economist Michael Spence.

In 1990, manufacturing was almost three times larger than the food-service industry. But restaurants have gradually closed the gap. At current rates of growth, more people will work at restaurants than in manufacturing in 2020. This mirrors the shift in consumer spending. Restaurants’ share of America’s food budget has doubled from 25 percent in the 1950s to 50 percent today.

The phenomenon is speeding up. Four of the five best years for restaurant growth on record have happened since 2011. Restaurant jobs have grown faster than the overall economy every month for the past seven years. It’s not just a redundant artifact of the service-sector economy, either. Almost every month between 1996 and 2000—years when job creation soared in a booming economy—restaurant jobs grew slower than the rest of the labor market.

The trend is speeding up, but it’s not clear that we should cheer it—or whether it’s sustainable. Jobs are jobs, but these ones don’t pay very well. The typical private-sector job pays about $22 an hour. The typical restaurant job pays about $12.50. That’s one reason why the Fight for 15 movement to raise the minimum wage has targeted the restaurant industry. What’s more, although it might feel like a golden age of restaurants in America, the truth is that the United States might have too many restaurants, particularly “family-casual” chains like Applebee’s, which have struggled to keep up with rising labor costs.

But the most important feature of the restaurant-jobs boom is not what it may say about the future, but rather the fact that it is happening in the first place. Trump and other politicians often say they want to help the common worker. But then they talk about the economy as if it were cryogenically frozen sometime around 1957. The U.S. still makes stuff, but mostly it serves stuff. To help American workers, it helps to begin with an honest accounting of what Americans actually do.